As Serbia prepares for the implementation of the Carbon Border Adjustment Mechanism (CBAM) in 2026, the implications for its industrial sector are becoming increasingly clear. The mechanism is expected to function as a competitiveness tax on industries that cannot demonstrate a credible separation from a coal-heavy electricity baseline. This presents a significant challenge for Serbian exporters, who must navigate a landscape where their electricity inputs are inherently linked to coal unless they can provide traceable low-carbon sourcing.
The national residual mix for Serbia in 2024, as published by EMS, reveals the difficulties exporters face in transitioning to greener energy sources. The mix is heavily dominated by brown coal and lignite, making up 66.60%, while hydropower accounts for 23.81%, natural gas 5.02%, wind 0.97%, and solar a mere 0.36%. This residual mix serves as the default electricity profile for many exporters unless they can substantiate their claims with Guarantees of Origin (GOs) or other accepted instruments that confirm low-carbon sourcing.
The recent renewable energy auction in Serbia, which offered a quota of 424.8 MW split between wind and solar, highlights the complexities involved in meeting exporter-specific needs. Supported by the European Bank for Reconstruction and Development (EBRD), this auction aimed to provide a significant supply block through long-term contracts for difference. However, the critical question remains: how much of this renewable output can be allocated specifically to exporters through Power Purchase Agreements (PPAs) and GOs? Without such allocations, much of the renewable energy generated may still be classified under the coal-heavy residual mix.
To address these challenges effectively, it is essential to analyze Serbia’s CBAM-exposed exporter landscape at the company level. This involves estimating the annual green electricity demand required to offset the residual mix and assessing this demand against both the available renewable energy pipeline and the realities of attribute allocation.
Focusing on key players within Serbia’s industrial sector reveals concentrated exposure to CBAM regulations. For instance, HBIS Serbia, located in Smederevo, represents the largest CBAM-exposed industrial export complex in the country with an annual production capacity of 2.2 million tons of finished steel products. To reduce its carbon footprint effectively, HBIS must secure substantial amounts of low-carbon electricity through PPAs and GOs to shift its narrative in EU procurement discussions.
In addition to steel, Serbia’s cement industry features three major plants operated by international firms, including Moravacem with a capacity of 1.35 million tons and TITAN Cementara Kosjerić at 750,000 tons annually. The total annual cement production capacity in Serbia stands at approximately 3.4 million tons, emphasizing the importance of securing green electricity as part of their compliance strategy under CBAM.
Fertilizer production also plays a crucial role in this landscape, particularly with companies like Elixir Prahovo targeting reductions in energy consumption through new technologies. Their stated goal is to decrease electricity usage by 25% per ton produced by 2027, underscoring the growing significance of traceable electricity inputs as part of their strategic approach.
In aluminium processing, while Serbia primarily focuses on secondary processing rather than primary smelting, there remains a substantial electricity demand that can be addressed through green procurement strategies. A mid-scale PPA could significantly enhance the carbon profile of exported products within EU markets.
When aggregating conservative estimates for green power demand across these sectors—660–990 GWh for HBIS Serbia, 306–408 GWh for cement production, 100–250 GWh for fertilizers and chemicals, and 50–150 GWh for aluminium processing—the total annual demand ranges between approximately 1.12 TWh and 1.80 TWh. The predominant driver remains HBIS Serbia’s requirements, emphasizing that small-scale renewable projects alone will not suffice to meet these demands.
The second renewable auction’s quota translates into an estimated annual output of roughly 952–1,117 GWh when factoring in conservative capacity assumptions for both wind and solar energy generation. However, if only 40-60% of this output can be allocated specifically to exporters due to competition from other market participants for green attributes, this would yield an exporter-allocable supply between approximately 381 GWh and 670 GWh annually—leaving a significant gap between demand and supply.
This gap represents not merely an accounting discrepancy but rather a tangible shortfall in renewable attributes necessary for compliance with CBAM requirements among Serbia’s major exporters. In light of this challenge, it becomes evident that dedicated renewable projects earmarked specifically for exporter PPAs and GO allocations are essential to mitigate reliance on coal-linked electricity sources.
Geographically speaking, Serbia’s largest industrial loads are concentrated around Belgrade and the Danube basin while optimal wind resources are located in Vojvodina and South Banat. This necessitates strategic investments in transmission infrastructure such as the BeoGrid 2025 project aimed at enhancing connectivity between regions to facilitate efficient renewable energy distribution.
Ultimately, Serbia’s approach to addressing its CBAM-related electricity constraints must involve both supplier allocation strategies—where exporters source renewable attributes from existing suppliers—and direct investments into new renewable projects tailored specifically for large industrial consumers. Only then can Serbia hope to close its substantial green electricity gap and maintain competitiveness within EU markets as CBAM regulations come into full effect.
