For Serbia’s steel producers, purchasing renewable electricity does not automatically reduce current Carbon Border Adjustment Mechanism (CBAM) certificate requirements. Under the present framework, covered iron and steel goods in the relevant Annex II category are assessed on direct emissions rather than emissions linked to purchased electricity. The distinction affects how exporters, customers and financiers evaluate green power purchase agreements (PPAs).
HBIS Serbia runs steelmaking facilities in Smederevo and Šabac, employs more than 5,000 people, and has annual finished-product capacity of approximately 2.2 million tonnes, according to Serbia’s Ministry of Trade. At that scale, electricity prices and security of supply are major commercial considerations alongside carbon-related requirements for exports to the European Union. A renewable PPA may support decarbonisation strategy, customer positioning and corporate reporting, but it does not change how covered steel goods are assessed under CBAM.
Direct emissions assessment under current CBAM rules
Renewable power can still help steelmakers limit exposure to wholesale electricity price volatility. It can also align with decarbonisation objectives held by lenders and customers. Additional benefits include strengthening environmental documentation, preparing manufacturers for possible changes in regulatory scope, and supporting industrial electrification as production shifts away from fossil fuels.
These effects operate through channels separate from the current CBAM treatment of direct emissions from covered steel goods. For banks and investors, direct process emissions and current CBAM exposure are treated as one risk category. Electricity procurement is treated as another risk category covering price, volume, renewable attributes, grid risks, PPA counterparty creditworthiness, and metering data reliability.
In that context, treating renewable electricity as an automatic reduction in current CBAM liabilities can lead to incorrect pricing. It can also produce unrealistic financial projections and result in poorly structured contracts. The separation is therefore relevant when PPAs are assessed alongside existing CBAM obligations.
EU proposal on expanding CBAM coverage from 2028
The European Commission has proposed extending CBAM from 2028 to selected manufactured goods with intensive steel or aluminium content. The Council of the EU and the European Parliament have supported broader coverage, while Parliament has proposed a substantially wider range of products. The expansion remains a proposal rather than a change to the current treatment of covered iron and steel goods.
Serbian manufacturers using steel in machinery, industrial components, fasteners, wire products and other fabricated goods are expected to incorporate supplier information into future export-compliance systems. Emissions data collected from steel suppliers could become increasingly important for demonstrating the environmental performance of downstream products sold into the EU. The relevance of such information would depend on which products and emissions categories are ultimately covered by any future rules.
Structuring green power supply alongside compliance data
Electricity traders can provide industrial customers with more than an undefined volume of green power. A structured package can combine physical electricity supply with transparent allocation of renewable attributes. It can also include metering and reconciliation procedures plus data interfaces for manufacturers’ product-emissions reporting where legally relevant.
Each component can carry commercial value even if it does not directly reduce the number of CBAM certificates required under the current methodology. This approach links operational electricity arrangements with reporting needs without assuming an automatic change in certificate obligations.
PPA financing depends on contract terms and credit quality
For HBIS Serbia and other large industrial electricity consumers, contract terms and counterparty creditworthiness matter alongside environmental claims. A long-term PPA can help finance new renewable capacity by giving developers predictable cash flows. This depends on whether the industrial buyer has sufficient credit strength and whether the contract allocates risks appropriately.
Project lenders also need to assess how a PPA performs if electricity demand falls or production schedules change. They also consider scenarios where the buyer is restructured. Lenders must further evaluate how a PPA would operate if CBAM rules expand to additional products or emissions categories.
Financing structures may rely on flexible volume bands, change-in-law provisions, and clearly defined ownership of renewable attributes. These contractual questions are separate from whether renewable electricity reduces a producer’s current CBAM certificate requirements.
Implications for Serbia’s steel competitiveness depend on EU methodology
Serbia’s steel competitiveness cannot be assessed by treating CBAM solely as an export tax or by assuming that renewable electricity purchases resolve carbon-compliance requirements. Process decarbonisation, electricity procurement, and reliable emissions-data systems have distinct legal and financial implications even when managed together. The resulting decisions for investment and financing are therefore tied to multiple factors rather than immediate effects from “green steel” claims.
Electricity is already described as a strategic input for Serbia’s steel industry. Its precise implications under CBAM depend on product category, the applicable emissions methodology, and how EU legislation evolves. Those factors shape how renewable procurement interacts with existing compliance requirements for covered iron and steel goods.