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). Beyond contract administration, such changes may trigger reassessments of eligibility, electricity nominations, and the evidence used to support installation-specific actual emissions.
Under the current CBAM framework, default emissions values apply to imported electricity unless all conditions for using installation-specific actual emissions are met. The conditions include a qualifying physical PPA relationship and an applicable network condition. They also require a generating installation below 550 g CO2/kWh fossil-fuel-origin emissions, firm nominations matched with production in periods of no more than one hour, and independent verification supported by at least monthly interim evidence.
Regulation 2025/2547 and requirements for physical supply evidence
Commission Implementing Regulation (EU) 2025/2547 sets out contractual evidence requirements for physical electricity supplies. A qualifying physical PPA can be concluded directly between the producer and the relevant authorised CBAM declarant. If an intermediary is involved, the physical supply must be supported by one coherent three-party contract.
Successive bilateral resales do not, on their own, create the same evidentiary chain. As a result, the identity of the authorised declarant needs to be assessed together with the contractual relationship. The declarant’s identity is treated as more than an administrative detail that can be changed without additional review.
The authorised declarant’s identity links to customs records and Economic Operators Registration and Identification (EORI) details. It is also connected to the PPA relationship, capacity and nomination arrangements, and a declarant-specific evidence file. Issuing an invoice to a different group affiliate does not automatically update or validate those elements.
Contract review scenarios for importer or declarant changes
A contractual review should test four scenarios: a normal delivery, a supply shortfall, a counterparty default, and a change of importer. Each scenario should result in a calculable settlement and a recoverable evidence trail. Where the contract cannot establish both outcomes, additional drafting is required.
Corporate steel and aluminium groups may face added complexity when electricity is procured centrally for multiple industrial sites. In such cases, a central procurement company may purchase electricity while different legal entities handle emissions documentation for resulting industrial products. The electricity supply contract and emissions documentation must remain distinct and properly documented.
The need for direct agreements and lender step-in provisions can increase when offtaker structures change. Assignment, change-of-control, and substitution clauses that are routine in conventional energy contracts may require additional scrutiny where CBAM qualification depends on specific conditions. These arrangements are relevant to preserving contractual rights and data-access rights.
Lender approvals and continuity of contractual rights
Amending a PPA or replacing a counterparty may require approval from a lender or security agent. Consent requirements can affect when importer structure changes occur. They can also create risk of interruption to an existing revenue stream if conversion is not planned in advance.
Contract managers are expected to verify that parties, title transfers, cash flows, data rights, and fallback settlement formulas remain consistent after proposed changes. The review should determine whether the replacement entity can operate within both the contractual structure and the evidentiary structure needed for intended CBAM treatment.
Electricity treatment reform proposal under COM(2025) 989
A separate legislative proposal, COM(2025) 989, would change electricity treatment under CBAM. It addresses methodology for default values and parts of the conditions governing actual emissions values. The proposal would also 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. When assessing current transactions or pricing long-term contracts, it should not be treated as already in force.
Until applicable rules change, replacing an importer or authorised declarant should be treated as a controlled transaction event requiring documented review. It should not be handled as a routine back-office amendment under existing requirements.