On Sept. 15, the European Parliament adopted its negotiating position on a broader revision of the EU Carbon Border Adjustment Mechanism (CBAM) by 464 votes to 50, with 159 abstentions. The vote opened negotiations with EU member states on the final legislation. The revision includes changes relevant to how electricity imported into the EU is treated as a CBAM good. For Serbia’s electricity market, the main focus is the methodology used for that import treatment.
The European Parliament’s position is not yet binding law. The proposed framework would adjust several elements of the electricity methodology, including evidence requirements and calculation approaches. It would remove the current requirement to demonstrate that physical network congestion did not affect the route to the EU. It would also introduce flexibility for physical power purchase agreements involving traders and other intermediaries.
Changes proposed for CBAM electricity methodology
The reform proposal would also adapt nomination rules for markets using implicit capacity allocation and market coupling. In addition, it would change the methodology used to calculate country electricity default values. None of these elements is binding at this stage, but they are part of negotiations over final CBAM legislation. For electricity exported during 2026, Serbian generators, traders, and their EU counterparties are expected to continue building evidence under existing rules while preparing for a potentially simpler framework.
This creates a compliance challenge tied to timing and documentation. Current transactions must be recorded against the methodology in force now, even as EU rules could change how those same 2026 imports are handled in the first definitive-period CBAM declarations. The evidence burden therefore has to be managed across two moving points: current documentation requirements and possible retrospective effects from negotiated legislation.
Verification bottlenecks under the current actual-emissions approach
Under the current electricity methodology, using actual embedded emissions instead of a national default factor requires multiple conditions to be met together. The electricity must be linked to a qualifying physical power purchase agreement (PPA). The generating installation must remain below a required emissions threshold, and production and firm nomination must correspond within the required hourly period.
Exporters also have to satisfy a network condition. For Serbian renewable projects, this network test has been described as one of the most difficult requirements to operationalise. While wind or solar producers can control generation meters, SCADA records, and plant documentation, other actors such as traders or balance responsible parties hold nominations, cross-border capacity, and settlement records. EU importers can document customs entries and their CBAM declarant identity.
The difficulty is linked to what information is available and where it sits in practice. Evidence showing, retrospectively and hour by hour, that physical network congestion did not prevent the claimed route is harder because much of that information lies with transmission-system operators and market infrastructure. The proposed reform would delete that congestion condition if retained in final legislation.
If kept in the final text, removing the congestion requirement would eliminate a major verification bottleneck for Serbian electricity moving toward EU markets. It would not remove evidence obligations entirely. Instead, verification would shift toward demonstrating a coherent relationship between the named generator, contract terms, hourly generation, trading route, allocation to the EU buyer, and the final CBAM declaration.
Intermediary structures and hourly traceability
The proposed changes are also relevant because Serbian renewable electricity exports often do not follow a single bilateral structure between one generator and one EU importer. Transactions frequently involve multiple parties across contracting and trading steps. One example chain described is: Serbian RES producer to supplier or trader, then balance responsible party, then cross-border market, then EU trader or importer, followed by an authorised CBAM declarant.
The current methodology can make intermediary arrangements difficult to fit into an actual-emissions framework. The proposed approach would allow intermediaries within the PPA chain if there is a verifiable contractual relationship connecting the electricity producer with intermediaries and linking them to the EU importer or authorised CBAM declarant. For traders, this could be among the most commercially relevant changes included in the revision proposal.
Contract flexibility would still require traceability without double counting. A verifier would need to establish that electricity claimed by a specific EU declarant can be traced back to an identified Serbian generating installation for the relevant period. The key test described is whether each claimed quantity can be reconstructed through commercial and operational steps across that chain.
Even under a simplified regime, hourly data is expected to remain central for actual-emissions claims. For Serbian renewable generators, evidence architecture is expected to connect installation identification through meter readings and production hours, then PPA linkage through trader allocation and cross-border transaction steps up to the EU importer or declarant receiving a verified quantity. Where explicit cross-border capacity is used, nomination evidence remains important.
Where electricity moves through markets using implicit allocation and market coupling, amended methodology is expected to recognise that bilateral nomination models may not fully reflect how such markets operate. This could become more significant as Serbian and regional markets deepen integration with EU day-ahead and intraday market coupling systems.
Guarantees of Origin and upstream data needs
The reform proposal should not be interpreted as making Guarantees of Origin sufficient CBAM evidence on their own. A Guarantee of Origin can demonstrate renewable attributes associated with electricity, but CBAM actual emissions require an evidence chain linking emissions values to the relevant generating installation and to electricity claimed by an EU declarant. For Serbian renewable producers, this means value depends on both renewable attributes and a verifier-ready evidence package.
The evidence package described can include plant identity, meter hierarchy, hourly generation details, PPA chain information, trading allocation records, relevant nomination records, EU declarant details, and emissions information accepted by an accredited verifier. Responsibility for CBAM declarations remains with an authorised CBAM declarant in the EU even though much supporting information originates outside the EU.
That structure implies contractual rights will become more important for EU importers and traders seeking data from Serbian generators and trading counterparties. CBAM clauses are therefore expected to migrate into electricity PPAs and trading agreements alongside provisions covering price delivery balancing credit settlement terms. EU buyers may increasingly request items including installation identification; meter and generation records; Monitoring Plan information; verified emissions data; hourly allocation data; PPA evidence; trading and nomination records; documentation supporting cross-border routes; and cooperation with an accredited EU verifier.
Default factors and timing of verification readiness
The proposed reform also includes changes to how electricity default values are calculated for CBAM purposes. Instead of relying on a factor focused on fossil electricity generation, it would use an average grid emissions factor reflecting a wider electricity mix that includes renewable generation. For Serbia, this could matter even where exporters cannot meet all conditions needed for actual emissions claims.
A cleaner national generation mix could gradually lower default CBAM emissions values applied to Serbian electricity under this approach. The proposal describes two commercial pathways: exporting using applicable Serbian default factors or exporting linked to a specific renewable installation supported by sufficient evidence enabling use of lower verified actual-emissions values.
The legislative changes are being negotiated while the EU verification system becomes operational. Accredited CBAM verifiers are entering the Registry system from September 2026. Installation reviews, Monitoring Plan assessments, evidence testing, and site visits are expected ahead of first definitive-period verification reports in 2027.
For Serbian exporters, waiting until annual declaration cycles would create risk because meter data nominations allocations and contractual evidence are generated continuously while missing records may be difficult or impossible to recreate months later. A practical approach described is running pre-verification during the reporting year by testing whether an evidence chain can withstand an EU verifier’s review before final assurance engagement.
The reform proposal indicates that removing congestion-evidence requirements would eliminate one of the most difficult elements in current methodology for actual-emissions claims if retained in final legislation. It also points to recognising intermediary PPA structures within regional trading practices where suppliers aggregate generation manage balancing exposure and secure cross-border positions on behalf of producers. Adjusting nomination requirements toward market coupling is described as aligning CBAM more closely with modern cross-border power markets while keeping traceability requirements intact.
For Serbia’s renewable sector, cross-border trading itself remains business as usual under existing commercial processes described in the reporting chain from production through allocation and onward receipt by an authorised CBAM declarant. The competitive element highlighted is that evidence travels with each MWh through producer-specific documentation up to what an accredited verifier accepts for underlying emissions-related claims.
Elevated by CBAM.Clarion.Engineer