EU CBAM electricity reform is considering broader recognition of indirect physical power purchase agreements (PPAs), a change that could affect how electricity supply arrangements are structured across borders. The proposal aims to reflect the role of intermediaries in cross-border electricity markets while keeping requirements for verifiable supply. The reform is linked to a legislative file identified as COM(2025) 989.
Intermediaries and eligibility for actual emissions values
Utilities and electricity traders typically structure power supply, manage balancing, and intermediate credit between renewable generators and industrial consumers. Under the current framework, eligibility for actual electricity emissions values can be difficult when the physical PPA relationship requires a direct connection between the generating installation and the authorised CBAM declarant. This constraint can limit how contractual chains are designed.
The proposed reform would allow more flexible contractual chains involving intermediaries, provided the requirements for demonstrating electricity supply and emissions are met. The change could give industrial buyers in steel and aluminium more options to procure electricity through licensed suppliers rather than contracting directly with generators. It would also support aggregation of smaller renewable projects into portfolios aligned with industrial demand.
Traceability, data access, and counterparty risk
A more flexible PPA framework is described as removing a potential legal bottleneck, not replacing core evidence obligations. Electricity quantities still need to be demonstrated, source traceability must be maintained, and counterparty risk must be managed. The framework therefore continues to depend on verifiable information flows.
Lenders are expected to require clear data-access rights, documented allocation arrangements, and transparent responsibility for losses. Traders would need to show how electricity moves through the contractual chain and ensure that intermediated supply does not undermine evidence required under applicable CBAM rules. Contracts would also need to address financial consequences if regulatory requirements are simplified.
Where reporting processes or contractual arrangements must be revised, agreements would need to specify who benefits from resulting cost savings and who bears reasonable transition costs. This includes situations where systems or documentation requirements change due to the reform. The contractual allocation of those effects is presented as part of the compliance planning process.
CBAM certificate timing and treasury impacts
The compliance timetable creates separate treasury considerations for importers ahead of certificate sales and declarations. For 2026 imports, CBAM certificate sales are scheduled to begin on 1 February 2027. The first annual declaration and certificate-surrender deadline is set for 30 September 2027.
From 2027, the general certificate-pricing mechanism would shift to weekly averaging of auction prices. Quarterly holding requirements would become part of the treasury cycle. These features mean that CBAM financial effects cannot be assessed only by electricity costs or expected benefits tied to a renewable PPA.
Extension of CBAM scope to downstream steel and aluminium goods
The same legislative file proposes extending CBAM from 2028 to selected steel- and aluminium-intensive downstream goods. Support for expansion comes from both the Council of the EU and the European Parliament, though their proposed product lists differ. The final list remains subject to negotiation.
Manufacturers planning capital expenditure for 2027–2028 could use the proposed product lists as scenarios when designing data systems and electricity procurement strategies. Investments would still need flexibility because the scope has not been adopted yet, while existing coverage remains the operating baseline. This affects how companies prepare reporting capabilities ahead of any expanded scope.
Status of COM(2025) 989 in EU negotiations
COM(2025) 989 is described as a reform proposal that would change electricity default-value methodology and aspects of conditions for using actual emissions values. It would also address recognition of physical PPAs involving intermediaries, along with congestion and nomination framework elements. The proposal is not yet enacted law.
The Council adopted its negotiating position on 12 June 2026, while the European Parliament adopted its position on 15 September 2026. The file remains under interinstitutional negotiation and should not be treated as enacted legislation. For policy-sensitive investments, maintaining current-law controls until an adopted rule changes them is presented as an approach for preserving flexibility.
The likely beneficiary described in the proposal context is not a trader that obscures electricity sourcing, but a trader able to intermediate supply while preserving traceability, reliable data, and clear contractual accountability. This framing links the potential commercial impact to evidence requirements under CBAM rules rather than changing underlying obligations for verifiable information.