The Energy Community Secretariat called for Western Balkan electricity market integration to be better aligned with the implementation of the Carbon Border Adjustment Mechanism (CBAM). The warning was issued that poorly coordinated arrangements could deter renewable investment and create new commercial divisions between EU and non-EU markets. The call was made at the Berlin Process Summit in Montenegro on 22 October 2026.
The EU aims to integrate Western Balkan electricity markets before the countries reach full membership. The approach involves progressive adoption of EU electricity rules through the Energy Community framework. The integration process covers market coupling, transparency, transmission capacity allocation, balancing arrangements, and regulatory alignment.
The Secretariat said greater integration could improve price convergence and support the use of regional generation and interconnection capacity. It also highlighted that electricity trading arrangements need to be coordinated with CBAM implementation. The statement connected these elements to the risk of commercial divisions between EU and non-EU markets.
Market coupling and CBAM obligations for imported electricity
Electricity market integration and CBAM compliance were described as operating under different legal requirements. Electricity imported into the EU remains subject to the applicable CBAM framework unless a specific legal exemption is available. The Secretariat noted that market coupling alone does not remove those obligations.
Article 2(7) of Regulation (EU) 2023/956 provides for a conditional electricity exemption. The conditions include market coupling, regulatory alignment, climate-policy commitments, and an assessment by the European Commission. The exemption is therefore linked to multiple requirements beyond market coupling.
The European Commission proposed amendments to CBAM treatment of imported electricity. The changes include adjustments to emissions calculations and more flexibility in demonstrating actual emissions. The proposal is identified as COM(2025)989.
The Council adopted its negotiating position in June 2026. The European Parliament voted on amendments in September 2026 under procedure 2025/0419(COD). By early November, the process had not produced a final enacted replacement for the existing rules.
Cross-border trading, transmission corridors, and carbon-related exposure
Western Balkan power exchanges may align more closely with European trading practices while exports from the region continue to face carbon-related obligations. The transitional commercial challenge affects Serbia, Montenegro, and neighbouring countries seeking access to European wholesale markets. It also covers cross-border balancing arrangements and longer-term investment opportunities.
Transmission corridors connect Western Balkan electricity systems with EU markets in Hungary, Croatia, Romania, Bulgaria, and Italy. These links are described as supporting supply, commercial trading, and regional security of supply. Additional border costs can influence how interconnections are used even when wholesale price differences would otherwise make trade economically attractive.
The effects could be particularly relevant during periods of strong renewable generation. In such periods, low-cost Western Balkan electricity could serve demand in neighbouring EU countries. The Secretariat linked these dynamics to how carbon-related obligations interact with cross-border power flows.
Carbon-pricing readiness and investment implications for Serbia and Montenegro
The Secretariat said governments in the region face two tasks: advancing market integration and developing carbon-pricing along with emissions-monitoring and verification arrangements. These measures are needed for durable access to the EU market. The outcome is expected to affect investors’ assessment of the commercial value of interconnectors, renewable generation, and cross-border power purchase agreements.
For Serbia and Montenegro, the Secretariat said developments could shape export strategies, renewable project financing, and participation in European power markets for the remainder of the decade. It also framed a longer-term policy objective as ensuring that market integration and decarbonisation reinforce each other rather than send conflicting investment signals.
A key policy question identified was whether Western Balkan electricity can access EU market prices on commercially equivalent terms before regulatory uncertainty weakens investment incentives. This question was presented alongside concerns about coordination between electricity integration steps and CBAM implementation requirements.