European Parliament lawmakers have advanced proposed changes to the way electricity emissions defaults are calculated under the EU Carbon Border Adjustment Mechanism, bringing the reform closer to negotiations with member states.
Parliament adopted its negotiating position on September 15, with 464 votes in favour, 50 against and 159 abstentions. The vote does not constitute final adoption and does not change the rules currently applicable to electricity exporters.
The European Commission’s proposal would calculate electricity default values using generation from all electricity sources, including non-fossil technologies. The existing methodology reflects fossil-fuel generation, which the Commission has said can result in emissions estimates that are too high for relatively low-carbon electricity exports.
Generation mix would affect revised default values
Broadening the generation base would change the starting point for exporters that rely on national default values instead of demonstrating installation-specific actual emissions.
The impact would vary according to the electricity generation mix in each country and the methodology ultimately adopted. The proposed change would therefore not constitute a uniform emissions reduction for all electricity suppliers.
The methodology is particularly relevant for electricity systems with substantial hydropower or nuclear generation. Excluding low-carbon generation from the calculation can make a national default less representative of the emissions intensity of the system as a whole. Including non-fossil generation would address that methodological issue, without establishing that an individual electricity delivery originated from a specific low-carbon generating facility.
Actual-emissions claims remain a separate route
A revised national default would apply at the system level and should be distinguished from the route based on actual emissions.
Changes to the national methodology could alter the value used for exporters relying on defaults, while producers seeking to demonstrate an installation-specific emissions figure would continue to face the applicable evidence requirements.
The final effect will depend on the methodology incorporated into the legislation rather than solely on the Parliament’s negotiating position.
Council position and legislative negotiations remain outstanding
The European Council agreed its negotiating approach in June, leaving the Parliament and member states to progress the legislative process.
The final legislative text, implementation timetable and any transition arrangements have yet to emerge from that process. Until changes are enacted and applicable, exporters remain subject to the existing electricity emissions methodology.
For companies negotiating electricity-related contracts, the distinction between a proposed reform and an enforceable CBAM rule remains material. Any potential benefit from a revised default value cannot be incorporated as an established regulatory treatment before the legislative changes take effect.
