Steel producers in the Western Balkans face increasing pressure to decarbonise their energy supply and meet EU customer requirements. Renewable electricity procurement is being discussed alongside EU carbon border adjustment rules. The link between power purchases and current CBAM certificate costs is not automatic for every steel product.
CBAM methodology: direct emissions drive current liabilities
For iron-and-steel and aluminium goods listed in Annex II of the CBAM framework, the calculation focuses on direct emissions. Emissions associated with purchased electricity therefore do not automatically reduce the certificate liability for these goods. This applies even when renewable electricity provides substantial operational and environmental benefits.
For covered steel products, determining CBAM liability depends on the production route, fuels, process emissions, and the precursor chain. Electricity procurement can still support decarbonisation and commercial competitiveness. However, its benefits need to be distinguished from emissions categories that legally enter the current CBAM calculation.
Producers are advised to start by classifying the product and mapping its production route. The relevant precursors also need to be identified before assessing which emissions categories apply. Only after that step should electricity procurement be connected to a specific regulatory or customer benefit.
Commercial value of renewable power for steel operations
Renewable electricity can reduce operating emissions and support corporate procurement requirements. It can also improve product-level information supplied to customers. In addition, it may strengthen the economics of electric arc furnace (EAF) production.
A domestic renewable power purchase agreement (PPA) can hedge wholesale electricity price exposure. It can also provide long-term demand for renewable generation projects. These benefits are described as creating a commercial basis for procurement independently of any immediate reduction in CBAM certificate liability.
Banks assessing PPAs are expected to review demonstrable value factors. These include electricity price stability, counterparty credit quality, renewable attributes, operating resilience, and customer demand. The text also notes that a premium based only on unsubstantiated claims of current CBAM savings is a weaker basis for financing.
Separating electricity procurement reporting from CBAM emissions data
Steel companies can combine competitive renewable electricity pricing with Guarantees of Origin (GoOs). They can also use metering records for customer reporting. At the same time, they can improve data availability on direct process emissions and precursor emissions for CBAM purposes.
Keeping these elements distinct is presented as a way to avoid confusing environmental attributes or customer-facing claims with the emissions categories used in the current certificate calculation. For steel buyers, the decision rule described is to pay for renewable electricity against a defined energy, customer, or decarbonisation benefit. This approach is contrasted with relying on a generic CBAM saving not established by the current product methodology.
COM(2025) 989 proposes changes affecting future electricity treatment
A separate legislative proposal, COM(2025) 989, would revise electricity treatment. It includes changes to the methodology for electricity default values and conditions governing actual values. The proposal would also broaden physical PPAs to include intermediaries and modify elements of the congestion and nomination framework.
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 is not treated as enacted legislation. The same legislative file proposes expanding downstream CBAM coverage from 2028 to selected steel- and aluminium-intensive goods.
Both institutions support an expansion, but their proposed product lists differ and remain subject to negotiation. Until final legislation is adopted, the existing scope is described as the operating baseline. The text links green electricity opportunities to benefits that producers, customers, and lenders can substantiate while assessing current CBAM liabilities separately from potential future regulatory changes.