A proposed revision of the EU Carbon Border Adjustment Mechanism could expand the circumstances in which electricity sold through intermediaries qualifies for treatment based on actual emissions, addressing a documentation issue for generators supplying European markets through trading companies.
The European Commission’s proposal would recognise verifiable contractual arrangements connecting a power generator with intermediaries and the importer or authorised CBAM declarant. The change concerns the documentation of physical electricity supply and would not automatically validate every renewable power purchase agreement.
A September 14 analysis by Karanovic & Partners identified several proposed changes, including broader recognition of intermediary arrangements, removal of the direct-connection or no-congestion test, and adjustments to capacity-nomination requirements where allocation is implicit.
Proposed rules focus on traceable physical supply
The distinction between physical electricity contracts and financial arrangements remains central to the proposed framework. Agreements supporting physical delivery could provide the basis for an actual-emissions claim, whereas a financial hedge or synthetic power-purchase agreement would not, on its own, demonstrate that the electricity associated with the claim was physically delivered.
Existing European Commission guidance already allows for a tripartite agreement involving a producer, an intermediary and an importer. The proposed changes therefore would not create the first possible role for an intermediary in a CBAM electricity transaction.
Instead, the proposed reform would provide broader recognition of a demonstrable contractual chain connecting generation, intermediary transactions and the final import.
For generators, this could make established electricity trading arrangements easier to align with CBAM requirements. For traders, the underlying generation and delivery records could become commercially important alongside purchase and resale documentation.
Current eligibility requirements remain in place
The changes remain proposals and do not replace the requirements currently applicable to electricity imports under CBAM. Parliament’s adoption of a negotiating position in September does not by itself remove existing eligibility conditions.
The key compliance issue remains whether the contractual structure provides an auditable link to the electricity for which actual emissions are being claimed.
An intermediary does not necessarily break that link, provided the relevant physical supply can be demonstrated. However, a sequence of invoices showing purchases and resales would not, by itself, establish that the electricity covered by an actual-emissions declaration was the electricity physically delivered.
