CBAM could heavily impact BiH economy unless firms get incentives for solar panels

The European Union’s cross-border carbon taxation could have a very negative impact on the economy of the Federation of Bosnia and Herzegovina if the authorities don’t simplify permitting and subsidize the installation of solar panels for companies, according to the Federal Minister of Energy, Mining, and Industry Vedran Lakić.

The Western Balkans, including Bosnia and Herzegovina, are among the countries affected by the Carbon Border Adjustment Mechanism (CBAM). However, they are doing little or almost nothing to prepare for the changes, starting on January 1, 2026.

Minister Vedran Lakić convened cantonal ministers to discuss the challenges arising from the EU’s cross-border carbon tax, the Federal Ministry of Energy, Mining and Industry said. The Federation of Bosnia and Herzegovina, which consists of ten cantons, is one of the two entities making up BiH. The other one is the Republic of Srpska.

At the meeting, the officials highlighted the need for coordinated action and the urgency of regulatory changes as well as of the introduction of subsidies for installing solar power plants. Adjusting the rules would ease the development of clean energy and increase the competitiveness of the domestic industry but also enable citizens to reduce electricity bills, with the prosumer model, according to the ministry.

The ministry is already preparing financial support for the industry

Industrial producers operating in cantons that don’t adjust their laws could face serious consequences due to additional costs of exporting to the EU, the ministry said.

“Unless the regulatory framework is changed and we don’t enable a faster procedure for installing solar panels on businesses entities’ roofs, and if we don’t subsidize these activities, we could have a very negative impact on our economy,” Lakić stated.

He stressed that the federal ministry is preparing financial support for the industry, in cooperation with the Development Bank of FBiH. Lakić advised cantons to do the same. Some of them have already taken steps in that direction, while others aren’t prepared yet, in his words.

Lakić: Put the interests of our economy before the interests of political parties

The introduction of CBAM could cause great economic pressure on the industry in such cantons, Lakić said.

“We invite all stakeholders involved in the process to put the interests of our economy before political party interests because it is the only way to avoid the negative economic consequences of the introduction of CBAM and protect domestic businesses”, he pointed out.

Lakić said he also expects institutions at the state level to do their part of the job regarding laws and regulations.

According to the ministry, the production of clean energy for self-consumption would enable firms to exempt their export goods from the EU’s cross-border carbon tax.

It would improve not only their competitiveness but also the energy and economic system of FBiH, the ministry said.