Electricity traders moving power between the Western Balkans and the European Union must factor in carbon-border liabilities alongside wholesale price differences, transmission constraints and balancing expenses. The margin between regional power exchanges can narrow or disappear when delivery costs and eligible emissions documentation are included.
Under the EU Carbon Border Adjustment Mechanism (CBAM), electricity is assessed in megawatt-hours (MWh), while emissions are expressed in tonnes of CO2 equivalent per MWh (tCO2e/MWh). The published CBAM certificate price for the third quarter of 2026 is €82.32/tCO2e, announced on October 5. This certificate price is described as a carbon price for electricity, with the cost per MWh depending on the emissions calculation applied.
Importers typically use regulated default electricity emissions values unless they meet cumulative requirements to use actual emissions. Those requirements link the generating installation and an eligible power purchase agreement (PPA) with network and interconnection evidence. They also require matching hourly generation and nominations, plus independent verification.
Default versus actual emissions treatment for imported electricity
Under the current framework, eligibility to use actual emissions depends on meeting cumulative conditions rather than on supply origin alone. Purchasing electricity from a country with a substantial renewable generation share does not automatically allow an EU importer to claim zero embedded emissions.
For traders, the carbon component depends on whether default values apply or whether actual emissions can be substantiated. The CBAM certificate price remains separate from customs pricing for electricity, with the resulting cost per MWh tied to the applicable emissions calculation.
Cross-border trading costs beyond wholesale price spreads
A trader purchasing electricity in Serbia for delivery into Hungary or Romania, or sourcing power in Montenegro for delivery towards Italy, must evaluate more than wholesale market price differences. Transmission rights, congestion auctions, curtailment, network losses, balancing deviations, settlement timing, credit support and customs obligations can all affect the final trading margin.
Cross-border electricity flows may also involve multiple markets with different trading arrangements and grid requirements. That structure can increase operational and contractual complexity for transactions spanning several systems.
An illustrative gross spread of €35/MWh may appear commercially attractive. If transmission and balancing expenses total €8/MWh, and an applicable emissions calculation yields 0.4 tCO2e/MWh, carbon exposure at €82.32/tCO2e would be about €32.93/MWh. In that example, combined costs exceed the original spread.
Sensitivity to verified low-emissions claims
The opposite outcome is possible when a generator can substantiate a low actual-emissions value under applicable legal requirements. Traceable renewable or other low-emission electricity could then reduce the carbon component for EU delivery.
Any potential benefit must be evaluated against contractual monitoring and verification costs needed to establish eligibility. Claimed emissions must correspond to the electricity allocated under the qualifying contract and to the relevant physical delivery schedule.
EU proposal COM(2025)989 and 2026 compliance rules
The European Commission’s December 2025 proposal COM(2025)989 would revise elements of CBAM rules for imported electricity. The proposal includes changes to default emissions factors and conditions for using actual emissions.
The proposal would allow certain intermediary PPAs where the contractual chain between producer and importer can be verified. It would also remove one existing network-congestion condition while keeping stringent hourly nomination requirements, alongside separate handling of implicit interconnector capacity allocation.
The Commission’s impact assessment reported that about 3% of electricity declarations during the transitional period used actual values. That figure does not indicate what share of imports could qualify under stricter definitive-phase requirements.
Generation shortfalls and hourly reconciliation risks
Electricity traders also manage portfolio risks linked to changes in generation availability. Hydropower shortages can force replacement purchases from thermal generators, affecting both profitability and the emissions profile of supplied electricity.
Wind or solar shortfalls can similarly leave long-term supply contracts under-delivered. Where a PPA pricing structure assumes eligibility for actual-emissions treatment, failure to reconcile nominated electricity with generation and delivery records may lead to disputes among importers, sellers and intermediaries.
Operational reconciliation is especially important at hourly level because traders may hold valid purchase and sale contracts but lack sufficient firm transmission capacity to deliver nominated volumes. Intraday adjustments, transmission system operator acceptance and imbalance settlement can differ from day-ahead nominations, particularly when renewable output deviates from forecasts.
For an actual-emissions claim, these operational changes must be assessed against specific legal requirements. Financial settlement alone does not establish that physical-delivery conditions were met, and a settlement invoice cannot replace underlying operational records.
Carbon cost treatment in bids and contract allocation of compliance work
The way carbon costs are treated can determine the maximum price an EU buyer is willing to pay for imported electricity. A buyer modelling default emissions may offer less than a buyer able to substantiate qualifying actual emissions if that calculation satisfies applicable rules.
A premium for low-carbon electricity would still need to cover legal due diligence, verifier fees and delivery risks. Contracts should allocate responsibility for metering, scheduling, legal review, verification and costs related to replacement electricity following forecasting errors or curtailment.
The expenses need to be incorporated into bid calculations from the start rather than treated as secondary costs after wholesale terms are agreed.
Documenting delivery data for CBAM-eligible transactions
Across Southeast Europe, documenting electricity delivery and emissions allocation is becoming part of cross-border transaction structures. A defensible transaction requires an identified generating installation, an identifiable buyer and an authorised CBAM declarant.
The transaction also requires an accepted cross-border schedule, verified hourly data and a controlled methodology for allocating delivered megawatt-hours. Without required contractual, operational and emissions evidence, a trade may remain conventional with an uncertain carbon-border cost rather than being a demonstrably eligible low-emissions supply arrangement.