European Energy Traders demand transparent guidelines prior to the introduction of the Carbon Border Adjustment Mechanism (CBAM)

The European Commission's Directorate-General for Taxation and Customs Union has launched a public consultation on the potential downstream extension of the Carbon Border Adjustment Mechanism (CBAM) to cover electricity imports. This move aims to ensure a fair price on carbon-intensive electricity imports and facilitate low-carbon flows.

Energy Traders Europe, a key player in the industry, has participated in the consultation, emphasising the need for a proportionate carbon price and clarity about contracts for the delivery year 2026 from a customs perspective. They argue that the inclusion of electricity imports within the scope of CBAM should respect the principle of proportionality.

Imports should be reported based on the hourly confirmed scheduled quantities provided by Transmission System Operators (TSOs) to each market participant, linked back to the hourly data of the generation plant underpinning the Power Purchase Agreements (PPAs). The carbon intensity of electricity imports should be measured with an hourly granularity.

To ensure CBAM is fit for purpose for electricity imports, several improvements are crucial. These include promoting efficient use of cross-border interconnections, preventing renewable curtailments, and promoting low-carbon electricity production in third countries.

The physical network congestion criterion should be removed if an importer can prove hourly matching between electricity production and capacity nomination, and immediately cancelled guarantees of origin (GOs). All generation technologies should be considered when calculating the emission factor of third countries from which electricity is imported.

Energy Traders Europe also stressed the need for a thorough impact assessment and a clear legislative framework before the CBAM application to electricity imports begins. They argue that European businesses should not face excessive costs or administrative burdens due to the CBAM.

The public consultation on the CBAM also includes additional anti-circumvention measures and rules for electricity as a CBAM good. However, the organization that submitted a contribution to the European Commission's public consultation on July 1, 2021, is not explicitly stated in the provided search results.

Clarity is needed for contracts for the delivery year 2026, as they are already traded on electricity markets. Energy Traders Europe emphasised that clarity about how these contracts will be treated from a customs perspective is urgently needed.

The improvements and clarifications sought by Energy Traders Europe are crucial steps towards a fair and effective CBAM for electricity imports. The consultation period is open until August 26, and all interested parties are encouraged to participate.

European Energy Traders demand transparent guidelines prior to the introduction of the Carbon Border Adjustment Mechanism (CBAM)