Brussels, October 27, 2026 — The European Commission has proposed changes to the Carbon Border Adjustment Mechanism (CBAM) electricity rules to address the differences between explicit cross-border capacity allocation and implicit allocation through coupled electricity markets. The amendment could make it easier for electricity traded through coupled markets to qualify for actual-emissions treatment, provided the final framework establishes a verifiable link between generation, market allocation and EU imports.
The issue is increasingly relevant as South-East European electricity markets move towards deeper integration with the European Union. Rules based on individually allocated interconnection capacity and firm nominations may not fully reflect how cross-border electricity is traded when capacity is incorporated into market-clearing algorithms.
Proposed Changes to the Nomination Condition
Under the current framework, claiming actual emissions requires firm nomination of the allocated interconnection capacity by the responsible transmission system operators (TSOs). Plant production and nominated capacity must be matched within periods of no more than one hour.
The Commission’s strengthening proposal would adapt the application of this condition to implicit capacity allocation, where market participants do not obtain and nominate traditional capacity rights in the same manner as under explicit allocation. The precise requirements remain subject to negotiations between the EU institutions.
The distinction is more than a technical drafting issue. As South-East European borders move towards closer market coupling, a compliance framework that assumes explicit capacity ownership risks becoming less compatible with the underlying market design. The proposed adjustment seeks to address that mismatch while preserving the need to attribute electricity reliably to the relevant generating installation and importer.
Market Data Becomes Central to Verification
In coupled markets, the evidence supporting a CBAM electricity claim is likely to depend more heavily on exchange transactions, bidding-zone results, flow and allocation records, plant output and the contractual chain. Companies may therefore need to retain detailed market data rather than rely primarily on capacity-auction certificates.
Verification will also need to address the risk of the same low-carbon generation being allocated more than once. The final methodology must establish how the relevant electricity and emissions attributes are traced through the market and contractual arrangements.
Metering, scheduling and contract information should be managed as a connected record set. Even when generation data is accurate, a claim may be challenged if timestamps, interconnector nominations or buyer allocations do not reconcile.
Monthly exception reporting can help identify missing hours, route changes, curtailment and balancing corrections before they become year-end verification issues. The objective is to maintain an auditable record of what was generated, scheduled and imported, rather than to assume that forecasts and operational records will always match perfectly.
Commercial Value Depends on Verifiable Emissions
If the final legislation accommodates implicit allocation, market coupling could expand the volume of low-emissions electricity eligible for actual-emissions treatment under CBAM. It could also support more standardised products supplied through exchanges and aggregators, reducing reliance on bespoke capacity arrangements.
The commercial benefit will depend on the final evidentiary requirements and the extent to which compliance processes can be automated at scale. Market integration alone would not guarantee eligibility for actual-emissions treatment.
Companies should assess the economics of qualifying electricity on an hourly basis where the rules require hourly matching. The potential value of a qualifying megawatt-hour can be assessed by comparing the CBAM certificate exposure calculated using the applicable default emissions factor with the exposure based on the verified emissions value of the generating installation.
That difference must be weighed against the additional costs of scheduling controls, data retention, verification and contract administration. Where the potential benefit does not cover these costs, relying on the applicable default treatment may be commercially preferable to maintaining a bespoke compliance chain.
Implications for South-East European Electricity Markets
The issue is particularly relevant to the Western Balkans, where regional electricity integration is advancing while cross-border interconnections remain central to commercial trading.
A CBAM framework that accommodates both explicit and implicit capacity allocation could help exporters participate in coupled markets without automatically sacrificing access to installation-specific emissions treatment because of the market design.
For Nominated Electricity Market Operators (NEMOs), TSOs, exchange traders, utilities, aggregators and EU electricity importers, preparation should cover both regulatory developments and market-coupling timelines. Data systems introduced now should capture exchange and allocation information in formats that can be mapped to generating-plant output and importer declarations.
This would help preserve the audit trail as borders transition from explicit capacity arrangements towards implicit allocation. Companies should avoid building compliance systems that depend exclusively on one capacity-allocation method when market arrangements may evolve.
Separate Current Compliance from Proposed Reform
The Commission proposal, together with the positions of the Council and European Parliament, can inform scenario analysis and contract planning. However, proposed provisions must not be applied to current declarations before the relevant amending legislation takes effect.
A two-scenario model can distinguish the nomination and evidence requirements applicable to 2026 imports from those that may apply under the amended framework. This allows companies to prepare data systems and conditional contract clauses without treating a legislative proposal as an existing entitlement.
The compliance file should use consistent underlying records across electricity procurement, generation, customs and finance. That enables both commercial managers and verifiers to understand the emissions claim, the operational evidence supporting it and the conditions under which the result could change.
Before a transaction or reporting period is finalised, companies should be able to connect the contract, generating installation, meter readings, schedule and cross-border records, while documenting who approves each assumption. A fallback should also be established for situations where the preferred emissions treatment cannot be substantiated.
Defining the fallback in advance helps identify potential exposure before a verifier, customs authority or authorised CBAM declarant challenges the claim. It also supports subsequent price adjustments, verification changes and management reporting.
Market coupling is pushing CBAM electricity rules towards an evidence model that reflects how capacity is allocated in integrated markets. The current nomination requirements nevertheless remain applicable until the amendment is adopted.
