European Union policymakers are considering changes that could make it easier for renewable electricity from neighbouring countries to receive actual-emissions treatment under CBAM. The adjustments are linked to how electricity is traded across multiple parties and how eligibility is assessed. As of October 2026, producers and traders still face a timing issue because the proposed changes have not completed the legislative process, while electricity has been imported under the definitive regime since January.
The European Commission’s proposal COM(2025) 989, tabled in December 2025, covers downstream CBAM goods and anti-circumvention measures as well as electricity-specific methodology updates. For electricity, the Commission would make actual-emissions eligibility less restrictive. The package includes changes related to contractual intermediaries and the network congestion requirement.
The proposal also revises the default emissions methodology for electricity. Instead of relying in the same way on fossil-only generation, the default approach would reflect a broader electricity generation mix. The Commission’s text remains a set of proposals rather than an automatic entitlement for market participants.
Default grid factors and incentives for power purchase agreements
The methodology change has potential economic implications for how imports are treated. Under a fossil-generation-based default measure that does not mirror the overall output mix, a country with significant hydro, wind or solar generation could appear relatively carbon-intensive. A broader average grid factor could reduce the gap between system reality and default import treatment.
Changes to the default basis could also affect commercial arrangements for electricity supply. The proposal is described as potentially influencing incentives for installation-specific PPAs. It may also shift relative negotiating positions between traders and IPPs, depending on the final wording and official factors rather than on a simple renewable-share calculation.
Contractual intermediaries and evidence requirements for actual emissions
Implementing rules currently recognise a direct PPA model and a narrow single-contract tripartite structure. The Commission’s intermediary reform would broaden recognition of verifiable contractual chains. This could allow standard power trading models to support actual-emissions claims without requiring every intermediary to fit one three-party instrument.
Even with broader contractual recognition, the importer would still need evidence that the claimed power was generated, nominated and imported in line with requirements under the final regulation. Contractual flexibility would not remove the need for reliable allocation controls. Market participants therefore face documentation and verification obligations tied to each import claim.
Network congestion evidence and proposed removal
The network congestion condition is highlighted as a point of concern for market participants. Route-wide physical evidence for each import hour may be difficult to obtain in practice. The Commission proposed removing the congestion condition as part of its reform package.
If enacted, removing the congestion requirement could reduce documentation risk for renewable generators and EU buyers. Until any amendment is enacted and applies to relevant imports, producers would not be able to disregard current congestion evidence based on the Commission’s assessment that it is burdensome.
Legislative timetable uncertainty affecting 2026 imports
A timing feature in the proposal is described as applying some electricity-methodology changes to imports from 1 January 2026. The aim is for first annual declarations in September 2027 to use revised rules. If adopted in its final form, this approach would have retroactive effect.
The Commission’s proposal indicates businesses should preserve evidence from 2026 even if they expect later simplification. The law as finally enacted may differ from the draft or include specific conditions for recalculation. This affects how import documentation may be handled ahead of annual declarations.
The European Parliament adopted amendments at first reading on 15 September 2026. After that, the file entered interinstitutional negotiations, leaving uncertainty over final text and timetable as of 17 October 2026. Project contracts are expected to distinguish between the regime already in force and anticipated rules if amendments become effective.
PPA contract terms covering future eligibility changes
A forward-looking PPA could include options tied to legal conditions. The contract might expand an eligible volume pool or permit additional contractual intermediaries once specific requirements are met under the final regulation. Contract drafting is also expected to address how historic 2026 settlements would be reopened.
The source indicates contract terms should specify whether a buyer must submit corrected data and who would receive any realised carbon saving. Without provisions covering these points, reforms intended to improve market access could lead to disputes over the value of past imports.
Regional market readiness under current evidence standards
For the regional electricity market, policy direction is described as important but not yet bankable. Market participants are expected to preserve today’s evidence standards while negotiating contracts intended to remain valid if rules change. They may also avoid distributing hypothetical regulatory gains before an enforceable rule exists.
