Serbia has begun putting in place a domestic response to the European Union’s Carbon Border Adjustment Mechanism. The government has expanded its carbon-tax framework through decrees covering decarbonisation grants and tax credits. Alongside these measures, an existing domestic charge applies to greenhouse gas emissions and carbon-intensive imports at €4/tCO₂e. The EU Emissions Trading System rate is more than €75/t.
Domestic carbon charge versus EU ETS cost levels
The difference between Serbia’s domestic charge and the EU ETS level creates a carbon-price gap for firms exporting into the EU. The structure of Serbia’s approach provides time for adjustment, while not removing future exposure to the higher-cost environment faced by EU-bound trade. Elektroprivreda Srbije, or EPS, is already under material cost pressure linked to the new domestic tax. General Manager Dušan Živković estimated the measure would cost the state-owned utility around €100mn this year.
Decarbonisation grants and tax credits for industry and power projects
The decrees introducing decarbonisation grants are designed to support projects that reduce greenhouse gas emissions or improve energy efficiency in industrial activities. Eligible areas include hydrogen, hydrogen-based and low-carbon fuels, renewable energy production, and energy storage. The framework also covers flexible electrification and CCS/CCUS. The ability of companies to prepare bankable investment cases, along with project readiness and public-call design, is expected to affect how effectively support can be deployed.
EPS policy commitments alongside tariff reform and investment needs
For EPS, the impact extends beyond a single annual tax bill. Under an IMF-linked policy framework, Serbia has committed to regular inflation-linked electricity tariff indexation. The same framework includes EPS workforce optimisation by early 2027 and stronger governance ahead of large-scale investments. This places three pressures on the utility at the same time: tariff reform, carbon cost, and investment demand.
Implications for electricity procurement in CBAM-exposed exports
CBAM affects how industrial exporters value electricity procurement when selling into the EU market. Low-carbon power supply, documented PPAs, renewable electricity sourcing, and storage-backed flexibility are positioned as commercial inputs rather than standalone reporting items. Serbian producers of steel, aluminium, fertiliser, cement and other carbon-intensive goods will increasingly require credible emissions data and lower-carbon energy contracts for EU sales.
Serbia’s domestic carbon price is set at a comparatively modest level relative to the EU ETS. While this can limit near-term costs for companies operating domestically, it does not remove longer-term alignment pressures tied to EU market requirements. Buyers, lenders and importers can apply their own carbon discipline through contracts, margins and bankability tests as trade exposure continues.
