At the Berlin Process Summit in Montenegro on 22 October 2026, the Energy Community Secretariat urged closer coordination between Western Balkan electricity market integration and the EU’s Carbon Border Adjustment Mechanism (CBAM). It warned that poorly aligned rules could discourage renewable investment and create new commercial divisions between EU and non-EU electricity markets.
The EU plans to integrate Western Balkan electricity markets before the countries become full members of the bloc. Under the Energy Community framework, countries in the region are progressively adopting EU electricity rules, with integration covering market coupling, transparency, transmission-capacity allocation, balancing arrangements and regulatory alignment.
Closer integration could support electricity price convergence and more efficient use of regional generation and interconnection capacity. But the two policy tracks have separate legal requirements: interconnected markets do not by themselves remove CBAM obligations on electricity imported into the EU.
Conditional exemption and cross-border trade
Article 2(7) of the CBAM Regulation provides for a conditional exemption for electricity imports. Its conditions include market coupling, regulatory alignment and climate-policy commitments, as well as an assessment by the European Commission.
Market coupling alone does not automatically exempt imported electricity from CBAM. During the transition, Western Balkan power exchanges may align more closely with European trading practices while electricity exported from the region remains subject to carbon-related obligations.
Transmission corridors connect Western Balkan systems with Hungary, Croatia, Romania, Bulgaria and Italy, supporting electricity supply, commercial trading and regional security of supply. Additional border costs could change how those links are used, even when wholesale price differences would otherwise make electricity trade economically attractive.
The issue could be especially relevant during periods of strong renewable generation, when low-cost Western Balkan power could serve demand in neighbouring EU countries. The interaction of the rules will affect the commercial value of interconnectors, renewable generation and cross-border power purchase agreements.
For Serbia and Montenegro, the outcome could shape electricity export strategies, renewable-project financing and participation in European power markets for the remainder of the decade. Governments in the region face the parallel task of advancing integration and developing carbon-pricing, emissions-monitoring and verification arrangements for durable access to EU markets.
CBAM amendments remain unsettled
The European Commission has proposed amendments to CBAM covering emissions calculations and greater flexibility for demonstrating actual emissions. The Council adopted its negotiating position in June 2026, while the European Parliament voted on amendments in September.
By early November 2026, the legislative process had not produced a final enacted replacement for the existing framework. The relevant references are Regulation (EU) 2023/956, Article 2(7), European Commission proposal COM(2025)989 and European Parliament procedure 2025/0419(COD).
The policy objective is for electricity market integration and decarbonisation to reinforce each other rather than create conflicting investment signals. A central question for investors is whether Western Balkan electricity can access EU market prices on commercially equivalent terms before regulatory uncertainty weakens investment incentives.
