The Energy Community Secretariat urged closer coordination between Western Balkan electricity market integration and the European Union’s Carbon Border Adjustment Mechanism (CBAM) at the Berlin Process Summit in Montenegro on 22 October 2026. It warned that poorly aligned arrangements could discourage renewable investment and create new commercial divisions between EU and non-EU electricity markets.
The EU plans to integrate the region’s electricity markets before Western Balkan countries become full members of the bloc. The effort involves adopting EU electricity rules through the Energy Community framework, including market coupling, electricity market transparency, transmission-capacity allocation, balancing arrangements and regulatory alignment.
Successful implementation could support electricity price convergence and more efficient use of regional generation and interconnection capacity. But the integration and CBAM processes have separate legal requirements: interconnected markets do not, by themselves, remove obligations on electricity imported into the EU.
Electricity imports and CBAM conditions
Article 2(7) of the CBAM Regulation provides for a conditional exemption for electricity imports. Requirements include market coupling, regulatory alignment, climate-policy commitments and an assessment by the European Commission; market coupling alone does not automatically exempt imports.
During the transition, Western Balkan power exchanges may align more closely with European trading practices while electricity exported from the region remains subject to carbon-related obligations. Markets could therefore become more aligned in how they operate without removing the obligations applying to exports.
Transmission corridors connect Western Balkan electricity systems with Hungary, Croatia, Romania, Bulgaria and Italy. They support electricity supply, commercial trading and regional security of supply, but additional border costs could change how the links are used even when wholesale price differences would otherwise make trading attractive.
The issue could be especially relevant during periods of strong renewable generation, when low-cost Western Balkan electricity could serve demand in neighbouring EU countries. The treatment of exports will affect the commercial value of interconnectors, renewable generation and cross-border power purchase agreements.
For Serbia and Montenegro, the outcome could shape electricity export strategies, renewable-project financing and participation in European power markets for the remainder of the decade. Governments in the region face the parallel task of advancing integration and developing carbon-pricing, emissions-monitoring and verification arrangements for durable access to EU markets.
CBAM amendments remain under negotiation
The European Commission has proposed amendments to improve the treatment of imported electricity, including changes to emissions calculations and more flexibility for demonstrating actual emissions. The Council adopted its negotiating position in June 2026, and the European Parliament voted on amendments in September.
By early November 2026, the legislative process had not produced a final enacted replacement for the existing framework. The relevant references are Regulation (EU) 2023/956, Article 2(7), European Commission proposal COM(2025)989 and European Parliament procedure 2025/0419(COD).
The longer-term policy objective is for market integration and decarbonisation to reinforce one another rather than send conflicting investment signals. A central question is whether Western Balkan electricity will gain access to EU market prices on commercially equivalent terms before regulatory uncertainty weakens investment incentives.
