The European Commission’s latest technical work on indirect emissions under the Carbon Border Adjustment Mechanism indicates that electricity used by industrial producers will need to be proven and documented for use in CBAM declarations. The documentation is expected to be credible enough for verification, including when a producer seeks to claim actual low-carbon electricity instead of relying on a default grid factor. The change shifts electricity procurement from settlement and contracting terms toward evidence that can support indirect-emissions calculations.
The issue gained prominence on 8 June 2026, when DG TAXUD published a technical study on indirect emissions in CBAM. The study is structured around three questions: determining operational default emission factors for indirect emissions; when declarants should be allowed to claim actual indirect emissions, including requirements for direct technical links, power purchase agreements and verification; and whether indirect-emissions coverage could be extended to additional CBAM sectors.
From green electricity claims to CBAM-verifiable documentation
DG TAXUD’s work distinguishes between green electricity as a marketing claim and low-carbon electricity as an evidence file for CBAM purposes. Under this approach, a renewable power purchase agreement may support decarbonisation, cost hedging and ESG positioning, but it also needs to be usable for calculating actual indirect emissions for goods entering the EU. The evidence must be relyable by the importer or authorised CBAM declarant and checkable by a verifier.
The technical requirements also extend to allocation questions, including whether power consumption can be attributed to the specific installation, process and product line producing CBAM goods. The study focus on direct technical links, PPAs and verification implies that not all green arrangements carry the same evidentiary value. A behind-the-meter renewable asset with clear metering and a direct technical link may carry stronger weight than an ordinary supply contract.
Default emission factors and the risk of weaker export competitiveness
The first DG TAXUD study question on operational default emission factors is described as crucial for energy markets. A default factor is not only a fallback mechanism; it can become a commercial penalty if actual low-carbon electricity use cannot be demonstrated. In that case, an EU importer may have to rely on a default emissions factor when calculating indirect emissions.
For producers operating in carbon-intensive grids, reliance on default factors could affect competitiveness of exported goods such as cement, fertiliser, steel derivatives and aluminium products. This creates an incentive for industrial buyers to procure electricity in ways that reduce the risk of falling back on defaults. Suppliers are therefore expected to provide not only renewable supply but also the data architecture needed to support an indirect-emissions claim.
The architecture referenced includes metering, settlement records, generation certificates, PPA documentation, grid connection evidence and time-matching logic. It also includes an approach to residual consumption that can be incorporated into the compliance documentation. Power suppliers are expected to provide a compliance appendix alongside the commercial contract.
Direct technical links and battery storage as evidence components
A direct technical link is highlighted as likely to become one of the strongest forms of evidence for industrial buyers seeking recognition of low-carbon electricity. For renewable developers, this points to a premium segment covering dedicated solar, wind, hydro, biomass or hybrid plants serving CBAM-exposed industrial sites. The value of such projects is described as extending beyond electricity pricing into embedded-emissions exposure reduction and supply-chain credibility.
The framework also links stronger supply structures with PPA bankability. A cement producer, fertiliser plant, metals processor or hydrogen producer facing CBAM-related scrutiny may seek more robust direct-supply arrangements. In parallel, battery storage is presented as relevant where solar output does not align with industrial load curves.
Battery energy storage systems are described as able to shift renewable output into consumption periods that are more relevant for production profiles. In this context, BESS is described as part of an evidence strategy rather than only a flexibility asset. The role includes reducing residual grid draw and strengthening credibility of the supply profile used in indirect-emissions calculations.
CBAM-ready PPAs require verification access and settlement alignment
The source material states that standard PPAs will not be sufficient under the emerging CBAM-linked electricity framework. A CBAM-ready PPA should include clauses covering data ownership and access rights, metering hierarchy and certificate transfer or cancellation. It should also address settlement-period matching, residual electricity treatment, curtailment, outages and replacement power.
Additional elements include balancing responsibility and verifier access, with clear definitions of what the buyer can claim and what the seller guarantees. Compatibility is also tied to engineering constraints: the PPA must work with the plant’s electrical system and production process while fitting within the buyer’s CBAM reporting boundaries. Contracts may fail if production lines cannot allocate electricity consumption to specific CBAM goods or if suppliers cannot provide required audit trails.
To support buyers’ reporting needs, power producers and traders are expected to prepare standardised CBAM electricity data packs. These include generation asset identity and location; installed capacity and technology; grid connection status; direct-line or grid-supply structure; PPA delivery period and settlement granularity; metered generation and consumption data; certificate issuance and cancellation evidence; balancing and replacement power treatment; residual mix disclosure; third-party verification rights; plus monthly and annual reconciliation templates.
Traders as data managers amid Southeast Europe volatility
Under this framework traders are positioned less as price-only intermediaries and more as data and evidence managers for industrial buyers. Industrial buyers are described as needing power products combining physical or financially settled supply with renewable or low-carbon attribution. Additional layers include metered consumption records, production-period alignment, certificate or guarantee-of-origin control, balancing and residual supply treatment, audit access and documentation transferable into an importer’s CBAM file.
The source material describes value creation where traders assemble power from multiple producers while managing balancing activities and documenting certificate flows. It also highlights reconciliation of metered consumption with provision of CBAM-ready data packages as differentiators compared with price execution alone. Traders’ roles are described as similar to structured-products desks packaging energy with certificates, shaping, traceability and verification support into one industrial supply solution.
Southeast Europe’s market volatility is cited as making these arrangements commercially urgent. In Week 23 of 2026, SEE electricity demand rose 8.2% week on week to 15.15 TWh, while variable renewable output fell 8.9%. Wind dropped 15.5%, solar declined 5.1%, hydro rose 10.1%, thermal generation increased 24.5%, and net imports rose 9.1% to 1.22 TWh.
Regional price fragmentation linked with gas market risk
The source material connects volatility with limits on building CBAM strategies using annual averages alone. It states that contracts need hourly shape coverage along with residual supply treatment, balancing exposure management and carbon character tracking for power consumed during production periods. This requirement is framed against cross-border balancing dependence indicated by net imports in SEE.
Week 23 trends also show significant price fragmentation across the region: Italy averaged €128.09/MWh, Bulgaria €100.83/MWh, Hungary €103.15/MWh, Greece €89.25/MWh, Serbia €99.63/MWh, Croatia €99.29/MWh, while Türkiye averaged only €22.53/MWh. Gas risk adds another layer through TTF gas futures averaging €48.56/MWh during the first week of June alongside one-month forward trading near €49.335/MWh.
The report cited warns that European gas markets remain vulnerable to LNG disruption, storage risk and competition for cargoes. For industrial buyers this leads to three linked procurement purposes: price hedging, decarbonisation support and CBAM evidence provision tied to actual low-carbon claims rather than certificates alone or unverified PPAs.
Definitive CBAM timing for declarants and certificate pricing mechanics
The Commission’s CBAM page referenced in the source states that the definitive regime started on 1 January 2026. It also states that EU importers or indirect customs representatives importing more than the single mass-based threshold of 50 tonnes must apply for authorised CBAM declarant status.
The same page states that CBAM certificate prices are calculated from EU ETS allowance auction prices quarterly in 2026 and weekly from 2027 onward. The transition period treatment described differs from definitive-period treatment for indirect emissions under Task 2 summary notes.
The Publications Office summary for Task 2 notes that during the transitional period indirect emissions were reported for all CBAM goods except electricity, while definitive coverage includes direct production emissions plus indirect emissions from electricity consumed for cement and fertiliser goods producing CBAM goods.
Sectors beyond cement and fertiliser face potential expansion questions
The source material points to DG TAXUD’s third study question about whether indirect-emissions coverage could be extended to additional CBAM sectors beyond those currently covered in definitive-period treatment examples provided for cement and fertiliser goods during Task 2 summary notes.
This forward-looking element is described as affecting how steel, aluminium, hydrogen and downstream processing chains treat electricity data even where some indirect emissions are not yet chargeable in the same way under current coverage assumptions described in the source material direction-of-travel framing.
The Task 3 publication is described as placing the issue within a wider EU carbon-leakage framework including the EU ETS Directive alongside free allocation, auctioning revenues and indirect cost compensation for electro-intensive industries. It states that any extension of CBAM indirect-emissions coverage would need interaction with how EU producers are treated regarding carbon costs passed through electricity prices.
Packs required from producers, traders’ controls, and buyer evidence questions
The source material says power producers should prepare for buyers requesting documentation at least as intensively as price information under emerging requirements tied to proof-based claims in CBAM declarations. Renewable producers are expected to provide asset-level generation data including metering records plus certificate issuance and cancellation evidence along with curtailment logs and outage reports linked contractually to industrial buyers where possible through direct technical link projects or behind-the-meter solutions.
Hydro producers are expected to document generation origin, dispatch periods and certificate treatment because hydro can better match non-solar load profiles if low-carbon attributes remain traceable without double-counting. Thermal producers are described as facing different expectations given potential buyer treatment of fossil-based residual supply unless it is explicitly separated, priced and disclosed within documentation used for claims.
BESS operators are described as positioning batteries as compliance-supporting flexibility assets able to help renewables match industrial demand while reducing exposure to fossil-heavy evening power periods affecting delivery shape used in PPA profiles referenced in the source material.
A trader’s operational checklist for importer-facing evidence packs
The source material describes trader preparation requirements focused on systems able to reconcile generation with consumption records plus certificates schedules and imbalances while providing monthly evidence packs usable by industrial buyers passing information into EU importers’ processes tied to CBAM declarations.
A trader’s responsibilities include managing residual electricity transparently while avoiding double-counting renewable attributes across physical delivery versus contractual arrangements versus financial-only components within supply structures described in the source material framework.
A “CBAM-ready trader” offering set includes structured renewable PPAs; sleeving services; balancing and shaping; storage optimisation; certificate management; residual mix disclosure; hourly or settlement-period reporting; importer-facing documentation; verifier cooperation; plus audit-ready data rooms supported by stronger controls compared with commodity trading margins referenced in the source material.
Cinque questions industrial buyers will use when assessing contracts
The source material lists five questions industrial buyers will increasingly demand answers for within contracts supporting CBAM declarations using electricity evidence files rather than only marketing claims or generic certificates.
The first question asks what electricity was consumed during production of CBAM goods at plant level while second asks what emissions factor was attached to that electricity used in calculations supporting claims referenced in DG TAXUD’s study framing included in the source material narrative flow.
The third question asks whether claims rely on default factors, actual factors via PPAs or direct technical links or blended methods used within allocation logic referenced earlier in the source material discussion of operational default emission factors versus actual claims supported by verification access requirements.
The fourth question asks whether electricity evidence can be reconciled with production volumes plus product-level allocation while fifth asks whether EU importers or authorised CBAM declarants can use evidence safely inside CBAM declarations submitted based on those reconciliations using verifier-checkable documentation referenced throughout the source material discussion.
Elevated by CBAM.Clarion.Engineer