Proposed changes to the European Union’s carbon border rules could reduce default emissions assigned to electricity exported from Serbia, Montenegro and Bosnia and Herzegovina. The same reform package would also adjust how exporters qualify for actual-emissions treatment. The European Commission has put forward a methodology change that would affect the calculation of default factors.
Current CBAM default factors and implied import costs
Under the existing methodology, national default factors are calculated largely from fossil-fuel generation. This approach produces values of 1.148 tCO₂/MWh for Bosnia, 1.041 tCO₂/MWh for Serbia and 0.979 tCO₂/MWh for Montenegro. At the second-quarter CBAM certificate price of €75.28 per tonne, those factors imply import costs of approximately €86.42/MWh, €78.37/MWh and €73.70/MWh, respectively.
Commission proposal to use the full electricity mix
The European Commission has proposed calculating default factors using each country’s entire electricity mix rather than focusing on fossil production. The stated effect is that hydro, wind and solar generation could reduce the national average used in the default factor calculation. The proposal is aimed at changing how electricity-related CBAM defaults are derived.
The potential impact could be material in power systems where non-fossil generation is significant alongside fossil output. In Montenegro, large hydropower output coexists with the Pljevlja lignite plant. Under the current default factor approach, Montenegrin electricity can carry a CBAM cost that exceeds the average commercial spread across the undersea interconnector to Italy.
Changes to evidence requirements for actual-emissions treatment
The reform would also remove a requirement for exporters seeking actual-emissions treatment to prove that no physical congestion existed between the generating installation and the EU at the hour of export. The change is linked to how congestion evidence is handled across transmission systems. Renewable producers have little control over congestion across multiple transmission networks.
Removing the condition would eliminate one of the most difficult elements of the present evidence chain. Producers and declarants would still need to meet other requirements for actual-emissions treatment. These include demonstrating a qualifying PPA, providing hourly production data, submitting firm nominations across each relevant border, reporting imported quantities and completing accredited verification.
Legislative timeline and possible retroactive application
The Council adopted its negotiating position in June, while the European Parliament’s environment committee approved its report in July. A political decision is expected towards the end of 2026. If adopted in its current form, the electricity changes could apply retroactively from January 1, 2026.
The possibility of retroactive application is already influencing market expectations, particularly on corridors where existing default values make exports uneconomic. The proposal would not remove CBAM from Balkan electricity. Instead, it could shift reliance away from default penalties that do not reflect the carbon content of a specific renewable delivery.
For developers planning wind, solar and hydro projects based on EU exports, the difference between default-based calculations and verified actual-emissions treatment could affect whether EU revenues are supported by bankable assumptions or remain theoretical under current arrangements.