The Energy Community Secretariat called for closer coordination between Western Balkan electricity-market integration and the European Union’s Carbon Border Adjustment Mechanism (CBAM) at the Berlin Process Summit in Montenegro on 22 October 2026. It warned that misaligned arrangements could deter renewable investment and create commercial divisions between EU and non-EU electricity markets.
The EU plans to integrate the region’s electricity markets before Western Balkan countries become full members of the bloc. The process is advancing through the Energy Community framework, under which countries are progressively adopting EU electricity rules. Market coupling, transparency, transmission-capacity allocation, balancing arrangements and greater regulatory alignment are among the areas involved.
Successful implementation could support electricity price convergence and more efficient use of regional generation and interconnection capacity. But the two policy tracks have different legal requirements: interconnected electricity markets do not by themselves remove CBAM obligations on power imported into the EU.
Electricity exports remain subject to CBAM conditions
Article 2(7) of the CBAM Regulation provides for a conditional exemption for electricity imports under defined circumstances. The conditions include market coupling, regulatory alignment, climate-policy commitments and an assessment by the European Commission. Market coupling alone does not automatically exempt imported electricity.
During the transition, Western Balkan power exchanges may align more closely with European trading practices while electricity exported from the region remains subject to carbon-related obligations. This means closer alignment in market operations does not itself remove the requirements applying to exports.
Transmission corridors connect Western Balkan electricity systems with Hungary, Croatia, Romania, Bulgaria and Italy. They support electricity supply, commercial trading and regional security of supply. Additional border costs could change how the links are used, even when wholesale price differences would otherwise make electricity trade economically attractive.
The issue could be especially important during periods of strong renewable generation, when low-cost Western Balkan electricity could serve demand in neighbouring EU countries. The outcome will affect the commercial value of interconnectors, renewable generation and cross-border power purchase agreements for investors.
For Serbia and Montenegro, the rules could shape electricity export strategies, renewable-project financing and participation in European power markets for the remainder of the decade. Governments in the region face the parallel task of advancing integration and developing carbon-pricing, emissions-monitoring and verification arrangements for durable access to EU markets.
Proposed CBAM changes remain under negotiation
The European Commission has proposed amendments to improve the treatment of imported electricity, including changes to emissions calculations and greater flexibility for demonstrating actual emissions. The Council’s negotiating position was adopted in June 2026, and the European Parliament voted on amendments in September.
By early November 2026, the legislative process had not produced a final enacted replacement for the existing framework. The relevant references are Regulation (EU) 2023/956, Article 2(7), European Commission proposal COM(2025)989 and European Parliament procedure 2025/0419(COD).
The longer-term policy objective is for market integration and decarbonisation to reinforce one another rather than create conflicting investment signals. A central question is whether Western Balkan electricity can access EU market prices on commercially equivalent terms before regulatory uncertainty weakens investment incentives.