Changes to the importing or declaring legal entity within the same corporate group can affect how long-term electricity export power purchase agreements are treated under the EU Carbon Border Adjustment Mechanism (CBAM). The shift can require reassessment of contractual eligibility, electricity nominations, and the evidence used to support installation-specific actual emissions.
Under the current CBAM framework, default emissions values are used for imported electricity unless all conditions for using installation-specific actual emissions are met. Those conditions include a qualifying physical PPA relationship, an applicable network condition, and a generating installation below a 550 g CO2/kWh fossil-fuel-origin emissions threshold. Additional requirements include firm nominations matched with production in periods of no more than one hour and independent verification supported by at least monthly interim evidence.
Evidence requirements for physical electricity supplies
Commission Implementing Regulation (EU) 2025/2547 sets out contractual evidence requirements for physical electricity supplies under CBAM. A qualifying physical PPA can be concluded directly between the producer and the relevant authorised CBAM declarant. Where an intermediary is involved, the physical supply must be supported by one coherent three-party contract.
Successive bilateral resales do not automatically create the same evidentiary chain. The authorised declarant’s identity must therefore be assessed together with the contractual relationship rather than treated as a change that can be made without additional review. This includes ensuring that invoicing to a different group affiliate does not replace or validate customs and declarant-linked documentation.
The declarant’s identity is linked to customs records and EORI details, as well as the PPA relationship, capacity and nomination arrangements, and the declarant-specific evidence file. When those elements are not aligned after an importer change, the documentation supporting installation-specific actual emissions may need to be rechecked. Contract managers are expected to treat such changes as more than routine administration.
Contract review scenarios when importing entities change
A contractual review should test four scenarios: a normal delivery, a supply shortfall, a counterparty default, and a change of importer. Each scenario should allow for a calculable settlement and a recoverable evidence trail. If the contract cannot establish both settlement mechanics and an evidence path under these scenarios, additional drafting is required.
Corporate steel and aluminium groups face added complexity when central procurement purchases electricity for multiple industrial sites or when a trading affiliate imports electricity on behalf of manufacturing operations. In these cases, the electricity supply contract and the emissions documentation for resulting industrial products may involve different legal entities. The relationships need to remain distinct and properly documented for CBAM purposes.
Direct agreements and lender step-in provisions are intended to preserve contractual and data-access rights if the offtaker structure changes. Assignment, change-of-control, and substitution clauses that may appear standard in conventional energy contracts can require further scrutiny where CBAM qualification depends on specific conditions. The review focus includes whether replacement structures preserve both contractual rights and access to relevant data.
Lender approvals and continuity of rights
Amending a PPA or replacing a counterparty may require approval from a lender or security agent. These consent requirements can affect timing for changes in importing structures. If conversion is not planned in advance, consent constraints can create risk of interruption to an existing revenue stream.
Contract managers are expected to verify that parties remain correct after changes, including title transfers, cash flows, data rights, and any fallback settlement formula. The review should determine whether the replacement entity can operate within both the contractual framework and the evidentiary structure required for intended CBAM treatment. This includes confirming that documentation expectations continue to be met after any proposed importer change.
Electricity methodology reform under negotiation
A separate legislative proposal, COM(2025) 989, would change how electricity is treated under CBAM. The proposal includes adjustments to the methodology for default values and parts of the conditions governing actual emissions values. It also would broaden how physical PPAs involving intermediaries are defined and modify elements related to 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 rather than being enacted legislation. As a result, current transactions should be assessed under existing rules until changes take effect.
Until applicable rules change, replacing an importer or authorised declarant should be treated as a controlled transaction event requiring documented review rather than a routine back-office amendment. This approach aligns with how CBAM qualification depends on eligibility conditions tied to evidence requirements for physical electricity supplies.