The European Parliament backed changes to the European Union’s Carbon Border Adjustment Mechanism (CBAM) that could reduce disruption to electricity trade with the Western Balkans. Lawmakers adopted the negotiating position on 15 September 2026 by 464 votes to 50, with 159 abstentions. The vote clears the way for talks with EU member states on the final legislation.
While the overall package also covers steel, aluminium and manufactured goods, several electricity provisions are designed to affect utilities, traders and renewable-energy developers. The measures are relevant for Serbia, Montenegro, Bosnia and Herzegovina, North Macedonia, Albania and Kosovo. The Parliament’s text includes electricity-specific rules that would apply alongside CBAM requirements.
Proposed exemption for stability-related cross-border flows
Parliament added a proposed exemption for electricity entering the EU when transmission system operators use cross-border flows to maintain network stability. The provision targets emergency balancing, redispatch and other security-related exchanges. It is intended to prevent those operational flows from triggering CBAM liabilities when they are not used for commercial trading.
The exemption would remain subject to negotiations with the Council and would not cover ordinary electricity trading. Parliament’s inclusion of the rule reflects concern that applying a border carbon charge mechanically across interconnected power systems can interfere with grid operation. Negotiations will determine whether the exemption is retained and how it is defined in the final text.
Revisions to embedded emissions default values
Further changes relate to how embedded emissions are calculated for electricity imports under CBAM. Under the existing methodology, electricity can be assigned a national default value based largely on the exporting country’s fossil generation. The approach can result in a carbon charge that does not match the actual mix of electricity delivered, particularly when exports come from hydropower, wind or solar plants.
The proposed revision would set default values using each country’s entire electricity generation mix, including non-fossil production. Non-EU countries could also seek a lower value if reliable data show that their average system emissions or emissions from price-setting generators are below the EU default. The change is aimed at aligning default calculations more closely with real generation characteristics.
Indicative border costs under Q2 2026 certificate pricing
The Parliament’s proposed approach would be material for Western Balkan markets under current assumptions. Using existing default values and a Q2 2026 CBAM certificate price of €75.28 per tonne of CO₂, indicative border costs reach about €86.42/MWh for Bosnia and Herzegovina. The same calculation gives €78.37/MWh for Serbia, €74.08/MWh for Kosovo and €73.70/MWh for Montenegro.
For North Macedonia, the indicative border cost is about €66.77/MWh under the same assumptions. Albania is listed as having a zero default factor because its electricity system is predominantly hydropower-based. The figures are presented as an illustration of how default-based liabilities could affect cross-border pricing decisions.
Trade volumes, day-ahead activity and regional routing
The source figures indicate that CBAM liabilities can exceed wholesale price spreads that support cross-border commerce. In the second quarter, Italian electricity averaged around €27/MWh above Montenegro, while Hungary’s price was approximately €13/MWh above Serbia. A default CBAM charge above €70/MWh can remove the value of an otherwise profitable export.
Data for the first six months of the definitive CBAM period suggest an impact on regional behaviour. Gross scheduled electricity exchanges between the Western Balkans and neighbouring EU markets fell by around 15% year on year in Q2 2026 and by approximately 19% across the first half of the year. At the same time, trading on four observed Western Balkan day-ahead exchanges increased by 19% to 2.70 TWh in Q2.
The Western Balkans returned to a seasonal net-import position of about 1,048 GWh in Q2 2026. This reversed exceptional net exports of roughly 1,247 GWh in Q1 2026 when favourable hydrology produced a temporary surplus. The shift is described as influenced by lower hydro generation, declining EU benchmark prices and changing fuel economics.
The market structure has also been described as different from 2025 patterns. Electricity is increasingly routed north through Serbia, while corridors into Croatia, Bulgaria, Greece and Italy remain commercially weaker. The changes occur alongside efforts by governments to deepen regional integration and connect Western Balkan power exchanges with the EU’s single day-ahead market.
CBAM evidence requirements for EU-bound transactions
Electricity exports and trading can continue largely as business as usual, but EU-bound transactions increasingly require CBAM evidence on source and embedded emissions. Analysts at Virtu.Energy describe an evidence package that must be sufficiently complete and traceable for examination by an EU-accredited verification body.
Although compliance responsibility rests with the authorised CBAM declarant or EU importer, much of the information needed for generation, metering, contracts and delivery comes from exporters and electricity producers. This means documentation has to move down the commercial chain toward importers responsible for declarations.
Virtu.Energy analysts said a pre-verification process should be integrated early so producers, traders and importers can build an evidence chain before annual CBAM declarations and certificate-surrender deadlines. They also noted that records not collected at generation or delivery can be difficult or sometimes impossible to reconstruct later.
Next steps in negotiations and possible retroactive application
The legislative revision could reduce market pressure by lowering default values and making plant-level emissions easier to demonstrate through available documentation. Parliament and the Council still need to agree on the final text, including treatment of emergency electricity flows and safeguards during severe market disruption.
A final agreement is targeted before the end of 2026, with some electricity amendments potentially applying retroactively from 1 January 2026. Until negotiations conclude, traders are expected to continue pricing against existing default liabilities while building evidence needed to support actual emissions under CBAM rules.