Albania is considering the introduction of an emissions trading system as exporters face increasing exposure to the European Union’s Carbon Border Adjustment Mechanism (CBAM). The proposal marks a potential move towards domestic carbon pricing, although no functioning emissions market or agreement with the EU has yet been established.
The country’s latest climate pledge, submitted to the United Nations climate convention on 16 September, outlines a future emissions trading system that would be aligned with EU standards. The proposed framework could potentially be designed to allow a future link with the EU Emissions Trading System (EU ETS).
The document does not, however, create an operating carbon market. It also does not establish an agreed connection between an Albanian emissions trading system and the EU ETS.
Albania’s proposal within the Western Balkans
The planned carbon-pricing framework comes as countries across the Western Balkans face varying levels of preparedness for the EU’s CBAM. Carbon Pulse reported on 2 October that preparations for the mechanism remained uneven across the region, with Albania’s proposal forming part of wider efforts to respond to the EU’s carbon-border rules.
Albania’s updated nationally determined contribution also separates domestic emissions-reduction measures from international carbon trading. The country states that it will achieve its national target through domestic measures, without relying on international carbon credits.
At the same time, Albania envisages participation in voluntary cooperation under Article 6 of the Paris Agreement, including the sale of carbon credits through 2035.
Carbon credits remain separate from emissions trading
The planned participation in international carbon-credit markets would operate separately from a domestic emissions trading system. The sale of credits generated through emissions-reduction projects does not, by itself, create the installation-level obligations, allowance market or enforcement arrangements needed to operate an emissions trading scheme.
For Albanian exporters, the eventual impact of domestic carbon pricing will therefore depend on how any future system is designed and implemented.
Key elements would include the installations covered by the system, the point at which carbon liabilities begin, the methods used to measure emissions and whether companies ultimately bear a domestic carbon price.
A future Albanian emissions trading framework could provide businesses with a domestic structure for managing carbon-related costs. However, its potential impact cannot currently be treated as a guaranteed reduction in the carbon costs faced by exporters under the EU’s CBAM.
Legislation and implementation remain outstanding
The next significant stage for Albania will be the development of legislation and implementation measures rather than the climate pledge itself.
Until the scope, obligations, emissions-monitoring requirements, pricing arrangements and enforcement structure of a future system are established, the proposal does not create a new carbon-pricing entitlement for Albanian exporters.
Albania’s climate pledge therefore establishes a potential direction towards domestic carbon pricing, while the practical implications for exporters will depend on subsequent legislation and implementation.
