CBAM moves from product pricing to electricity documentation
The EU’s definitive Carbon Border Adjustment Mechanism enters its operational phase on 1 January 2026, bringing electricity into scope alongside iron and steel, cement, aluminium, fertilisers and hydrogen. For energy-intensive exporters, the compliance challenge is no longer confined to factory emissions accounting at the point of sale. It extends upstream into how electricity is sourced, evidenced and translated into embedded emissions that can affect CBAM exposure.
Electricity imports from Energy Community countries into the EU are also subject to CBAM in this period, while no Contracting Party has yet qualified for an exemption. That regulatory design matters for Serbia because its industrial base remains tied to a generation mix where coal still dominates. The same coal-linked system influences both direct electricity exports and the indirect emissions profile carried by industrial output shipped to EU buyers.
Serbia’s generation mix keeps carbon intensity high
Serbia’s starting point is its power system. A U.S. government market guide published in January 2026 estimates that about 60% of Serbia’s electricity in 2024 came from coal, mainly lignite, with roughly 30% from hydropower and around 10% from other renewables. Serbia’s own just transition materials describe the sector as largely coal-based, while a 2025 Energy Community report places renewable capacity at 3,985 MW in 2024 and sets a policy target of 45.2% renewables in electricity generation by 2030.
In practical terms, the system is shifting but not quickly enough to remove coal from the cost base that exporters rely on. As CBAM links trade exposure to emissions performance, the pace of grid decarbonisation becomes a competitiveness variable rather than only an energy policy objective. For Serbian industry, this means that “where power comes from” increasingly shapes “how products are priced” for EU compliance purposes.
Carbon price arithmetic: lignite-linked electricity faces a large EU gap
CBAM pressure is amplified by carbon price levels used as benchmarks in EU calculations. The EU benchmark carbon price fell to €64.93/tCO2 on 17 March 2026 after signals of possible market intervention, but it remains high enough to keep carbon components material in electricity costs. Serbia’s greenhouse-gas inventory uses a country-specific lignite emission factor of 106.95 kg CO2/GJ for lignite burned in thermal power plants.
On that basis, a typical lignite power station can be inferred to emit roughly 1.0–1.1 tCO2 per MWh of electricity output depending on efficiency. At an EU carbon price near €65/t, this corresponds to an implied carbon cost of about €65–72/MWh for coal-based electricity. Serbia introduced a national carbon tax of €4/tCO2 from 1 January 2026, which translates on the same simplified power-sector basis into roughly €4–5/MWh—leaving a very large gap versus the EU benchmark.
Export exposure concentrates in steel, cement and fertilisers
For industrial buyers inside Serbia, the central issue is how EU customers increasingly price embedded emissions rather than only ex-works costs and freight. The EU is Serbia’s main trading partner, accounting for 58.3% of Serbia’s total trade in 2024, while exports to the EU were close to €19bn. That exposure means documentation quality and emissions performance are becoming part of commercial negotiations for CBAM-relevant goods.
The sectors closest to this pressure include steel producers such as HBIS Serbia in Smederevo, cement producers and fertiliser and chemical producers across the wider Serbian fertiliser chain. Serbian industry groups have already begun framing the issue through this lens, including through the Association of Serbian Energy-Intensive Industry which brings together companies from steel, cement and fertilizer sectors. These industries face multiple channels at once: they are major electricity buyers, they export into the EU and they increasingly need credible renewable sourcing arrangements that can improve the carbon profile of output.
Market coupling raises volatility while embedded emissions remain
Regulatory pressure arrives alongside market changes that can move electricity costs quickly for large consumers. Serbia’s organised day-ahead market has become more liquid: SEEPEX day-ahead traded 404,970.3 MWh in January 2026 and 414,520.1 MWh in February 2026. Day-ahead base prices for 15–19 March 2026 ranged from €89.24/MWh to €109.53/MWh with daily traded volumes broadly around 13.3–14.2 GWh.
Serbia is also progressing toward market coupling, with implementation work on the Serbia-Hungary border and activity beginning for Serbia-Bulgaria. This increases the extent to which domestic industrial power costs reflect regional wholesale conditions rather than a closed national pricing logic. Even if electricity is physically produced from lignite at relatively low short-run cash cost, prices paid by industrial buyers can be pulled upward by regional scarcity signals including hydrology conditions, gas prices and neighbouring EU power prices.
From “cheap power” to “qualified electricity” through contracts and attributes
The compliance discussion is shifting from buying low-cost electricity toward securing “qualified electricity” that can be credibly ring-fenced as lower-carbon supply for CBAM-relevant exports. For Serbian exporters of steel, cement or fertilisers, the question becomes whether power can be evidenced through mechanisms such as PPAs or self-generation and supported where relevant by Guarantees of Origin or dedicated renewable sourcing structures that improve emissions profiles of exported goods.
This creates a new role for renewable developers as counterparties to industrial procurement strategies rather than only suppliers of megawatt-hours into SEEPEX or bilateral contracts. A Serbian solar or wind project can potentially support “carbon relief” outcomes for CBAM-exposed exporters by reducing embedded indirect emissions in shipments to the EU while strengthening customer negotiations and defending export margin through improved documentation and trade competitiveness.
Analytical synthesis: competitiveness hinges on carbon-adjusted export costs
The emerging pattern is an asymmetry between coal-linked electricity and renewable-linked supply that shows up inside industrial margin structures once embedded emissions are translated into CBAM exposure at the border. Coal-linked buyers may face wholesale bills around regional levels but still carry higher effective export costs when carbon add-ons are applied through CBAM-related calculations tied to product emissions performance.
Renewable-linked buyers may pay similar or even slightly higher contracted power prices in nominal terms while achieving lower effective export costs because border-facing carbon add-ons are smaller under improved emissions profiles supported by contractual evidence. Based on these dynamics—and given Serbia’s ongoing transition targets toward 45.2% renewables by 2030—energy-intensive companies are likely to split between merchant purchasing of grid power with rising carbon-adjusted pressure and procurement strategies using PPAs or self-generation that combine partial renewables with storage or flexibility aligned with wholesale market conditions.