The latest response from Eurelectric to the draft EU Implementing Regulation on carbon prices paid in third countries under the Carbon Border Adjustment Mechanism (CBAM) points to implications for electricity markets across South-East Europe (SEE). The proposal is described as highly technical, with commercial effects that relate to how electricity exports are valued. When CBAM’s financial phase becomes fully operational, electricity exports from non-EU countries into the EU will not be priced only by wholesale power levels, transmission capacity or balancing costs. Instead, carbon pricing, emissions verification and regulatory documentation are expected to influence competitiveness in cross-border trade.
For the Western Balkans, Eurelectric characterises the change as structural rather than a minor adjustment. Serbia, Montenegro, Bosnia and Herzegovina, North Macedonia, Albania and Kosovo are described as closely integrated with EU electricity markets through trade with Croatia, Hungary, Romania, Bulgaria, Greece and Italy. Regional flows have previously been shaped mainly by hydrological conditions, coal availability, renewable generation, interconnector capacity and wholesale price differentials. Under CBAM, exporters are expected to manage carbon-price exposure and compliance risk alongside these factors.
Carbon cost calculation and timing for CBAM reference prices
A key issue raised in the response concerns how carbon costs would be calculated under CBAM. Eurelectric argues that using monthly CBAM reference prices would better reflect electricity trading conditions than relying on annual averages. The organisation links this to the continuous operation of electricity markets. It also says the timing of calculations matters for exporters that need to assess carbon costs before securing transmission capacity, pricing forward contracts or scheduling cross-border deliveries.
Eurelectric warns that delayed carbon-price calculations would increase uncertainty for exporters in Serbia, Montenegro and Bosnia and Herzegovina. The response states that this could lead to higher risk premiums for electricity exported from non-EU SEE markets. The approach to reference pricing is therefore presented as a practical variable affecting commercial planning for cross-border transactions.
EU-recognised carbon pricing systems and deduction rules
The response also highlights the role of EU-recognised carbon pricing systems for market access under CBAM. It states that introducing domestic carbon levies alone may not improve access if those mechanisms are not recognised under CBAM deduction rules. Eurelectric identifies Serbia, Bosnia and Herzegovina and Montenegro as facing a policy challenge related to compliance design. Carbon-pricing reforms would need to be developed from the outset to meet EU recognition criteria.
The response notes a risk that domestic producers could face higher operating costs while still incurring CBAM charges at the EU border if recognition requirements are not met. This is described as a factor that could reduce overall competitiveness for exporters from these countries. The draft regulation is therefore linked to both compliance costs and the ability to benefit from deductions where applicable.
Default emissions factors and plant-specific evidence
Another major point concerns default emissions factors that could become a defining commercial input in regional electricity trade. Eurelectric says coal-intensive systems—including Serbia, Bosnia and Herzegovina, North Macedonia and Kosovo—could face significantly higher CBAM costs unless plant-specific emissions can be demonstrated as lower. It adds that Montenegro and Albania benefit from large hydroelectric fleets compared with coal-heavy portfolios. However, it notes that prolonged droughts and increased thermal generation could reduce this relative advantage during certain years.
The response further indicates that plant-level emissions verification would become more important across low-carbon generation types in the Western Balkans. Renewable generators, hydroelectric producers and other low-carbon facilities would need to provide evidence covering the origin of electricity, measured emissions, generation data and contractual allocation. Eurelectric says that without robust documentation, EU importers may rely on default emissions values that overstate actual carbon intensity. This could reduce the commercial value of otherwise low-emission electricity exports.
Renewables documentation versus unclear emissions profiles
Eurelectric also expects CBAM to segment regional electricity trade into two commercial categories based on emissions information quality. Electricity supported by verified renewable generation or documented low-carbon production is described as becoming increasingly attractive to European buyers. By contrast, electricity with unclear emissions data or high carbon intensity is expected to trade at a discount. The response links this shift to utilities, independent traders, industrial consumers and long-term electricity purchasing agreements.
In this framework, Eurelectric says emissions documentation quality may become almost as valuable as the electricity itself in contracting decisions. It also points to implications for how long-term deals are structured when emissions evidence needs to be provided alongside supply terms. The emphasis on documentation is presented as central to how products are assessed by EU counterparties under CBAM-related requirements.
Cross-border netting and balancing treatment
The treatment of cross-border balancing and electricity netting is identified as significant for the Balkans under CBAM rules. Many countries in the region alternate between imports and exports depending on seasonal demand, hydrological conditions and renewable generation output. Eurelectric cites Serbia as potentially importing during one trading period while exporting during another. It also notes that Montenegro, Albania and Bosnia and Herzegovina frequently adjust positions according to water availability.
Eurelectric states that clear CBAM rules governing import-export netting would be essential to avoid overstating the carbon footprint of electricity used primarily for regional balancing rather than final consumption within the EU. The response frames netting treatment as a factor affecting how carbon-related quantities are attributed across trading periods.
Coal-dependent systems: margins, investment signals and financing
Eurelectric describes potential financial consequences for coal-dependent power systems as potentially increasing over time. It says Serbia, Bosnia and Herzegovina, North Macedonia and Kosovo cannot assume EU-bound exports will remain commercially attractive under existing market conditions alone. Unless generation portfolios decarbonise or carbon-pricing systems become fully recognised under CBAM, carbon adjustment costs are expected to reduce export margins steadily. The response also links these costs to investment decisions, asset valuations and long-term generation planning.
Montenegro is presented as an example of both opportunities and challenges created by the new framework due to its hydroelectric capacity. Eurelectric says strong water availability could support competitiveness if credible emissions documentation and transparent electricity tracing are available. It adds that hydrological variability, balancing imports and insufficient contractual evidence could weaken Montenegro’s position if supporting documentation does not meet EU expectations.
Serbia’s broader CBAM strategy requirements
Eurelectric describes Serbia’s situation as broader because it combines a coal-heavy generation mix with expanding renewable investments. It also notes an active electricity exchange alongside substantial industrial exports to the European Union. The response says a comprehensive national CBAM strategy would require recognised emissions methodologies and transparent carbon-pricing mechanisms. It also calls for renewable electricity certification plus support for low-carbon power purchase agreements.
The response further specifies practical guidance needs for exporters selling into neighbouring EU markets including Hungary, Romania, Croatia and Bulgaria. It also highlights renewable power purchase agreements (PPAs) as an area where commercial value is expected to increase considerably under CBAM requirements. Eurelectric states PPAs would increasingly serve not only as price hedging instruments but also as evidence supporting embedded-emissions reporting under CBAM.
Market operator coordination and investor exposure
Eurelectric says industrial exporters with access to documented renewable electricity would strengthen both regulatory compliance and long-term export competitiveness. It links this development to improving the investment case for renewable generation across the region based on access to evidence required by CBAM-related reporting expectations. The response then extends these implications beyond generators into market infrastructure roles.
Regional power exchanges, transmission system operators and financial institutions are described as needing adaptation as CBAM risks become embedded in electricity pricing. Eurelectric says exchanges and grid operators would require more transparent emissions reporting and stronger cross-border data coordination. It also states banks and investors are expected to incorporate CBAM exposure into financing decisions, which could make low-carbon generation, storage projects and renewable infrastructure increasingly attractive while raising transition risks for coal-dependent assets.
