The European Commission has put forward changes to the EU carbon border rules that could reduce default emissions assigned to electricity from Serbia, Montenegro and Bosnia and Herzegovina. The proposal also aims to make verified renewable exports easier to execute.
Current CBAM default factors and implied import costs
Under the existing methodology, national default factors are calculated largely from fossil-fuel generation. That approach yields values of 1.148 tCO₂/MWh for Bosnia, 1.041 tCO₂/MWh for Serbia and 0.979 tCO₂/MWh for Montenegro.
Using the second-quarter CBAM certificate price of €75.28 per tonne, the factors translate into import costs of approximately €86.42/MWh, €78.37/MWh and €73.70/MWh, respectively. These calculations reflect the default emissions attached to imported electricity under the current framework.
Commission proposal to use national electricity mix
The European Commission’s proposal would calculate default factors using each country’s entire electricity mix rather than focusing on fossil production. The change is intended to allow hydro, wind and solar generation to lower the national average used in the default factor calculation.
The impact could be material in power systems such as Montenegro, where large hydropower output coexists with the Pljevlja lignite plant. Under the current default factor, Montenegrin electricity can carry a CBAM cost that exceeds the average commercial spread across the undersea interconnector to Italy.
Changes affecting actual-emissions treatment and evidence requirements
The reform would also remove a requirement for exporters seeking actual-emissions treatment to prove that no physical congestion existed between the generating installation and the EU at the hour of export. Renewable producers have limited control over congestion across multiple transmission systems.
Removing that condition would eliminate one of the most difficult elements of the present evidence chain, while leaving other conditions in place. Producers and declarants would still need to demonstrate a qualifying PPA, hourly production, firm nominations across each relevant border, imported quantities and accredited verification.
EU legislative timeline and potential retroactive application
The Council adopted its negotiating position in June, and the European Parliament’s environment committee approved its report in July. A political decision is expected towards the end of 2026.
If adopted in its current form, the electricity changes could apply retroactively from January 1, 2026. The possibility is already influencing market expectations, particularly on corridors where present default values make exports uneconomic.
No removal of CBAM for Balkan electricity
The proposal would not remove CBAM from Balkan electricity. Instead, it could shift the system away from default penalties that bear little resemblance to the carbon content of a specific renewable delivery.
For developers financing wind, solar and hydro projects based on EU exports, that distinction could affect whether EU sales support bankable revenue or remain theoretical under current assumptions about export treatment.
