Wholesale electricity trading typically involves fungible power, portfolio aggregation and successive resales. Under the EU Carbon Border Adjustment Mechanism (CBAM), additional evidence requirements apply when an importer seeks to use installation-specific actual emissions. The issue arises when a resale chain no longer links the original generating installation to the authorised CBAM declarant.
When the conditions for installation-specific actual emissions are not met, default emissions values remain the standard approach for imported electricity. The conditions include a qualifying physical power purchase agreement (PPA) and an applicable network condition. They also require a generating installation below the 550 g CO2/kWh fossil-fuel-origin emissions threshold.
Additional requirements relate to operational matching and verification. Firm electricity nominations must be matched with production in periods of no more than one hour. Independent verification must be supported by at least monthly interim evidence.
Wholesale trading structures and CBAM evidence
A trader may buy renewable electricity through portfolio and net positions and resell power at a trading hub under ordinary wholesale market arrangements. Such transactions can be settled commercially without necessarily producing the contractual evidence needed for installation-specific actual-emissions treatment under CBAM. The evidence gap becomes relevant when the final importer wants to claim actual emissions tied to a specific generating installation.
In those cases, the contractual chain may fail to show the producer-to-declarant relationship required under current rules. This does not prevent conventional electricity resales. It instead distinguishes ordinary wholesale transactions from imports seeking a specific CBAM emissions treatment.
Industrial buyers using multi-supplier procurement are therefore expected to separate a general renewable electricity statement from evidence supporting a qualifying physical electricity-import arrangement. The distinction is tied to whether the importer can demonstrate the required link between generation and the authorised declarant for CBAM purposes.
Contract testing, legacy portfolios and financing constraints
Contract reviews should test how an arrangement works across delivery scenarios including normal supply, shortfall, counterparty default and change of importer. Each scenario should result in a calculable settlement and a recoverable evidence trail. If either settlement calculation or evidence recovery is missing, further contractual work is required.
Existing contracts should be prioritised based on value at risk, feasibility of amendment, and availability of supporting evidence. Long-term positions connected to identified generating installations may justify restructuring. Anonymous spot purchases and short-term positions may be handled as transactions priced using applicable default values.
Financing arrangements can complicate changes to contractual structures. Amending a PPA or replacing a counterparty may require approval from a lender or security agent. Contract conversion therefore needs to account for financing consents and be scheduled early enough to avoid disrupting an existing revenue stream.
Arrangements should be released only when parties, title transfers, cash flows, data rights and fallback settlement formulas can be reconciled. This reconciliation must avoid relying on informal assumptions in place of contractual terms.
CBAM reform proposal affecting electricity treatment
A separate CBAM reform proposal, COM(2025) 989, would change electricity treatment. It includes updates to the methodology for default values and parts of the conditions for using actual emissions values. The proposal would also broaden physical PPAs to include arrangements involving intermediaries.
The reform would revise elements of the framework governing congestion and electricity nominations. The Council adopted its negotiating position on 12 June 2026, followed by the European Parliament’s position on 15 September 2026. The proposal remains under interinstitutional negotiation and is not enacted legislation.
Any assessment of potential restructuring based on the proposed framework is conditional on final legislation and its applicable requirements. Until then, current-law pricing and compliance decisions remain separate from what could change under the reform process.
Ordinary electricity resale remains permissible under CBAM practice. The compliance distinction is that a conventional resale transaction is not equivalent to an arrangement supporting installation-specific actual emissions for CBAM purposes.