Supported by CBAM.Clarion.Engineer
Replacing one importing entity with another within the same corporate group can have consequences beyond routine contract administration under the EU Carbon Border Adjustment Mechanism (CBAM). For long-term electricity export power purchase agreements (PPAs), a change in the importing or declaring legal entity can require a reassessment of contractual eligibility, electricity nominations and the evidence supporting installation-specific actual emissions.
Under the current framework, default emissions values remain the standard route for imported electricity unless all conditions for using installation-specific actual emissions are satisfied. These include a qualifying physical PPA relationship, the applicable network condition, a generating installation below the 550 g CO₂/kWh fossil-fuel-origin emissions threshold, firm nominations matched with production in periods of no more than one hour, and independent verification supported by at least monthly interim evidence.
The authorised declarant’s identity matters
Commission Implementing Regulation (EU) 2025/2547 specifies the contractual evidence requirements for physical electricity supplies. A qualifying physical PPA may be concluded directly between the producer and the relevant authorised CBAM declarant. Where an intermediary is involved, the relevant physical supply must be supported by one coherent three-party contract.
Successive bilateral resales do not, by themselves, establish the same evidentiary chain. The identity of the authorised declarant must therefore be considered alongside the contractual relationship, rather than treated as an administrative detail that can be changed without further review.
The declarant’s identity is connected to customs records, Economic Operators Registration and Identification (EORI) details, the PPA relationship, capacity and nomination arrangements, and the declarant-specific evidence file. Issuing an invoice to a different group affiliate does not automatically update or validate these elements.
Contract testing for changes in the importing entity
A practical contractual review should test four scenarios: a normal delivery, a supply shortfall, a counterparty default and a change of importer. Each scenario should produce a calculable settlement and a recoverable evidence trail. Where the contract cannot establish both, additional drafting is required.
Corporate steel and aluminium groups face particular complexity when a central procurement company purchases electricity for several industrial sites or a trading affiliate imports electricity on behalf of manufacturing operations. The electricity supply contract and the emissions documentation for the resulting industrial products may involve different legal entities. These relationships must remain distinct and properly documented.
Direct agreements and lender step-in provisions should preserve the contractual and data-access rights needed if the offtaker structure changes. Assignment, change-of-control and substitution clauses that appear routine in conventional energy contracts can require additional scrutiny when the transaction depends on specific CBAM qualification conditions.
Financing approvals and continuity of contractual rights
Amending a PPA or replacing a counterparty may require approval from a lender or security agent. These consent requirements can affect the timing of a change in the importing structure and create a risk of interruption to an existing revenue stream if conversion is not planned in advance.
Contract managers should verify that the parties, title transfers, cash flows, data rights and fallback settlement formula remain consistent after any proposed change. The review should establish whether the replacement entity can operate within the contractual and evidentiary structure required for the intended CBAM treatment.
Proposed electricity reform remains under negotiation
A separate legislative proposal, COM(2025) 989, would change electricity treatment under CBAM, including the methodology for default values and parts of the conditions governing actual emissions values. It would broaden the concept of physical PPAs involving intermediaries and modify the framework for congestion and electricity nominations.
The Council adopted its negotiating position on 12 June 2026, followed by the European Parliament’s position on 15 September 2026. The proposal remains under interinstitutional negotiation and must not be treated as enacted legislation when assessing current transactions or pricing long-term contracts.
Until the applicable rules change, a replacement importer or authorised declarant should be treated as a controlled transaction event requiring a documented review, rather than a routine back-office amendment.
