The European Commission has put forward a proposal to revise how emissions are calculated for imported electricity under the Carbon Border Adjustment Mechanism, with rules applying from 1 January 2026. The change is expected to affect non-EU power exporters, including Serbia, where electricity generation spans lignite-fired thermal output, large hydro capacity and expanding wind and solar.
Under the existing approach, CBAM treatment of imported electricity has relied on default emission values anchored to fossil-fuel benchmarks. The methodology has applied even when an exporting system includes substantial low-carbon generation. As described in the proposal context, this has led to Serbian electricity exports being treated as predominantly coal-based during periods when hydro contributes significantly to domestic output and exports.
Revised default emission factors based on national generation intensity
A central element of the reform is a change in how default emission factors are calculated. Instead of using emission factors derived only from fossil-fuel generation, future default values would be based on the overall emission intensity of all electricity generation sources in the exporting country. For Serbia, this is described as a structural reclassification tied to the country’s mixed generation portfolio.
The Serbian system combines lignite-fired thermal plants with a substantial hydro fleet and growing wind and solar capacity. While lignite remains dominant in marginal dispatch, the system-average carbon intensity is stated to be meaningfully lower than a pure coal benchmark. Once the revised methodology applies, exports relying on default values would be assessed against a national average reflecting hydro, renewables and thermal generation together.
The Commission’s proposal indicates that this shift would reduce CBAM exposure per exported megawatt-hour for electricity assessed using default values. The reduction would apply before any additional reporting or verification steps are taken by exporters. For cross-border pricing, CBAM costs are embedded into power prices, so lower assumed emissions would translate into lower carbon costs.
Expanded ability to report actual emissions for differentiated treatment
The Commission’s proposal also targets conditions for reporting actual emissions from electricity under CBAM. Under the existing framework, use of actual emission data has been described as theoretically possible but practically inaccessible for most non-EU exporters. Requirements around tracing electricity flows, attributing generation sources, aligning dispatch data and obtaining EU-acceptable verification have made default values effectively unavoidable.
The new proposal seeks to make recourse to actual emission data easier in practice. It is intended to enable differentiated treatment of electricity exports based on verifiable carbon performance rather than treating all exports uniformly. For Serbia, this is presented as introducing segmentation across categories of power exports.
In this approach, system-average exports could rely on improved default values. Exports backed by hydro or renewables could be supported by actual emissions data approaching zero where documentation and verification allow it. Electricity supplied under specific contracts to export-oriented industrial facilities could also be documented as low-carbon input electricity, affecting both power exports and Serbian manufacturers selling goods into the EU.
Implications for Elektroprivreda Srbije and regional power flows
The changes have implications for Elektroprivreda Srbije and Serbian power traders because credible emissions data becomes economically relevant under the revised regime. Under the previous logic, investment in granular emissions accounting was described as limited by uncertain regulatory payoff and high administrative burden. With the reform, hydro plants, renewable portfolios and clean dispatch periods would gain direct monetary relevance in cross-border trade where actual data can be used.
Seasonality is highlighted as an operational factor because Serbia’s hydro output peaks during spring and early summer. This period coincides with times when exports to the EU often increase. Under the revised CBAM electricity approach, export windows could be monetised more effectively if actual emissions data is available and accepted by verifiers.
The reform also affects Serbia’s role in regional power markets. Although framed around rules for electricity imports into the EU, CBAM is described as reshaping cross-border power flows across South-East Europe. Serbia acts as both exporter and transit country, with flows into Hungary, Romania, Bulgaria and Croatia; from 2026 onward, lower default emission factors and potential use of actual data are expected to influence dispatch decisions, trading strategies and congestion management outcomes.
Effects on industrial exporters using low-carbon electricity documentation
Industrial exporters face carbon costs linked not only to direct process emissions but also to the electricity they consume. The proposal context lists CBAM-covered goods produced in Serbia including steel, aluminium, cement and chemicals. If electricity supplied to these facilities can be documented as low-carbon under revised CBAM electricity rules, embedded emissions of exported goods would decline accordingly.
The Commission’s proposal ties electricity data governance requirements to industrial decarbonisation reporting needs. It indicates that capturing opportunities under the revised framework requires institutional readiness in Serbia. This includes establishing credible national electricity emission factors acceptable to EU importers and verifiers.
The requirements described include transparent, consistent and auditable grid-level emissions data. Hourly or sub-hourly generation tracking would be required at least for major hydro and renewable plants. Independent third-party verification aligned with EU expectations is also identified as essential; without these elements, exporters would continue relying on default values even if defaults improve.
Compliance timeline starting with imports from 1 January 2026
The timing dimension starts with application of revised rules for electricity imported as of 1 January 2026. The period before that date is described as limited for regulatory alignment, technical preparation and market communication. Countries ready early are expected to shape how EU traders, utilities and banks interpret and price electricity carbon risk.
The proposal context also notes that late readiness could result in conservative assessment regardless of an exporting country’s actual generation mix. For Serbia specifically, it describes a mixed system with meaningful low-carbon capacity alongside geographic relevance and export optionality that was largely invisible under prior CBAM electricity rules but becomes actionable under the proposed changes.
Lignite remains dominant within Serbia’s system and marginal emissions are stated to continue mattering under CBAM calculations that reflect dispatch reality. From 2026 onward, Serbian electricity exports are described as being judged increasingly by what they actually are through improved defaults and potential use of actual emissions data rather than only by what they are not in terms of EU compliance.
Elevated by cbam.engineer