Beginning January 2026, Serbia’s electricity export landscape will undergo significant changes as the European Union’s Carbon Border Adjustment Mechanism (CBAM) comes into effect. This regulatory shift aims to incorporate carbon costs into the pricing of electricity, fundamentally altering how Serbian power is traded in EU markets.
Currently, Serbia’s energy generation is heavily reliant on lignite, which constitutes approximately 61% of its energy mix. The remaining sources include about 5% from gas and over 30% from low-carbon options, primarily hydroelectric power. Under the new CBAM framework, electricity exports will be subject to carbon reporting and will incur financial obligations based on embedded emissions, significantly impacting export competitiveness.
The implications of CBAM are profound. With EU Emissions Trading System (ETS) allowances priced between €65–95/tCO₂, Serbian electricity exports could face additional costs ranging from €65–95/MWh. Even under a system-average emission factor, carbon costs may still hover between €40–60/MWh. This substantial cost layer threatens to erode profit margins for coal-based generation, especially during stable market conditions.
As regional wholesale prices approach €100/MWh, the carbon pricing component becomes increasingly significant, potentially limiting Serbian exports to high-demand periods or transactions supported by lower-carbon energy sources. This shift effectively diminishes the historical advantage Serbia held as a low-cost exporter of coal-based electricity.
While CBAM does not directly apply to electricity imports into Serbia, it indirectly raises import prices through regional market coupling. Neighboring EU countries such as Romania and Hungary have already integrated full EU ETS carbon pricing into their wholesale power markets. Consequently, Serbian import costs are increasingly aligned with these carbon-inclusive benchmarks rather than solely energy prices.
Recent data indicates a convergence in pricing; Romania’s day-ahead market averaged around €114/MWh in 2025, while Serbia’s annual base price on SEEPEX was approximately €99/MWh. As carbon costs become more entrenched in surrounding markets, Serbia’s import parity price is expected to rise significantly.
A model assessing the potential impact suggests that Serbian import benchmarks could increase by about €15–70/MWh, reflecting the indirect influence of EU carbon pricing rather than a direct charge from CBAM. This dual pressure—where export competitiveness declines due to rising carbon costs while import prices escalate—poses challenges for the Serbian energy sector.
In response to these changes, trading strategies across Southeast Europe are evolving. There is a noticeable shift from traditional geographical arbitrage towards strategies focused on short-term optimization and carbon-aware portfolio management. Factors such as hourly price spreads and renewable intermittency are becoming critical drivers of value in this new landscape.
The demand for traceable low-carbon electricity is also increasing as industrial consumers facing EU carbon costs seek renewable-backed supply options. This trend is fostering a premium segment for “CBAM-compliant” electricity, where emissions can be verified and minimized.
This transition signals a clear need for investment in renewable energy sources within Serbia. The integration of renewable generation—especially when paired with storage solutions or flexible dispatch capabilities—will be essential for maintaining export viability and enhancing industrial competitiveness in the long term.
The ability to deliver verified low-carbon electricity is poised to become a key differentiator in regional power markets. Conversely, coal-based generation may find its economic viability limited primarily to domestic applications or non-EU export routes where carbon pricing has yet to be implemented.
The introduction of CBAM marks a pivotal moment for Southeast Europe’s electricity trading dynamics. For Serbia, this transition represents a move away from volume-driven exports towards a model characterized by carbon-adjusted pricing, enhanced portfolio flexibility, and greater emissions transparency, with lasting implications for market behavior and investment strategies in the energy sector.
