The European Commission is examining how the Carbon Border Adjustment Mechanism could account for electricity consumed during the production of imported goods, potentially increasing the relevance of power sourcing for manufacturers whose products enter the EU market.
A technical study published by the Commission on June 8 examines default electricity emissions factors, the conditions for using actual emissions data and the possible extension of indirect-emissions coverage to additional CBAM sectors.
The work forms part of policy development and does not constitute an enacted expansion of CBAM liabilities.
Indirect electricity emissions considered across more sectors
The study addresses indirect emissions generated when electricity is used to manufacture a product. These emissions are separate from those associated with electricity imported into the EU as a commodity, meaning the analysis does not replace or alter the existing framework governing cross-border power imports.
Among the issues examined are the use of power-purchase agreements and direct connections to substantiate actual electricity emissions data. The study also considers verification requirements and the administrative feasibility of such approaches.
A broader treatment of electricity-related emissions would therefore involve both emissions accounting and the evidence needed to support claims about the electricity used in manufacturing.
Resource shuffling identified as a policy concern
The study’s final-report summary highlights resource shuffling as a potential problem.
Under such a scenario, existing low-carbon electricity could be allocated to production intended for the EU market while higher-carbon electricity is supplied to other customers. The reported emissions intensity of EU-bound products could consequently improve without an equivalent reduction in total emissions.
The issue creates a challenge for any system seeking to give greater recognition to low-carbon electricity. More precise treatment of clean electricity supply could support industrial electrification, while insufficient allocation rules could instead favour changes in reporting or electricity allocation without corresponding changes in generation or production.
Interaction with support for EU industry
The Commission’s analysis also considers the relationship between potential CBAM treatment and compensation received by EU industry for indirect carbon costs.
Any expansion of carbon-cost coverage for imported goods would therefore interact with measures supporting domestic electricity consumers against indirect emissions-related costs. The two elements form part of the competitive comparison between imported products and goods manufactured within the EU.
For manufacturers, the study identifies electricity sourcing records and product-emissions data as areas that could become increasingly important commercially. It does not create a new obligation for every CBAM sector, but its analysis places power procurement and product-emissions information more closely within the same compliance and investment framework.
