As Serbia prepares for the European Union’s Carbon Border Adjustment Mechanism (CBAM), which takes effect on January 1, 2026, the dynamics of its energy-intensive industries are undergoing significant changes. The CBAM will apply to various sectors, including electricity, iron and steel, cement, aluminium, fertilisers, and hydrogen. This regulatory framework poses challenges for Serbia, where coal remains the dominant source of electricity generation, thereby impacting both local industries and their export capabilities.
In 2024, approximately 60% of Serbia’s electricity was generated from coal, primarily lignite. Hydropower contributed around 30%, while other renewable sources accounted for about 10%. Despite efforts to transition towards a more diversified energy mix—such as a national policy targeting 45.2% renewable energy by 2030—the pace of change is insufficient to eliminate coal’s influence on the industrial cost structure.
The financial implications of CBAM are significant. As of March 17, 2026, the EU’s carbon price benchmark was €64.93 per tonne of CO2, which translates to an estimated carbon cost of €65–72 per megawatt-hour (MWh) for coal-based electricity in Serbia. In contrast, Serbia’s domestic carbon tax is set at only €4 per tonne of CO2, resulting in a much lower burden of approximately €4–5 per MWh. This discrepancy highlights the substantial gap between local carbon costs and those imposed by EU regulations.
For Serbian industrial buyers—particularly in sectors such as steel and cement—the challenge lies in reconciling domestic electricity prices with the increasing expectations from EU customers regarding embedded carbon costs. With the EU accounting for over 58% of Serbia’s total trade in 2024 and exports nearing €19 billion, Serbian industries are under pressure to enhance their competitiveness by addressing carbon emissions associated with their production processes.
Key players within Serbia’s industrial landscape include major companies like HBIS Serbia in Smederevo and various cement and fertiliser producers. These industries face simultaneous pressures as large electricity consumers, exporters to the EU market, and potential investors in renewable energy solutions that could mitigate their carbon footprint.
The evolution of Serbia’s electricity market further complicates this scenario. The liquidity of the organized day-ahead market has improved significantly; for instance, SEEPEX traded approximately 404,970 MWh in January 2026 and 414,520 MWh in February 2026. Day-ahead base prices fluctuated between €89.24/MWh and €109.53/MWh during mid-March 2026. Additionally, ongoing market coupling initiatives with Hungary and Bulgaria are expected to align domestic prices more closely with regional wholesale conditions.
This shift presents two main consequences: increased exposure to wholesale price volatility for energy-intensive industries and a disconnect between low short-run cash costs associated with lignite generation and actual market prices influenced by external factors such as hydrology and gas prices. Consequently, Serbian industries may find themselves facing higher effective costs without benefiting from the anticipated advantages of a low-carbon grid.
The conversation around electricity procurement is evolving from merely seeking “cheap electricity” to prioritizing “qualified electricity.” For exporters in sectors like steel or cement, it is increasingly crucial to secure power that can be verified as lower-carbon through mechanisms such as Power Purchase Agreements (PPAs) or self-generation initiatives that enhance their emissions profiles.
Renewable energy developers are positioned to play a vital role in this transition. As Serbia continues to expand its renewable capacity—currently at approximately 3,985 MW—the ability to provide not just power but also documentation that supports lower-carbon claims will become essential for maintaining competitiveness in EU markets.
The disparity between coal-linked and renewable-linked electricity costs will likely become more pronounced within the margins of Serbian industry. While coal-based buyers might face rising wholesale prices due to CBAM exposure, those linked to renewable sources could potentially benefit from lower effective export costs despite higher nominal rates. This strategic inversion suggests that what was once perceived as expensive power could actually enhance industrial competitiveness.
In summary, while coal remains a critical component of Serbia’s energy landscape, its role as a viable input for CBAM-exposed industries is diminishing. Moving forward, Serbian energy-intensive companies are expected to diverge into three distinct groups: those who continue relying on traditional grid electricity; those pursuing long-term renewable contracts; and a third group adopting hybrid strategies that blend both approaches. The future competitiveness of Serbian exporters will hinge on their ability to navigate this evolving landscape effectively.
