The European Carbon Border Adjustment Mechanism (CBAM) is introducing instability into the Western Balkans’ electricity markets. This was discussed at the Belgrade Energy Forum 2026, which took place last week,
according to Balkan Green Energy News.
As noted, the CBAM has cast doubt on their integration with the EU market and increased uncertainty regarding investments in renewable energy, observed event participants representing regulators, energy exchanges, traders, and investors.
As Dejan Stojčevski, Chief Technical Officer of the Serbian energy exchange SEEPEX, noted, the mechanism has led to reduced liquidity in the country, an increase in price differentials between the energy exchanges of Serbia and Hungary, a decline in cross-border electricity trade with the EU, and a reduction in the cost of cross-border transmission capacity.
At the same time, Anže Predovnik, Chairman of the Board of the ADEX Group and CEO of the Slovenian BSP Energy Exchange, noted that the mechanism was introduced to level the playing field for all producers of certain goods. He pointed out that in the EU, thermal power plants are required to purchase CO2 emission allowances, which makes their electricity more expensive than that of competitors not subject to the same regulation.
On the other hand, he added, countries in the region were obligated to implement carbon pricing but failed to do so and are now paying the levy under the CBAM.
One of the first analyses of the CBAM’s impact was conducted by the Energy Community Secretariat. Yasmina Trhul, head of the organization’s electricity department, noted that the levy has led to market instability. However, the proposed amendments to the CBAM regulation are expected to resolve many uncertainties, and a much clearer system will be introduced starting in 2027.
The expert warned that if the uncertainty persists for an extended period, the CBAM will not be able to fulfill its objective of accelerating decarbonization and the integration of renewable energy.
Trhul reminded that the introduction of the CBAM was not a surprise and was not intended to apply to the contracting parties of the Energy Community
Instead, the latter were required to adopt the EU Electricity Integration Package by December 31, 2023. After that, they would have had at least 18 months to integrate their markets with the EU.
However, she noted that progress on the part of the contracting parties has been very slow.
The expert noted that Serbia has made the most progress in market integration and is currently awaiting the EC’s review of the package’s implementation. Meanwhile, the Energy Community Secretariat is still reviewing Montenegro and Moldova.
Zoran Gjorgjievski, CEO of MEMO (North Macedonia), believes that the mechanism creates a paradox by keeping renewable electricity within the Western Balkan countries.
Investors expect that amendments to the CBAM regulation will exempt energy imports from renewable sources from the Western Balkans to the EU from taxation. However, Maja Turković, Executive Vice President of CWP Europe, noted that operational procedures for implementing the mechanism have not yet been developed, which poses a regulatory risk. She emphasized that even before the levy was introduced, it was difficult to conclude power purchase agreements (PPAs) intended to support the development of new projects, and now this will become even more difficult.
As a reminder, Montenegro’s annual costs for the European CBAM could amount to up to €191 million, as previously warned by the state-owned electricity producer EPCG.