From 1 January 2026, the EU’s Carbon Border Adjustment Mechanism (CBAM) enters its binding phase, and electricity is explicitly in scope. Electricity is treated differently from other CBAM goods, with its rules set out in specific annexes of the regulation rather than in the core articles. This article looks only at electricity under CBAM to help energy buyers and sellers understand when these rules are relevant. 

For companies exposed to CBAM, electricity also presents a clear opportunity. Where electricity supply is cleaner than grid averages, and that can be evidenced in line with the regulation, CBAM costs can be lower.

“Procurement choices, delivery structures, and data quality can translate into a competitive advantage under CBAM.”
– Carolyn Addy, Renewabl

TL;DR

CBAM does not change how electricity is bought.
It changes which electricity data can affect border costs.

In practice:

  • default values reflect grid-average carbon intensity
  • actual values allow deviation from those averages, where proven
  • data quality determines which value applies

For companies exposed to CBAM, this opens up a practical opportunity. Where electricity supply can be shown to be cleaner than grid averages – using the evidence the regulation requires – the emissions figure used for CBAM can be lower. That can translate into lower costs, and a stronger position compared with companies that rely on defaults.

What is CBAM, and what changes from January 2026

The Carbon Border Adjustment Mechanism (CBAM) is the EU’s system for applying a carbon cost to certain imports entering the European market. Its purpose is to reflect the carbon emissions linked to production outside the EU, in line with the EU’s internal carbon pricing.

Alongside goods such as cement, iron and steel, fertilisers, aluminium, and hydrogen, electricity is also covered under CBAM. 

CBAM has been introduced in phases:

  • Transitional phase: October 2023 – December 2025
    Emissions are reported, but no financial adjustment applies.
  • Definitive phase: From 1 January 2026
    Reported emissions values are used to determine CBAM costs, based on methodologies set out in EU law.

From 2027, companies importing electricity or other CBAM-covered goods into the EU will need to file a yearly CBAM declaration (by 31 May) for the previous year. This sets out how much was imported, the emissions linked to those imports, and how many CBAM certificates are required. The certificates must be surrendered by the same deadline each year. If too few are surrendered, a penalty applies.

“From January 2026 onwards, emissions values are no longer purely informational under CBAM. They now have financial consequences.”
– JP Cerda, Renewabl

By 2030, CBAM’s scope is expected to extend to all product groups covered by the EU ETS. By 2034, 100% of embedded emissions of CBAM goods will be covered.

Default values vs actual values for electricity under CBAM

Grid averages apply by default

CBAM’s treatment of electricity is built around a strict hierarchy: there is a default method, and there is an option to use actual emissions values. The default applies automatically. The actual values can only be used if specific conditions are met. There is no discretion to choose between the two approaches.

The default method uses the average carbon intensity of the electricity grid in the country of origin. This approach is deliberately simple. It avoids the need for detailed evidence in every case. However, as grid averages reflect the overall mix of generation on a system – including the cleanest and the dirtiest hours – they do not account for how electricity may have been supplied to a specific facility at a specific time.

For companies that rely on electricity supplied in a way that is cleaner than the grid average, default values can materially overstate emissions. 

At low volumes, that difference may not matter. At scale, especially for electricity imports or electricity-intensive production linked to EU trade, it can translate into meaningful CBAM costs.

When and why actual embedded emissions matter

This is where actual values come in.

To use actual embedded emissions, the regulation does not ask for general claims about renewable sourcing or annual coverage – it focuses on physical delivery and time alignment. 

In simple terms, electricity must be shown to reach the relevant facility in the same hour it is generated, supported by contractual and metering evidence. Companies that can meet these conditions are allowed to move away from grid averages and lower their reported emissions under CBAM. 

The regulation does not require companies to pursue this path. But for those exposed to CBAM costs and able to demonstrate time-aligned physical delivery, the difference between default values and actual emissions directly affects competitiveness.

“CBAM does not ask whether electricity is “clean” in principle. It asks whether lower emissions can be proven in practice. Without that proof, grid averages apply by default.”
– Carolyn Addy, Renewabl

How CBAM costs for electricity are determined (and why they can change)

1. If you import electricity into the EU

If your operations are in the EU and you physically import electricity from a country outside the EU, CBAM applies directly to that electricity. To be able to use actual values over default, the following five conditions must be met: 

If you want to use actual values for imported electricity under CBAM, the evidence package includes:

  • a physical-delivery PPA covering the volume claimed (and, if applicable, the structure through an intermediary)
  • proof of direct connection to the Union transmission system or an hourly no-congestion attestation
  • data confirming the generating installation is ≤ 550 g CO₂ (fossil) / kWh
  • cross-border nomination documentation across origin/destination/transit TSOs
  • smart metering production data showing alignment to the nominated period, with a measurement period not exceeding one hour
  • monthly interim reporting to support accredited verification

2. Electricity used in CBAM-covered goods imported into the EU

CBAM also applies indirectly where electricity is used to produce goods that are imported into the EU (cement, iron and steel, aluminium, fertilisers, and hydrogen). 

There are two routes to apply actual values over default: 

Route 1: Direct technical link between generation and production

Actual values may be used where a direct technical link exists between the electricity-generating installation and the installation producing the CBAM-covered good.

Evidence focuses on:

  • a physical connection between installations
  • hourly metered electricity production
  • hourly metered delivery to the goods-producing installation
  • contractual or intra-company arrangements where multiple installations are involved

This route applies where electricity supply is physically integrated with the production process.

Route 2: Physical PPA for electricity used in production

Alternatively, actual values may be used where the operator of the goods-producing installation has concluded a PPA for physical delivery with a producer of electricity in a third country.

Evidence focuses on:

  • contractual proof of the PPA
  • hourly metered production by the generating installation
  • hourly metered delivery of an equivalent amount of electricity to the goods-producing installation
  • proof of a physical grid connection between the two installations

Unlike direct electricity imports, this route does not involve interconnector nominations or congestion tests, as the electricity is not traded across the border.

When CBAM does not apply

CBAM’s electricity rules are narrow, and they are often overstated or confused with other frameworks. To avoid misinterpretation, it helps to be clear about what CBAM does not do.

  • CBAM does not apply to certificates or virtual PPAs.
    Buying Energy Attribute Certificates (EACs) such as GOs or REGOs, or signing virtual PPAs will not be accepted as sufficient proof of renewable electricity consumption to reduce CBAM liability. Under CBAM, the ability to move away from default grid values depends on evidence of physical electricity delivery and how emissions are calculated, not on certificates or contractual claims alone.

  • CBAM does not replace Scope 2 accounting or sustainability reporting.
    CBAM is a border mechanism. It does not change how companies report electricity emissions under the GHG Protocol, CSRD, or other corporate reporting frameworks. However, electricity data used for reporting can also become relevant where CBAM exposure exists.

  • CBAM does not require all electricity to be matched hour by hour.
    Time alignment only matters in specific cases where actual values are used instead of default grid averages. In those cases, the ability to demonstrate time-aligned delivery can materially change CBAM outcomes – and, by extension, competitiveness.
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  • CBAM does not apply to electricity produced and consumed entirely within the EU.
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  • CBAM does not mandate specific contracts or technologies.
    It does not require PPAs, storage, or renewable technologies. It sets conditions for when certain data can be used.

How Renewabl supports CBAM-ready electricity data

CBAM increases the value of electricity data that is hourly, structured, and defensible. That is where Renewabl can help.

1) Centralise electricity data

Bring consumption, contracts, and supply data into one place, at hourly resolution. This reduces manual work and creates a clear, auditable baseline.

2) Identify where stronger electricity evidence could improve CBAM outcomes

See when consumption aligns with cleaner electricity and when fossil-heavy hours drive emissions. This shows where grid averages may overstate emissions, and where eligible, evidenced actual values could lead to a lower reported emissions value under CBAM.

3) Turn eligibility into usable evidence 

Where CBAM allows actual values, Renewabl helps organise contracts, metering, and generation data so time-aligned delivery can be assessed, documented, and maintained over time.

4) Improve hourly matching through procurement

Use data insights to inform tenders and sourcing decisions, so procurement responds to where gaps actually sit, rather than operating in isolation.

5) Cover UK–EU operations in one view

Manage electricity data across jurisdictions, sites, and suppliers in a single platform - with clarity on where CBAM exposure exists and where it does not.

In short: Renewabl helps turn electricity procurement into hourly data that stands up when CBAM makes electricity emissions matter.

Does CBAM still apply to the UK if ETS schemes are linked?

A common question from UK-based renewable energy sellers is whether CBAM will still apply if the UK and EU link their carbon markets.

At the time of writing, the UK and EU operate separate emissions trading systems, and there is no CBAM exemption for the UK from the start of the binding phase in January 2026. 

Discussions about linking the UK ETS and the EU ETS have been raised, but formal negotiations have not yet begun. Even if linking were to happen in the future, it would not automatically remove CBAM. The CBAM framework is designed around carbon price equivalence, not just the existence of an ETS. If carbon prices differ between jurisdictions, CBAM can still apply to reflect that difference.

In practical terms, this means:

  • UK electricity and UK-produced goods are treated as third-country inputs under CBAM today
  • grid averages apply by default unless the conditions for actual values are met
  • any future ETS linking would require separate decisions and timelines, and would not retroactively change CBAM obligations

For companies operating across the UK and EU, the safest assumption for now is that CBAM applies as written from January 2026, regardless of potential future ETS alignment.

Conclusion: Why CBAM is a big deal for energy transparency

CBAM is narrow in scope, but it is influential in what it signals about credible electricity data.

For electricity, CBAM draws a clear line between averages and evidence. Grid averages remain the default. Moving away from them depends on whether electricity supply can be shown, in practice, to align with real consumption in time and delivery. Where that evidence exists, outcomes can change materially.

This logic mirrors a broader shift now to better visibility across energy and carbon accounting. Updates to the GHG Protocol, alongside CBAM, point in the same direction: greater emphasis on when and where electricity is delivered, not just how much is contracted on an annual basis. In both cases, transparency and data quality become decisive.

Seen together, these developments are not about imposing a single model for electricity procurement. They are about rewarding systems that can clearly show how electricity supply relates to real-world demand. That makes energy transparency - delivery, timing, and data - increasingly central to competitiveness, even when the underlying rules remain tightly defined.