The Energy Community Secretariat called for Western Balkan electricity market integration to be better aligned with implementation of the Carbon Border Adjustment Mechanism (CBAM), warning that poorly coordinated arrangements could deter renewable investment and create new commercial divisions between EU and non-EU markets. The call came at the Berlin Process Summit in Montenegro on 22 October 2026.
The EU aims to integrate Western Balkan electricity markets before the countries achieve full membership, while they progressively adopt EU electricity rules through the Energy Community framework. The process covers market coupling, transparency, transmission capacity allocation, balancing arrangements and regulatory alignment. Greater integration could improve price convergence and the use of regional generation and interconnection capacity.
Market coupling does not remove CBAM obligations
Electricity market integration and CBAM compliance operate under different legal requirements. Electricity imported into the EU remains subject to the applicable CBAM framework unless a specific legal exemption is available. Article 2(7) of Regulation (EU) 2023/956 provides for a conditional electricity exemption, with conditions including market coupling, regulatory alignment, climate-policy commitments and assessment by the European Commission. Market coupling alone does not grant an exemption.
The European Commission proposed amendments to CBAM treatment of imported electricity, including changes to emissions calculations and more flexibility in demonstrating actual emissions. The proposal is identified as COM(2025)989. The Council adopted its negotiating position in June 2026, and the European Parliament voted on amendments in September 2026 under procedure 2025/0419(COD). By early November, the process had not produced a final enacted replacement for the existing rules.
Export and investment decisions remain exposed
Western Balkan power exchanges may align more closely with European trading practices even while exports from the region continue to face carbon-related obligations. The transitional commercial challenge affects Serbia, Montenegro and neighbouring countries seeking access to European wholesale markets, cross-border balancing arrangements and longer-term investment opportunities.
Transmission corridors connect Western Balkan electricity systems with EU markets in Hungary, Croatia, Romania, Bulgaria and Italy, supporting supply, commercial trading and regional security of supply. Additional border costs can change how these interconnections are used, even when wholesale price differences would otherwise make trade economically attractive. The effects could be particularly important during periods of strong renewable generation, when low-cost Western Balkan electricity could serve demand in neighbouring EU countries.
Governments in the region face the twin tasks of advancing market integration and developing carbon-pricing, emissions-monitoring and verification arrangements for durable access to the EU market. The outcome will affect investors’ assessment of the commercial value of interconnectors, renewable generation and cross-border power purchase agreements. For Serbia and Montenegro, it could shape export strategies, renewable project financing and participation in European power markets for the remainder of the decade.
The longer-term objective is for market integration and decarbonisation to reinforce one another rather than send conflicting investment signals. A key policy question is whether Western Balkan electricity can access EU market prices on commercially equivalent terms before regulatory uncertainty weakens investment incentives.
