The decision adopted by the Council of the European Union on 12 June 2026 represents the most significant strengthening of the Carbon Border Adjustment Mechanism (CBAM) since the system entered its definitive phase on 1 January 2026. While the original CBAM focused primarily on basic materials such as iron and steel, aluminium, cement, fertilisers, electricity and hydrogen, the Council has now agreed a negotiating position that would substantially broaden coverage and introduce stronger anti-circumvention measures.
For exporters in Serbia, Montenegro, Bosnia and Herzegovina, North Macedonia and Albania, the message is clear: CBAM is evolving from a reporting and payment mechanism into a broader industrial compliance framework that increasingly follows products deeper into manufacturing supply chains.
Closing the “downstream loophole”
One of the biggest weaknesses identified by Brussels was that CBAM largely targeted upstream commodities while leaving many downstream manufactured products outside the system.
This created a potential loophole. Steel imported into the EU could be subject to CBAM, but a finished product manufactured elsewhere using that same high-emission steel might enter the EU market without facing equivalent carbon costs.
The Council’s position seeks to close this gap by extending CBAM to additional downstream products that contain significant quantities of steel and aluminium. Reports indicate that potentially hundreds of additional product categories could ultimately fall within scope during the legislative process.
For Western Balkan manufacturers this is particularly important because many exporters do not sell raw steel or aluminium directly to the EU. Instead they export:
- automotive components;
- fabricated metal products;
- machinery;
- industrial equipment;
- construction products;
- electrical equipment;
- metal assemblies.
Many of these value-added products could eventually become subject to CBAM requirements if Parliament and Council agree on the expanded scope.
Why this matters for Serbia
Serbia’s exports to the EU contain substantial volumes of CBAM-exposed products.
The country’s steel sector, centred around operations such as HBIS Serbia in Smederevo, has already been identified as a direct CBAM exposure point. However, the next phase could affect companies further down the industrial chain producing fabricated steel products, industrial machinery and automotive components.
The same applies to aluminium processors, cable manufacturers, industrial equipment suppliers and engineering companies that increasingly serve EU buyers demanding carbon transparency.
The practical implication is that carbon accounting may move from a facility-level obligation to a product-level commercial requirement.
Electricity becomes even more strategic
For Serbia and Montenegro, perhaps the most important consequence lies in electricity.
Electricity has been covered by CBAM from the outset. The strengthening proposal arrives only days after the European Commission published further technical work on indirect emissions accounting and electricity-related decarbonisation pathways.
European industrial buyers are increasingly seeking evidence regarding:
- electricity source;
- generation profile;
- hourly matching;
- metering systems;
- guarantees of origin;
- auditable emissions factors.
The Council’s decision reinforces the direction of travel: the EU wants fewer opportunities for carbon leakage and greater traceability throughout industrial supply chains.
For renewable developers across the Western Balkans, this creates a potential commercial opportunity.
Wind farms, solar parks and BESS-supported renewable portfolios that can demonstrate verifiable low-carbon electricity may become increasingly valuable partners for CBAM-exposed manufacturers exporting to the EU.
Anti-circumvention measures are becoming a major theme
A second major pillar of the Council proposal concerns anti-circumvention rules.
EU policymakers increasingly believe some market participants may attempt to avoid CBAM obligations through product reclassification, supply-chain restructuring or shifting carbon-intensive processing stages outside covered sectors.
The Council therefore wants stronger powers to monitor and respond to circumvention risks. It has also proposed more systematic reviews of products that should be brought within CBAM coverage in future years.
For exporters, this means that relying on regulatory gaps may become an increasingly risky strategy.
Instead, competitive advantage is likely to come from demonstrable emissions reductions, verified data systems and transparent reporting.
Implications for mining and metals
The proposal is especially significant for mining and processing projects across Southeast Europe.
Companies developing:
- copper processing;
- zinc refining;
- aluminium products;
- steel production;
- critical minerals processing;
- battery-material facilities;
are increasingly likely to encounter CBAM-related requirements from European customers, financiers and industrial partners.
The strategic direction from Brussels suggests that future competitiveness will not depend solely on production cost but increasingly on embedded carbon intensity.
Projects able to demonstrate lower-carbon processing routes, renewable power sourcing and verifiable emissions monitoring may gain advantages in EU procurement and industrial supply contracts.
What industrial companies should prepare now
The Council position is not yet final law. Negotiations with the European Parliament still need to take place before a final agreement is reached. However, the political direction is now unmistakable.
Industrial exporters should already be preparing for:
- product-level carbon accounting;
- facility-level emissions verification;
- electricity consumption reconciliation;
- meter and SCADA traceability;
- supplier emissions data collection;
- CBAM audit trails;
- downstream product reporting requirements;
- importer verification requests.
For Serbian and Montenegrin manufacturers, the debate is no longer whether CBAM will affect them. The question is how far down the value chain CBAM will ultimately extend and how quickly EU customers begin demanding evidence before regulations formally require it.
The Council’s June 2026 position indicates that Brussels intends to transform CBAM from a border carbon charge into a comprehensive industrial competitiveness instrument. For exporters across the Western Balkans, carbon data is increasingly becoming as important as price, quality and delivery schedules.
Elevated by CBAM.Clarion.Engineer