The Energy Community Secretariat urged 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 poorly aligned arrangements could discourage renewable investment and create commercial divisions between EU and non-EU electricity markets.
The EU plans to integrate Western Balkan electricity markets before countries in the region become full members of the bloc. Under the Energy Community framework, countries are progressively adopting EU electricity rules, including market coupling, transparency, transmission-capacity allocation, balancing arrangements and regulatory alignment. Successful implementation could support electricity price convergence and more efficient use of regional generation and interconnection capacity.
Integration does not remove CBAM obligations
Electricity market integration and CBAM compliance have separate legal requirements. Interconnected markets do not, by themselves, remove CBAM obligations on electricity imported into the EU, the Secretariat said. During the transition, Western Balkan power exchanges may align more closely with European trading practices while electricity exports from the region remain subject to carbon-related obligations.
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.
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, but additional border costs could change their use even when wholesale price differences would otherwise make trade attractive.
The issue could be especially relevant when renewable generation is strong and low-cost Western Balkan electricity could serve demand in neighbouring EU countries. The commercial value of interconnectors, renewable generation and cross-border power purchase agreements will be affected by how exports are treated.
Proposed amendments remain under negotiation
The European Commission has proposed changes to improve the treatment of imported electricity, including revisions to emissions calculations and greater flexibility in demonstrating actual emissions. The Council adopted its negotiating position on the proposed amendments 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).
Western Balkan governments face the parallel task of advancing integration and developing carbon-pricing, emissions-monitoring and verification arrangements for durable access to EU markets. For Serbia and Montenegro, the outcome could shape electricity export strategies, renewable-project financing and participation in European power markets for the remainder of the decade.
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 will obtain access to EU market prices on commercially equivalent terms before regulatory uncertainty weakens investment incentives.