Electricity producers in the Western Balkans face growing pressure to establish reliable emissions accounting systems as EU carbon border costs increasingly influence cross-border power trading and investment decisions. Regional governments are working with European institutions and international financial organisations to strengthen the monitoring, reporting, verification and accreditation frameworks needed for future carbon pricing arrangements.
The Energy Community Secretariat and Germany’s GIZ convened more than 50 participants in Belgrade on 6 October 2026. Attendees included representatives of the European Bank for Reconstruction and Development (EBRD), World Bank, KfW, European Commission and regional energy ministries.
Discussions focused on the systems required to monitor and verify emissions and establish accreditation arrangements across Energy Community countries. Most participating states are drafting or transposing relevant legislation, although implementation capacity and coordination between institutions remain uneven.
CBAM raises the cost of electricity exports to the EU
Since January 2026, electricity imports into the EU have been subject to CBAM financial obligations, exposing exporters from carbon-intensive power systems to additional costs when supplying neighbouring European markets.
The European Commission’s published CBAM certificate price for the third quarter of 2026 reached €82.32 per tonne of CO₂, increasing the financial significance of national electricity emissions factors.
Using applicable default factors, indicative gross carbon exposure stands at approximately €85.70/MWh for Serbia, €80.59/MWh for Montenegro and €94.50/MWh for Bosnia and Herzegovina.
These estimates do not represent automatic charges on every electricity transaction. Actual liabilities depend on the applicable CBAM rules, qualifying emissions evidence and recognised adjustments.
Carbon costs alter regional electricity trading economics
Wholesale electricity prices, transmission costs and available interconnection capacity have traditionally shaped cross-border trading decisions. CBAM introduces an additional cost component that can change the economics of transactions that would otherwise appear commercially attractive.
During the first quarter of 2026, commercially scheduled electricity exchanges across Western Balkan borders with EU member states declined by approximately 25%, despite regional wholesale prices averaging around €30/MWh below those in neighbouring EU markets.
The Energy Community reported a partial recovery in market integration during the second quarter. However, it continued to identify difficulties for renewable electricity producers seeking to demonstrate eligibility for actual-emissions values under CBAM.
The ability to substantiate emissions performance is therefore becoming an important consideration alongside wholesale price differentials and cross-border transmission availability.
Serbia and Montenegro face different emissions challenges
Serbia combines substantial coal-fired electricity generation with a growing renewable energy portfolio and increasing interest in electricity storage. Montenegro has a significant hydropower base and expanding wind and solar development, while its national default emissions factor also reflects emissions associated with coal-fired generation.
These circumstances create a particular challenge for renewable electricity producers. Even when generation comes from renewable sources, exporters may face default-based CBAM exposure unless they satisfy the applicable contractual, physical delivery and verification requirements for using actual emissions values.
Establishing the necessary evidence requires coordination between electricity producers, traders and importers, as well as systems capable of documenting eligible generation and deliveries.
The distinction is commercially significant for renewable projects seeking to sell electricity into the EU, where the treatment of exported power can influence expected revenues.
Lenders reassess renewable energy and storage investments
Banks evaluating new wind, solar and electricity storage projects need to consider whether contracted electricity deliveries qualify for favourable CBAM treatment, alongside generation forecasts and wholesale market prices.
For projects already financed, lenders may need to reassess export revenue assumptions, power purchase agreements and contractual obligations affecting traders and offtakers.
The regional push to strengthen emissions monitoring and verification could also create investment opportunities in industrial metering, emissions monitoring systems, data infrastructure and technical upgrades for carbon accounting.
Coordination between the Energy Community and international financial institutions provides a framework for aligning these investments with the development of future carbon pricing systems.
However, adopting domestic emissions monitoring legislation or introducing a national carbon price does not automatically exempt electricity exports from CBAM. Any exemption or alternative treatment remains subject to the relevant EU rules.
Industrial exporters require product-specific emissions accounting
For steel and aluminium manufacturers in the Western Balkans, the challenge differs from that facing electricity exporters. Electricity costs influence production competitiveness, while CBAM liabilities for manufactured goods depend on the emissions categories and calculation methodologies applicable to each product.
Regional industrial development therefore requires parallel investment in lower-emission production, electricity market integration and reliable emissions evidence systems.
Expanding renewable generation alone may not be sufficient to secure the commercial benefits of lower-emission electricity in EU markets. Producers also need the documentation, market infrastructure and carbon accounting capabilities required to demonstrate their emissions performance under the applicable rules.
