Energy Community Director Artur Lorkowski said at the Berlin Process summit in Montenegro on 22 October that electricity-market integration with the European Union raises a regulatory question on how carbon-border charges should apply when power is traded through a regional system. He warned that links between CBAM, electricity integration and EU accession need careful handling to avoid discouraging renewable investment or creating divisions between electricity markets on either side of the EU border.
The concerns affect Serbia, Montenegro, Bosnia and Herzegovina, North Macedonia, Albania and Kosovo. While these markets differ in generation mix, cross-border connectivity and market reform progress, their electricity systems are connected through regional trading. In practice, electricity imported by an EU buyer in a given hour can be associated with generation, transit and commercial transactions involving multiple countries.
Under the EU framework, imported electricity must receive a defined emissions treatment even when the interconnected grid makes it difficult to present the transaction as a simple bilateral physical delivery. The Energy Community said this creates challenges for aligning carbon accounting with how regional power flows are organised commercially and operationally.
EU CBAM rules for electricity and embedded-emissions calculations
The EU’s definitive CBAM regime covers electricity from 1 January 2026. Electricity is handled under separate provisions rather than the general 50-tonne mass-based threshold used for certain physical goods. The level of financial exposure depends on the embedded-emissions approach used for each shipment of electricity.
That exposure can vary depending on whether default values or eligible actual emissions are applied, along with the official CBAM certificate price and any relevant adjustments. The Energy Community noted that the presence of renewable generation somewhere within the trading chain does not automatically remove potential carbon-border liability for imported electricity.
The warning was issued as the European Commission works on amendments to CBAM’s electricity provisions. A proposal published in December 2025 would change emissions calculations and the conditions under which actual emissions may be recognised.
The Council set out its position in June 2026, followed by European Parliament adoption of amendments in September. At the time of the summit remarks, negotiations had not produced a final binding framework, meaning market participants needed to distinguish current requirements from possible changes arising from EU institutional talks.
Balancing needs versus carbon accounting
A key difficulty highlighted by Lorkowski concerns the difference between energy security and carbon accounting. Regional systems exchange power to manage outages, variations in hydropower output and unexpected demand changes. Such exchanges can support stability and protect consumers even when assigned emissions values are relatively high.
Policy discussions therefore face the risk that carbon-border rules could unintentionally discourage legitimate short-term balancing or imports needed to maintain security of supply. The challenge is linked to how emissions are attributed within trading arrangements that do not always correspond to straightforward physical delivery patterns.
Transmission data, compliance evidence and contractual risk allocation
Regional transmission system operators are described as central to reliable cross-border trading. Accurate schedules, metered exchanges and transparent capacity allocation are needed to reconcile transactions across borders. The Energy Community also pointed to information exchange as a factor that can reduce settlement disputes independently of CBAM.
For exporters, commercial arrangements must also allow use of relevant operational data for compliance purposes. Information systems are expected to retain timing and origin records required for independent verification tied to CBAM obligations.
The Energy Community said national renewable-energy strategies must consider how domestic decarbonisation interacts with export opportunities. Governments may expand wind and solar generation both to displace fossil-fuel production at home and to attract investment through access to European electricity markets, while CBAM can affect which destination is financially more attractive.
Renewables delivery constraints and eligibility for actual emissions
The availability of renewable generation does not ensure that electricity can be delivered when it is produced. Network congestion, curtailment and balancing requirements can reduce revenues assumed in a renewable power purchase agreement. The Energy Community also noted that certain existing conditions for using actual emissions can depend on cross-border circumstances.
Project developers and their contractual partners need clarity on which operating and commercial risks fall on generators, traders and importers. The physical delivery arrangements and contractual evidence must support the same transaction for compliance purposes.
Cost pass-through across borders under an importer obligation
The distribution of carbon-border costs across the region is another point raised by the Energy Community. Although the EU importer carries formal responsibility to declare emissions and surrender CBAM certificates, economic costs may be reflected in prices offered to Balkan suppliers and renewable generators.
It said focusing only on who purchases certificates does not show who ultimately bears the financial burden. Greater transparency over contractual cost pass-through and its effect on market prices was described as necessary for assessing whether CBAM supports clean investment or reduces competitiveness of cross-border sales.
Market coupling limits and uncertainty for investment models
Electricity market coupling can improve cross-border capacity allocation, price formation and absorption of renewable generation, but it does not automatically exempt transactions from CBAM. The existing framework allows specific treatment for certain third-country electricity markets if legal, climate and market conditions are met through a formal EU decision process.
The Energy Community said technical connection to an EU trading platform alone does not demonstrate compliance with exemption requirements. It added that such conditions can create uncertainty for renewable investment models that rely on access to European buyers willing to pay higher prices.
Compliance across multi-party trading chains
The Energy Community said compliance assessments require consideration of the full commercial chain rather than only end buyers. Electricity can be sold by a generator under a power purchase agreement to a regional supplier, traded through intermediaries, then imported by an EU buyer. In such cases, identification of the CBAM declarant, metering arrangements, hourly schedules and attribution of generation must be established throughout the process.
Eligibility to use actual emissions cannot be inferred from market price alone or from contractual claims or certificate-of-origin documents. The required physical and commercial evidence must satisfy applicable legal conditions tied to CBAM’s electricity provisions.
Regulatory change scenarios affecting financing assumptions
Banks and project developers were advised by the Energy Community to incorporate regulatory uncertainty into financial assessments. Renewable export projects were described as needing base-case calculations reflecting current rules alongside sensitivity scenarios tied to exposure under default emissions values.
The Commission’s December 2025 proposal would revise default calculation methodology and relax certain restrictions related to use of actual emissions if adopted. The Energy Community said potential changes could affect project economics including revenue expectations under power purchase agreements and specific cross-border trading routes, while final outcomes depend on agreement among EU institutions.
Integration priorities alongside CBAM attribution requirements
The Energy Community said closer electricity-market integration remains supported by economic and energy-security reasons in the Western Balkans. Shared markets can improve system resilience, support renewable deployment and strengthen cross-border trade if aligned with regional objectives.
Turning integration ambitions into bankable export contracts was described as depending on regulatory details including how emissions are attributed per megawatt-hour, which records substantiate attribution, and under what conditions transactions may use actual rather than default emissions values.