Brussels, October 27, 2026 — The European Commission has proposed changes to the Carbon Border Adjustment Mechanism (CBAM) electricity rules to address differences between explicit cross-border capacity allocation and implicit allocation through coupled electricity markets. The amendment could make it easier for electricity traded through coupled markets to qualify for actual-emissions treatment. Eligibility would depend on the final framework establishing a verifiable link between generation, market allocation and EU imports.
The proposal is relevant as South-East European electricity markets move toward deeper integration with the European Union. Rules that rely on individually allocated interconnection capacity and firm nominations may not fully reflect how cross-border electricity is traded when capacity is incorporated into market-clearing algorithms. The Commission’s approach targets that gap while keeping the attribution of electricity to the relevant generating installation and importer as a requirement.
Nomination condition under current CBAM electricity rules
Under the current framework, claiming actual emissions requires firm nomination of allocated interconnection capacity by the responsible transmission system operators (TSOs). Plant production and nominated capacity must be matched within periods of no more than one hour. This condition links the operational output of a plant to the nominated cross-border capacity for the relevant period.
The Commission’s strengthening proposal would adapt this condition for cases involving implicit capacity allocation. In such arrangements, market participants do not obtain and nominate traditional capacity rights in the same manner as under explicit allocation. The precise requirements for how this adaptation would work are subject to negotiations between EU institutions.
Implicit allocation and verification evidence in coupled markets
In coupled markets, evidence supporting a CBAM electricity claim is expected to rely more heavily on exchange transactions and bidding-zone results. Verification would also draw on flow and allocation records, plant output, and the contractual chain. Companies may therefore need to retain detailed market data rather than rely primarily on capacity-auction certificates.
The verification approach would also need to address the risk that the same low-carbon generation is allocated more than once. The final methodology would have to define how electricity and emissions attributes are traced through market processes and contractual arrangements. This tracing requirement is intended to support a consistent attribution of emissions-related characteristics to specific imports.
Metering, scheduling, and contract information are expected to be handled as a connected record set. Even where generation data is accurate, a claim may be challenged if timestamps, interconnector nominations, or buyer allocations do not reconcile. Monthly exception reporting is described as a tool to identify missing hours, route changes, curtailment, and balancing corrections before year-end verification issues arise.
Hourly matching and potential value of actual-emissions treatment
If final legislation accommodates implicit allocation, market coupling could increase the volume of low-emissions electricity eligible for actual-emissions treatment under CBAM. It could also support more standardised products supplied through exchanges and aggregators, reducing reliance on bespoke capacity arrangements. The commercial impact would depend on the evidentiary requirements set out in the final framework.
Companies are expected to assess economics on an hourly basis where rules require hourly matching. The potential value of a qualifying megawatt-hour can be assessed by comparing CBAM certificate exposure calculated using an applicable default emissions factor with exposure based on verified emissions values from the generating installation. Any difference would need to be weighed against additional costs related to scheduling controls, data retention, verification, and contract administration.
The proposal text indicates that where benefits do not cover those added costs, relying on applicable default treatment may be commercially preferable to maintaining a bespoke compliance chain. Market integration alone would not guarantee eligibility for actual-emissions treatment under CBAM electricity rules. The eligibility outcome would remain tied to whether required evidence can be substantiated under the final methodology.
Relevance for Western Balkans market integration
The issue is described as particularly relevant to the Western Balkans as regional electricity integration advances while cross-border interconnections remain central to commercial trading. A CBAM framework that accommodates both explicit and implicit capacity allocation could allow exporters to participate in coupled markets without automatically losing access to installation-specific emissions treatment due to market design features.
Preparation is highlighted for Nominated Electricity Market Operators (NEMOs), TSOs, exchange traders, utilities, aggregators, and EU electricity importers. Data systems introduced during implementation are expected to capture exchange and allocation information in formats that can be mapped to generating-plant output and importer declarations. This mapping requirement is intended to preserve an audit trail as borders transition from explicit capacity arrangements toward implicit allocation.
Timing of application and scenario planning for 2026 imports
The Commission proposal can inform scenario analysis and contract planning alongside positions from the Council and European Parliament. Proposed provisions must not be applied to current declarations before relevant amending legislation takes effect. A two-scenario model is described as a way to distinguish nomination and evidence requirements applicable to 2026 imports from those that may apply under an amended framework.
The compliance file is expected to use consistent underlying records across electricity procurement, generation, customs, and finance. This consistency is intended to allow commercial managers and verifiers to understand the emissions claim, operational evidence supporting it, and conditions under which outcomes could change. Before finalising a transaction or reporting period, companies should connect contract terms with generating installation details, meter readings, schedules, and cross-border records while documenting who approves each assumption.
A fallback should also be established for situations where preferred emissions treatment cannot be substantiated. Defining such a fallback in advance is described as a way to identify potential exposure before challenges by a verifier, customs authority, or an authorised CBAM declarant occur. Market coupling is presented as pushing CBAM electricity rules toward an evidence model reflecting how capacity is allocated in integrated markets.
The current nomination requirements nevertheless remain applicable until any amendment is adopted under the final legislative process.