The recent implementation of the European Union’s carbon border levy is having a significant impact on Serbia’s economy, particularly within its energy-intensive sectors. Since the beginning of the year, Serbian exporters have reported a nearly 30% decrease in shipments to EU markets. This decline is attributed to the early effects of the Carbon Border Adjustment Mechanism (CBAM), which imposes additional costs on imports associated with higher carbon emissions.
In addition to the challenges faced by exporters, Serbia’s electricity sector is also feeling the strain. The state-owned power utility, EPS, has announced that it has not delivered any electricity to the European Union since January 1, 2026. This cessation of exports is largely due to the new carbon pricing regulations that have undermined the competitiveness of Serbian electricity in the EU market. The CBAM imposes an additional charge of approximately 78 euros per megawatt-hour (MWh) on Serbian electricity exports, significantly raising prices compared to electricity produced within EU member states under different regulatory frameworks.
The implications of these developments are far-reaching for Serbia’s energy landscape and its economic ties with the EU. With energy-intensive industries facing mounting pressures from increased operational costs and reduced market access, there are concerns about long-term sustainability and growth in these sectors. As Serbia navigates this new regulatory environment, stakeholders will need to assess strategies that could mitigate the impacts of the CBAM while maintaining competitiveness in a rapidly evolving energy market.
