DG TAXUD published the Technical Study on Indirect Emissions in the CBAM on 8 June 2026. The local report package contains five PDFs: a 107-page synthesis report, a 94-page Task 1 report on default values, a 105-page Task 2 report on actual indirect emissions and verification, a 180-page Task 3 report on scope extension and indirect cost compensation, and a 27-page stakeholder annex.

The study is evidence for Commission work. The technical question is how to price electricity embedded in imports without allowing resource shuffling, weak default values or double protection through indirect cost compensation.
Task 1 is the default-value problem. The study evaluates four ways to set the electricity emission factor used for indirect emissions. Option 1 uses the EU average grid emission factor. The synthesis rejects it because it is below the EU price-setting electricity source and gives no incentive for third-country grid decarbonisation. It would make the import adjustment weaker than the electricity-cost signal faced by EU producers when marginal fossil generation sets the power price. Option 2 uses the average emission factor of the country-of-origin electricity grid. Its strength is feasibility and incentive compatibility. If the exporting country decarbonises its whole grid, the CBAM indirect-emissions factor falls over time.
Instead option 3a uses the average fossil-only emission factor of the country of origin, option 3b uses marginal generation in the exporting country. The first is strength because it leakage prevention. It tracks fossil generation closer to the EU price-setting electricity source, so it gives a stricter signal for electricity-intensive production exposed to cross-border relocation. The latter is excluded by the study because of feasibility. Marginal generation requires dispatch modelling and electricity-market data that are not available or comparable across many third countries, especially where power markets are not liberalised.
Dataset choice is a second technical layer. The study screens public sources and warns that coverage, recency, transparency and methodology differ materially.

Task 2 is the actual-emissions problem. Section 6 of Annex IV gives two routes for using actual indirect emissions: a direct technical link or a PPA for an equivalent electricity amount.
The study is strict on accounting. It says an annual net balance should not be accepted because it does not reflect the electricity actually consumed for production. It also says clean electricity cannot be virtually stored in the grid. The emissions calculation must follow actual generation, actual consumption and transparent metering.
For direct technical links, the report notes that the CBAM Regulation uses the term but does not define it. The synthesis says the concept can cover direct lines and private grids, provided the evidence demonstrates electricity flows rather than a contractual label.
For PPAs, the study separates direct and sleeved arrangements, physical and virtual arrangements, and the role of energy attribute certificates. Physical PPAs are easier to defend than virtual PPAs because deliverability and metering can be connected to consumption. Virtual PPAs and standalone book-and-claim EAC approaches are weaker unless additional safeguards are imposed. EACs can help prevent double counting when bundled and cancelled in a credible system, but the study treats flexible EAC accounting as high risk for resource shuffling.
Temporal correlation and geographical correlation are the operational safeguards. Temporal correlation links claimed electricity to the production period. Geographical correlation limits claims to a credible power-market boundary. The report discusses monthly correlation until 2029 and hourly correlation from 2030 as a possible temporal path, consistent with the direction taken in other EU electricity-related rules.
The study works with reasonable assurance. If the declarant cannot provide a positive verification report for the actual-emissions route, default values should be used.

Task 3 is the scope-extension problem. The report starts from a key difference between free allocation and indirect cost compensation. Free allocation is part of the EU ETS architecture and follows a harmonised phase-out path for CBAM goods. ICC is State aid. It is funded and implemented by Member States, varies by sector and country, and depends on fragmented compensation data. That heterogeneity makes indirect-emissions extension harder than direct-emissions CBAM. If CBAM charges imports for indirect electricity emissions while EU producers continue receiving ICC for the same exposure, the design can create double protection. If ICC is removed immediately, EU producers face an abrupt electricity-cost shock. If CBAM waits until ICC has disappeared, imports face no border adjustment for indirect emissions during the transition.

The study maps five technical solution families. The first (TS1) is immediate full CBAM coverage. TS1a keeps ICC and creates overlap. TS1b removes ICC immediately and creates the sharpest adaptation burden. The second solution (TS2) charges only the share not covered by ICC. TS2a uses the 75% maximum aid-intensity proxy. TS2b calculates actual ICC paid by sector or goods. TS2c estimates a realistic maximum aid intensity where actual compensation data are incomplete. TS3 phases CBAM in while ICC phases out. TS3a uses a uniform path. TS3b gives differentiated treatment to high-exposure sectors or goods. TS4 starts CBAM only after ICC has been fully phased out. The study treats it as weak during the transition because indirect emissions are not priced at the border while ICC is withdrawn. TS5 keeps ICC alongside CBAM but adjusts the compensation level to account for CBAM coverage. The Task 3 update links this logic to the 2026 fertiliser State Aid development, because the problem can also run in reverse: a sector already covered by CBAM may later become ICC-eligible.

Scope extension cannot be evaluated separately from Task 1 and Task 2. For importers, a lower reported indirect-emissions value will need electricity evidence that survives verification, rather than a renewable claim in a supplier declaration.