Brussels, October 27, 2026 — The European Commission has proposed changes to the EU’s Carbon Border Adjustment Mechanism (CBAM) electricity rules that could allow power purchase agreements involving intermediaries to qualify for actual-emissions treatment. The proposal addresses a practical limitation in the current framework, which requires a qualifying PPA to be concluded directly between an authorised CBAM declarant and a third-country electricity producer.
Proposal Targets a Structural Barrier in Power Markets
Electricity markets frequently involve traders, aggregators and licensed suppliers between generators and final buyers. These intermediaries provide market access, balancing services, collateral arrangements and cross-border scheduling, making direct contracts between independent power producers and EU importers commercially difficult in some cases.
Recognising intermediary-based contractual structures could expand the number of independent generators able to supply electricity under qualifying arrangements. The proposed approach would seek to accommodate physical PPA chains where the contractual relationships and connection to the source installation can be demonstrated.
The change remains a legislative proposal, not an adopted rule. Under the framework applicable to 2026 imports, the qualifying PPA must still be concluded directly between the authorised CBAM declarant and the producer. The Commission’s December 2025 proposal would broaden the framework to accommodate intermediaries, subject to the final terms agreed by the Council and European Parliament.
Commercial Models Must Account for Compliance Risk
The financial implications extend beyond the electricity purchase price. Trading margins can be narrow, and a transaction that appears attractive based on energy costs and cross-border price spreads may become less profitable if the claimed actual-emissions treatment cannot be substantiated and a higher default emissions factor must be applied.
Commercial assessments should therefore model both the qualifying case and the fallback scenario, identifying which party bears any resulting cost difference. This is particularly important for long-term PPAs whose pricing arrangements extend across multiple regulatory years.
Allowing intermediaries would not eliminate documentation requirements. Instead, it would place greater emphasis on proving the integrity of the contractual and physical chain. Agreements would need to establish the relationship between the generating installation, intermediary and authorised declarant, prevent the same generation from being allocated more than once, and preserve access to hourly production and scheduling data.
Verification would consequently require a controlled allocation methodology capable of tracing the relevant electricity through the contractual chain, rather than relying solely on a bilateral PPA.
Evidence Responsibilities Across the Supply Chain
The records needed to support a CBAM electricity claim are distributed among different participants. The generating plant holds production data, traders may control nominations, transmission system operators retain relevant capacity or flow records, and the EU importer remains responsible for its CBAM declaration.
Contracts should specify who retains each record, how long it must be kept and how quickly it must be made available to the verifier. Without enforceable access to the necessary evidence, electricity may fail to qualify for the intended treatment even where its physical origin and generation can otherwise be traced.
If adopted, the reform could support a specialised supply model in which utilities and aggregators combine renewable generation from several third-country installations and deliver it to EU importers through a single trading platform. Such arrangements could reduce transaction costs, while creating additional questions about the allocation of emissions performance, failed operating hours and verification expenses among participating parties.
Potential Implications for the Western Balkans
The proposed flexibility could be particularly relevant to the Western Balkans, where independent producers often sell electricity through regional trading companies instead of maintaining direct access to EU import markets.
In Serbia and Montenegro, aggregators could potentially combine generation, market access and CBAM documentation while preserving the required connection to the source installation. The commercial benefit would depend on the final legal requirements and the ability of every participant to supply the evidence needed for verification.
For independent power producers, aggregators, suppliers, traders, corporate buyers and EU importers, the immediate priority is to distinguish the proposed framework from the requirements governing 2026 imports.
The Commission proposal and the positions taken by the Council and Parliament can inform scenario planning and contract negotiations. However, proposed provisions must not be treated as available compliance options until the relevant amending legislation enters into force.
Contract Planning for Current and Future Rules
A two-scenario model can help companies prepare without relying prematurely on a legislative change. One scenario should reflect the direct-PPA requirement currently applicable to 2026 imports; the other should assess the potential effects of an intermediary-compatible framework.
Existing 2026 transactions must comply with the rules in force. New long-term agreements can include conditional clauses designed to permit intermediary arrangements if the amendment is adopted, avoiding the assumption that proposed flexibility already constitutes a legal entitlement.
Implementation should also connect compliance documentation with purchasing, production, customs and financial records. Using the same underlying information for verification and commercial management can make it easier to assess how changes in suppliers, trading routes, prices or legal requirements affect the outcome.
Establishing a Defensible Compliance File
Before a transaction or reporting period is finalised, companies should be able to connect the contract, generating installation, meter data, electricity schedule and cross-border records. The documentation should identify who approves each assumption and establish a fallback where the preferred emissions treatment cannot be demonstrated.
Although the fallback may be less commercially attractive, defining it in advance helps companies assess their exposure before a verifier, customs authority or authorised declarant challenges the claim. It also supports the management of price adjustments, changes to verification requirements and internal reporting.
As the financial impact of CBAM increases over the coming years, preventable evidence gaps could become recurring costs for electricity suppliers and importers. A documented process can help distinguish genuine emissions performance from claims that cannot be adequately substantiated.
The policy direction is to bring CBAM electricity requirements closer to the way power markets operate in practice. Until the amendment is adopted, however, the existing direct-PPA requirement remains the applicable legal test.
