European transmission system operators are seeking clearer Carbon Border Adjustment Mechanism (CBAM) treatment for electricity exchanges undertaken for grid balancing, emergency support, reserve sharing and congestion management.
The issue concerns power movements required to maintain network security rather than transactions conducted primarily for commercial purposes. ENTSO-E called for clarification, as reported by Montel on June 3, arguing that applying ordinary import procedures to operational electricity exchanges could create additional administrative requirements for system operators.
ENTSO-E’s published policy position distinguishes regulated transmission system operators from commercial electricity traders. The association has called for an exemption covering relevant operational exchanges and for an assessment of the consequences of applying CBAM to these activities.
Parliament proposes an operational electricity exemption
The European Parliament’s September 15 negotiating position subsequently included a proposed exemption for electricity flows from non-EU countries used by grid operators to maintain network stability.
The provision remains part of the legislative negotiating position. Parliament’s vote does not constitute a completed legal exemption, and electricity does not become exempt solely because the Parliament has supported the proposal.
The distinction is significant because identical physical electricity flows can have different functions within the power system. A balancing instruction responds to a system requirement, while a commercial schedule represents a market transaction.
Documentation would determine qualifying flows
Any future exception would need a practical method for identifying the electricity exchanges that qualify and the party responsible for the activity.
A narrowly defined operational exemption could prevent urgent security-related interventions from being subject to procedures designed for ordinary commercial electricity imports. At the same time, an excessively broad definition could allow commercial transactions to be presented as technical system-support activity.
Records showing grid-operator instructions and the operational purpose of an electricity exchange would therefore be important if an exemption is incorporated into the final CBAM framework.
For transmission system operators, the regulatory distinction needs to be established before emergency or balancing actions occur. The proposed approach seeks to preserve the use of cross-border electricity for network stability while retaining CBAM treatment for ordinary commercial power trade.
