Photo: Albrecht Fietz from Pixabay
None of Energy Community contracting parties, including the Western Balkans, can get an exemption for electricity by the start of implementation of CBAM on January 1, 2026, Energy Community Secretariat Director Artur Lorkowski said.
If they don’t secure exemptions, contracting parties including Montenegro, Bosnia and Herzegovina, North Macedonia, and Serbia would have to bear additional costs for their electricity exports to the European Union. The reason is the Carbon Border Adjustment Mechanism (CBAM), which is going to be introduced by the European Union on January 1, 2026.
The question is what the exact cost would be to export electricity from the Western Balkans from the said date. Artur Lorkowski said a correlation can be made between CBAM costs and income from power exports, but that it depends on specific variables such as the carbon intensity of the electricity, applicable CBAM rates, and the volume of exports.
For 2023, CBAM costs for Serbian exports are estimated at EUR 1.07 billion
The Energy Community Secretariat’s recently published CBAM-Readiness Tracker shed some light.
It contains a table with an example of CBAM costs associated with EU electricity imports from contracting parties for 2023, based on aggregated commercial flows (exports and transit) and average monthly prices from auctions of allowances within the EU’s Emissions Trading System (EU ETS).
The calculation provides an estimate, using historical data, of the magnitude of additional costs that would need to be added to the overall import costs of electricity.
For 2023, CBAM costs for Serbian exports are estimated at EUR 1.07 billion while the combined figure for Montenegro, Bosnia and Herzegovina, and North Macedonia would be EUR 797 million.
“It is just a matter of how much the contracting parties are going to be late for CBAM exemption,” Lorkowski stressed during a media briefing on the upcoming meeting of the Energy Community Ministerial Council.
To achieve CBAM exemption, contracting parties must conduct market coupling with EU member states and commit to introducing carbon pricing mechanism. Market coupling alone lasts 18 months. Lorkowski noted that, for now, only the Montenegro-Italy coupling initiative has advanced, expected to be operationalized by mid-2026.
Serbia has proposed the Western Balkans region to be split into two subregions
He said other Western Balkans countries haven’t done much in the market coupling domain. Serbia, in his words, has proposed to split the Western Balkans into two subregions.
Lorkowski said he expects transmission system operators in the region to back an agreement on market coupling today in Brussels.
“We expect the Ministerial Council on December 12 would welcome the agreement if it is confirmed today. The agreement between the Western Balkan and neighbouring EU TSOs, facilitated by ENTSO-E, is to propose an alternative configuration proposal for approval in line with EU legislation. Once approved, it would unlock adherence of all stakeholders to the corporate agreements necessary for the contracting parties’ market coupling with the EU,” Lorkowski explained.
The agreement, in his words, could unlock and speed up market coupling in the Western Balkans.
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