Wholesale electricity trading typically uses fungible power, portfolio aggregation and successive resales. Under the EU Carbon Border Adjustment Mechanism (CBAM), an importer seeking installation-specific actual emissions must meet additional evidence requirements. A key contractual issue arises when a resale chain no longer links the original generating installation to the authorised CBAM declarant.
When the required conditions are not met, default emissions values are used for imported electricity. Installation-specific actual emissions depend on multiple elements being satisfied. These include a qualifying physical power purchase agreement (PPA), the applicable network condition, and a generating installation below the 550 g CO2/kWh fossil-fuel-origin threshold.
The conditions also require firm electricity nominations matched with production in periods of no more than one hour. Independent verification must be supported by at least monthly interim evidence. If these requirements are not fully satisfied, the default route remains the standard approach for CBAM treatment.
How wholesale resales differ from installation-specific CBAM claims
A trader may buy renewable electricity through a portfolio or net positions and resell power at a trading hub under ordinary wholesale market arrangements. Such transactions can be settled commercially without necessarily creating the contractual evidence needed for installation-specific actual-emissions treatment under CBAM. The evidence gap becomes relevant when the final importer attempts to claim actual emissions tied to a particular generating installation.
In those cases, the contractual chain may fail to demonstrate the producer-to-declarant relationship required by current rules. This does not prevent conventional electricity resales from taking place. It instead distinguishes ordinary wholesale transactions from imports seeking a specific CBAM emissions treatment.
Industrial buyers using multi-supplier procurement are therefore required to separate a general renewable electricity statement from evidence that supports a qualifying physical electricity-import arrangement. The distinction matters for compliance purposes under CBAM when installation-specific actual emissions are claimed.
Contract testing, legacy portfolios and financing constraints
Contract reviews should test how an arrangement works across several delivery scenarios. These include normal supply, shortfall, counterparty default and a change of importer. Each scenario should allow a calculable settlement and a recoverable evidence trail.
If either settlement calculation or evidence recovery is missing, further contractual work is required. Existing contracts should be prioritised based on value at risk, feasibility of amendment, and availability of supporting evidence. Long-term positions linked to identified generating installations may justify restructuring, while anonymous spot purchases and short-term positions may be handled using applicable default values.
Financing arrangements can add complexity to contract changes. Amending a PPA or replacing a counterparty may require approval from a lender or security agent. Contract conversion therefore needs to account for financing consents and be scheduled early enough to avoid disrupting an existing revenue stream.
Arrangements should be released only when parties, title transfers, cash flows, data rights and the fallback settlement formula can be reconciled. This requirement applies without relying on informal assumptions in place of contractual terms.
Separate CBAM reform proposal affecting electricity treatment
COM(2025) 989 is a separate CBAM reform proposal that would change electricity treatment. It includes changes to the methodology for default values and parts of the conditions for using actual emissions values. The proposal would also broaden physical PPAs to include arrangements involving intermediaries.
The reform proposal would revise the framework governing congestion and electricity nominations as well. 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 enacted legislation.
Any assessment of potential restructuring based on this proposal must be separated from current-law pricing and compliance decisions. Restructuring under the proposed framework remains conditional on final legislation and its applicable requirements.
Ordinary electricity resale remains permissible under CBAM rules. The compliance distinction is that a conventional resale transaction is not equivalent to an arrangement that supports installation-specific actual emissions for CBAM purposes.