The Council of the European Union adopted a negotiating position on 12 June 2026 that would strengthen the Carbon Border Adjustment Mechanism (CBAM) after the system entered its definitive phase on 1 January 2026. The original CBAM covered basic materials including iron and steel, aluminium, cement, fertilisers, electricity and hydrogen. The new Council stance would broaden coverage and introduce stronger anti-circumvention measures.
For exporters in Serbia, Montenegro, Bosnia and Herzegovina, North Macedonia and Albania, the change points to CBAM shifting from a reporting and payment mechanism toward a wider industrial compliance framework. The approach described in the Council position increasingly follows products as they move deeper into manufacturing supply chains. This is linked to efforts to address gaps between upstream coverage and downstream product flows.
Downstream products targeted to close a CBAM gap
Brussels identified a weakness in how CBAM applied primarily to upstream commodities while leaving many downstream manufactured products outside the system. The potential gap arises when steel imported into the EU is covered by CBAM, but finished goods made elsewhere using that same high-emission input can enter the EU without equivalent carbon costs. The Council’s negotiating position aims to close this difference.
The proposal seeks to extend CBAM to additional downstream products containing significant quantities of steel and aluminium. Reports indicate that potentially hundreds of additional product categories could fall within scope during the legislative process. If agreed by Parliament and Council, value-added exports from the Western Balkans could face new CBAM-related requirements.
Many exporters in the region do not sell raw steel or aluminium directly to the EU. Instead, they export automotive components, fabricated metal products, machinery, industrial equipment, construction products, electrical equipment and metal assemblies. Under an expanded scope, these categories could be brought into CBAM coverage depending on how product rules are finalized.
Serbia’s exposure across steel processing and industrial supply chains
Serbia’s exports to the EU include substantial volumes of products already exposed under CBAM coverage. The country’s steel sector has been identified as a direct exposure point, including operations such as HBIS Serbia in Smederevo. The next stage could extend effects beyond primary production.
The strengthened approach could affect companies further down the industrial chain producing fabricated steel products, industrial machinery and automotive components. Similar implications are described for aluminium processors, cable manufacturers, industrial equipment suppliers and engineering companies serving EU buyers seeking carbon transparency. The practical effect described is a shift from facility-level accounting toward product-level commercial requirements.
Electricity evidence requirements for Serbian and Montenegrin trade
For Serbia and Montenegro, electricity is highlighted as a key consequence of the Council’s strengthened direction. Electricity has been covered by CBAM from the outset. The strengthening proposal arrives shortly after the European Commission published further technical work on indirect emissions accounting and electricity-related decarbonisation pathways.
European industrial buyers are increasingly seeking evidence covering electricity source, generation profile, hourly matching, metering systems, guarantees of origin and auditable emissions factors. The Council decision is described as reinforcing a move toward fewer opportunities for carbon leakage and greater traceability across industrial supply chains. This aligns with increased documentation expectations for electricity inputs used in production.
The same developments are described as creating potential commercial opportunities for renewable developers across the Western Balkans. Wind farms, solar parks and BESS-supported renewable portfolios that can demonstrate verifiable low-carbon electricity may become more valuable partners for manufacturers exporting to the EU under CBAM-exposed supply chains.
Anti-circumvention provisions and monitoring powers
A second pillar of the Council proposal concerns anti-circumvention rules. EU policymakers expect some market participants may attempt to avoid CBAM obligations through product reclassification, supply-chain restructuring or shifting carbon-intensive processing stages outside covered sectors. The Council therefore seeks stronger powers to monitor and respond to circumvention risks.
The Council also proposes more systematic reviews of products that should be brought within CBAM coverage in future years. For exporters, this is presented as increasing risk in strategies that rely on regulatory gaps rather than verified emissions performance. The alternative described is based on demonstrable emissions reductions supported by verified data systems and transparent reporting.
Mining and metals projects facing expanded customer requirements
The proposal is described as especially significant for mining and processing projects across Southeast Europe. Companies developing copper processing, zinc refining, aluminium products, steel production, critical minerals processing and battery-material facilities are described as increasingly likely to encounter CBAM-related requirements from European customers, financiers and industrial partners.
The direction attributed to Brussels indicates that competitiveness would increasingly relate to embedded carbon intensity alongside production cost. Projects able to demonstrate lower-carbon processing routes, renewable power sourcing and verifiable emissions monitoring may gain advantages in EU procurement and industrial supply contracts. These elements are presented as part of how evidence may be assessed under expanded CBAM expectations.
Preparation steps before final legislation
The Council position is not yet final law because negotiations with the European Parliament remain ongoing before agreement is reached. Even so, industrial exporters are described as needing preparation aligned with expected requirements under an expanded approach. The list of preparation items includes product-level carbon accounting and facility-level emissions verification.
Additional preparation areas listed include electricity consumption reconciliation; meter and SCADA traceability; supplier emissions data collection; CBAM audit trails; downstream product reporting requirements; and importer verification requests. For Serbian and Montenegrin manufacturers, the question is framed around how far down value chains CBAM extends and how quickly EU customers request evidence before formal regulations apply.
The June 2026 Council position indicates an intention to transform CBAM from a border carbon charge into a comprehensive industrial competitiveness instrument. For exporters across the Western Balkans, carbon data is described as becoming increasingly important alongside price, quality and delivery schedules in commercial relationships with EU buyers.
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