BiH to prepare CO2 taxing system by 2026

Bosnia and Herzegovina plans to put together a system for CO2 pricing and trading by January 2026 to avoid paying the EU’s carbon border tax, said Branka Knežević, head of the primary energy and policy department at the Ministry of Foreign Trade and Economic Relations of BiH.

Branka Knežević spoke at the Trebinje Energy Summit (SET) within the panel called Challenges of introducing the costs of CO2 emissions and the consequences of applying the Carbon Border Adjustment Mechanism (CBAM) for the countries of the region. The EU plans to introduce the tax from 2026 and apply it to imports of cement, iron, steel, fertilizer, aluminum, and electricity from countries without a national carbon pricing scheme.

The ministry has prepared the first draft of the roadmap for the introduction of the CO2 taxing and trading system in BiH

According to Knežević, the ministry has recognized the importance of the CBAM and requested technical assistance from the Energy Community Secretariat and the World Bank. The ministry and the Secretariat are drafting a roadmap for introducing the CO2 taxing and trading system in BiH.

The first draft of the roadmap was prepared, and the plan is to have the model of the system prepared by January 2026, she said. The first activity of the ministry will be to prepare detailed information on the model for the Council of Ministers of BiH by the end of the year.

The aim of the system is to avoid paying CBAM

The roadmap aims to consider and plan the models of introducing elements of the EU Emission Trading System (EU ETS) in BiH and how the price of CO2 will be determined.

In this process, the ministry had the consent of all involved institutions from the level of BiH and the entities, which is very important in the decision-making process in BiH, Knežević stressed.

She pointed out that by introducing the system, the ministry intends to avoid the CBAM and taxation, announced by the EU in June last year.

Countries in the region have committed to finishing decarbonization by 2050

Milka Mumović, an expert on electricity and statistics at the Secretariat of the Energy Community, noted the states in the region accepted the obligation to decarbonize by 2050 by signing the Sofia Declaration.

All countries in the region have committed themselves to being decarbonized by 2050, and added CO2 emissions from power plants must be ended by then.

The Energy Community Secretariat has prepared a proposal for CO2 taxation in contracting parties. It envisages introducing internal carbon pricing right away, developing national systems by 2025, combining them into a single regional system by 2030, and reaching the EU’s carbon price by 2040.