The EU’s Carbon Border Adjustment Mechanism started on January 1, introducing a carbon liability for electricity imported from non-EU markets. For countries applying national defaults, the commercial impact is described as severe. At a second-quarter certificate price of €75.28/tCO2, indicative costs were reported at €86.42/MWh for Bosnia and Herzegovina, €78.37/MWh for Serbia, and €73.70/MWh for Montenegro.
Albania’s default factor is zero, so it faced no corresponding CBAM charge. The resulting outcome is a two-tier market where electricity with similar physical characteristics can carry different CBAM costs based on declared origin.
Trading volumes shift amid CBAM-linked pricing
First-half trading data indicate that market participants adjusted their behaviour. Gross commercial exchange between the Western Balkans and neighbouring EU markets fell by approximately 19% year on year, while trading on regional power exchanges increased. This change was reported alongside ongoing cross-border price dynamics.
In the first quarter, strong hydro output widened price gaps between the Western Balkans and the EU, but the lower-priced power was not fully exported. CBAM default costs were described as often exceeding the available arbitrage margin.
By the second quarter, EU prices declined and the Western Balkans returned to net imports. Price correlations recovered, but trade did not fully revert to the earlier pattern. Instead, new cross-border routes were reported to strengthen.
New north-south schedules diverge from physical flows
Scheduled exports from Serbia to Hungary rose by 111%, while Romania-Hungary trade increased by 156%. The increase was partly linked to Ukrainian import demand. Greece was also described as maintaining its role as a southern supply centre, sending more electricity toward Bulgaria, North Macedonia and Albania.
The source data also point to growing divergence between commercial schedules and physical power movements. The difference was described as most visible on the south-to-north axis through Albania, Montenegro, Bosnia, Serbia and the EU border.
Evidence requirements for renewable claims under CBAM
The Commission’s August electricity guidance is aimed at addressing the gap between contractual attribution and physical dispatch under an evidence chain approach. Renewable actual-emissions claims require a physical PPA, hourly production data, firmly nominated interconnection capacity, documentation across transit countries and an accredited verification conclusion.
A guarantee of origin (GoO) is described as unable to replace those elements on its own. A separate Commission proposal would introduce mutual recognition between the EU and the Energy Community, which could make renewable certificates issued in Serbia, Montenegro and other qualifying markets commercially usable inside the EU.
The certificate reform is described as potentially improving corporate-PPA economics and creating additional revenue for renewable projects. Proposed CBAM amendments are also described as including reductions to national default factors by reflecting the entire electricity mix and removing the requirement to demonstrate an absence of network congestion.
Three-part product structure for EU market access
The emerging compliance structure is described as requiring three distinct components: the electricity itself, its renewable certificate and verified evidence supporting its CBAM emissions claim. Utilities and independent traders are expected to start from different positions in assembling these elements.
Large state utilities such as EPS, EPCG, ERS and EPBiH control broad generation portfolios and established trading routes. They are also described as needing to prevent renewable electricity from being mixed or double allocated and ensure consistent attribution across customers.
Independent suppliers may be more able to build installation-specific packages for EU declarants or Serbian industrial exporters. Their challenge is securing long-term access to named plants, interconnector capacity and operational data required by verifiers.
Two ways to supply low-carbon electricity into Europe
Renewable producers face a choice between exporting electricity directly into the EU or supplying Serbian and Montenegrin factories seeking credible low-carbon electricity for goods exported to Europe. Direct export is described as carrying full scheduling responsibilities and CBAM evidence burdens.
The alternative route is described as serving a different emissions claim framework. Electricity used in a Serbian factory becomes part of the manufacturer’s CBAM or corporate emissions evidence rather than being treated as electricity imported into the EU as a good.
The source material describes that the emerging market will reward parties that keep those emissions claims separate and controlled. It also states that Southeast Europe retains renewable resources, interconnections and price differentials needed to support electricity trade with the EU while shifting the burden of proof.
From 2026, it is stated that the most valuable megawatt-hour will not necessarily be the cheapest or even the greenest option available. Instead, value will be linked to whether its commercial and carbon identity can be independently demonstrated from the generating installation through to the final declarant.
