European climate policy has helped cut greenhouse gas emissions over the past two decades, but the carbon footprint linked to goods imported into the EU has continued to rise, according to the Belgrade Open School (BOŠ). That divergence is now feeding into a trade compliance regime designed to connect production emissions abroad with EU carbon pricing. Under this approach, importers face additional obligations when covered products are linked to high-emitting production pathways.
BOŠ says the policy direction is tied to the European Green Deal objective of making Europe climate-neutral by 2050, alongside efforts to reduce dependence on fossil fuels. The Carbon Border Adjustment Mechanism is presented as a tool intended both to motivate trading partners and to safeguard the domestic economy from carbon-cost distortions. For companies operating in supply chains that feed EU demand, the practical effect is a shift from purely environmental reporting toward measurable cost exposure tied to emissions.
CBAM links border charges to emissions from energy-intensive production
CBAM, or Carbon Border Adjustment Mechanism, is designed to regulate cross-border carbon emissions by requiring payments for goods whose production releases too many greenhouse gases. BOŠ notes that the trigger is particularly relevant where emissions stem from energy-intensive activities. In that framework, exporters supplying the EU market can face financial liabilities connected to how much carbon was emitted during production.
The mechanism covers carbon dioxide emissions and, where necessary, nitrogen oxide emissions, which are described as dominant in the transport sector. It also defines coverage across specific industrial product categories: iron and steel industry products, cement, aluminium, hydrogen, fertilisers, and electric power. As a result, CBAM applies when these products are imported into the EU customs territory.
Covered sectors face a compliance test alongside EU ETS pricing
EU lawmakers’ stated rationale is to ensure fair competition by imposing a tax on imported products that reflects what EU producers already pay when producing under comparable conditions. That logic effectively aligns border charges with the cost structure created by EU ETS-linked carbon pricing for covered activities. From an exporter perspective, BOŠ argues this can complicate business operations by increasing uncertainty around total landed costs and documentation requirements.
The compliance challenge is not limited to one-off calculations at customs. It also depends on how firms demonstrate emissions performance for covered goods and how they manage reporting across supply chains that may include multiple production sites and varying energy inputs. For importers, this means CBAM becomes part of broader trade compliance planning rather than a standalone paperwork exercise.
Transitional implementation started in 2023; full application begins in 2026
BOŠ highlights that public understanding of CBAM has remained limited outside specialist circles and civil society groups focused on energy policy and climate change. The transitional phase has already begun on October 1, 2023, with early-stage financial penalties for improper reporting still described as low. This period is intended as an adjustment window for countries and companies to adapt to CBAM requirements.
The transitional phase is set to last three years, according to BOŠ. From 2026, full implementation begins and emissions are expected to be taxed at rates aligned with those applied within the European Union. The timing matters for industry planning because firms must use the transition period to build reporting capability ahead of when charges become fully operational.
Exporters report uneven readiness; SMEs in particular lack clarity
BOŠ says Serbia is unprepared for the initial phase of the CBAM regulation because exports are primarily directed toward the EU while domestic climate policies are not yet aligned with European ones. The statement adds that Serbian companies—especially small and medium-sized enterprises—still do not know their obligations or the final impact of the mechanism on business outcomes and financial balance. In BOŠ’s view, adapting to CBAM’s existence is therefore framed as a necessity for decision-makers.
The organization also warns that implementation could significantly impact exports from countries with high GHG-intensive industries. It attributes this risk to costs that affect EU importers first and then cascade into supplier competitiveness, potentially making certain products less desirable in EU markets. For importers and exporters alike, CBAM thus operates as both a carbon-price transmission mechanism and a market-access factor.
Broader implications for decarbonisation planning and trade compliance
CBAM’s sector coverage—cement, steel-related products, aluminium, hydrogen, fertilisers, and electricity—places decarbonisation pressure on industries where emissions are often tied to process chemistry and energy demand. As full implementation approaches in 2026 after the October 1, 2023 start of the transition period, firms face growing incentives to improve emissions measurement accuracy and reduce carbon intensity where feasible. The compliance burden also intersects with wider EU ETS dynamics and European Green Deal industrial transformation goals.
In parallel with these regulatory developments, BOŠ has produced a publication titled “CBAM – Carbon Tax; Pay Now or Pay More Later,” aiming to explain how CBAM works in practice and outline steps for legal and economic stakeholders to support smoother adaptation. For industry participants across import logistics and production planning, the core takeaway is that CBAM turns environmental performance into a trade cost variable—requiring earlier preparation than many companies have demonstrated so far.