Fasteners, wire, springs and other fabricated steel products are positioned closer to final customers than primary steel. For their manufacturers, electricity procurement is increasingly treated as part of a broader competitiveness approach rather than only a utility purchasing decision. The European Commission’s proposed expansion of the EU Carbon Border Adjustment Mechanism (CBAM) is expected to affect this downstream segment.
The proposal would bring selected steel- and aluminium-intensive downstream goods within CBAM scope starting in 2028. This would extend the mechanism beyond the current coverage for certain iron-and-steel and aluminium products listed in Annex II. The existing and proposed rules are presented as separate elements within the same legislative package.
CBAM scope for Annex II goods and the role of purchased electricity
For iron-and-steel and aluminium goods currently listed in Annex II, the existing CBAM calculation covers direct emissions. Renewable electricity procurement can provide operational, customer, financing and decarbonisation benefits without automatically lowering certificate liability through purchased-electricity emissions. Current CBAM treatment therefore remains distinct from how renewable electricity benefits may be used elsewhere.
The same legislative file also proposes extending CBAM downstream coverage from 2028 to selected steel- and aluminium-intensive products. Support for expansion is indicated by both the Council and the European Parliament, but their proposed product lists differ. Those lists remain subject to negotiation, with the existing scope continuing as the operating baseline until final adoption.
Emissions data needs for manufacturers under expanded downstream coverage
If the expansion proceeds, EU importers will require emissions information from manufacturers that may not yet have mature CBAM data systems. Renewable electricity contracts can support corporate decarbonisation efforts and product-carbon-footprint work. However, evidence tied to such contracts must be linked to production and product allocation rather than used as generic plant-wide proof.
Energy suppliers, traders and independent power producers (IPPs) are described as potential contributors to product-level evidence. Their role can include providing granular generation data, relevant Guarantees of Origin (GoOs), and stable long-term pricing. Manufacturers would then integrate these inputs into their own production records and customer-facing documentation.
Product allocation controls and evidence transfer limits
The evidence framework described in the proposal emphasises that responsibility for product claims should not be shifted to the electricity supplier. Instead, manufacturers are expected to incorporate supplier information into production records and customer-facing evidence. This approach is intended to keep claims tied to specific goods rather than relying on electricity procurement alone.
The creation of demand is expected for energy suppliers, engineers and verifiers serving smaller industrial sites. Aggregated renewable procurement may reduce transaction costs, while robust installation records, metering and product-allocation controls are highlighted as ways to keep claims specific and defensible. Where customers request low-carbon steel, producers should define the product boundary and allocation methodology before attributing renewable-electricity benefits to particular goods.
Electricity evidence in financing decisions
Banks financing export manufacturers may increasingly assess whether electricity contracts, supplier data and customer reporting systems are sufficiently robust for sales into the EU market. In this context, electricity-related evidence could become relevant not only for sustainability reporting but also for working-capital facilities and credit assessments. Steel buyers are also advised to evaluate renewable electricity against a defined energy, customer or decarbonisation benefit.
The same guidance notes that buyers should not treat renewable electricity as a generic CBAM saving when the current product methodology does not support that linkage. This distinction is presented as important for aligning renewable-electricity claims with what CBAM-related calculations can reflect under existing rules.
Separate proposal COM(2025) 989 on electricity treatment
A separate legislative proposal, COM(2025) 989, would revise electricity treatment in ways that could affect how default values and actual values are handled. It would also broaden physical power purchase agreements to include intermediaries. The proposal additionally changes elements of the congestion and nomination framework.
The Council adopted its negotiating position on 12 June 2026, followed by the European Parliament on 15 September 2026. The proposal remains under interinstitutional negotiation and is not treated as enacted law. As CBAM coverage extends deeper into finished goods, electricity procurement may become more integrated into supply-chain planning alongside process emissions, material inputs and product-specific requirements applicable to each item.