Western Balkan exporters are dealing with an uneven competitive challenge under the EU Carbon Border Adjustment Mechanism (CBAM), where carbon-related costs apply to existing covered imports. Policymakers are also considering extending CBAM to additional manufactured metal products. The compliance burden therefore varies by product and trade route rather than by region alone.
Exposure differs across the Western Balkans. Serbia has significant trade links in steel, aluminium and electricity, while Bosnia and Herzegovina combines exposure to power generation and metals. North Macedonia’s links include electricity and industrial production, and Montenegro’s position is more heavily centred on electricity and its remaining aluminium processing chain. Relevant manufacturers and electricity trade in Albania operate under different product and transmission conditions.
Comparisons across the region need to be based on CN codes, individual installations and export routes. This approach is intended to avoid relying on a single regional emissions average. It also reflects that CBAM obligations depend on the specific covered product being imported.
Changing EU steel import flows provide market context
European import patterns are shifting alongside CBAM implementation. EUROFER reported that finished-steel imports from Indonesia rose by 70% in the first half of 2026, while imports from China increased by 40%. Shipments from Türkiye declined by 16% over the same period, and total EU steel imports fell by 5%.
The reported figures provide context for Western Balkan exporters competing in the European market. They do not establish that carbon charges caused changes in purchasing patterns. The data therefore functions as background for how supply flows are moving within the EU steel market.
CBAM obligations and July 2026 quota limits affect pricing
Exporters are required to assess two separate EU policy measures when evaluating sales into the bloc. Under CBAM, carbon-related obligations apply to imports of covered steel, aluminium, cement, fertilisers, hydrogen and electricity. Separately, an EU steel measure introduced in July 2026 limits annual tariff-free imports to approximately 18.3 million tonnes.
The July 2026 measure also imposes a 50% duty on volumes exceeding the applicable quota. For Western Balkan steel producers, quota availability can determine whether a sale remains commercially viable before associated CBAM liability is calculated. Carbon costs and quota restrictions therefore need separate assessment during quotations, contract negotiations and customer access evaluation.
Electricity exports require conditions for using actual emissions values
Electricity exports involve a different compliance challenge under CBAM rules. Importers seeking to use actual emissions values must meet specific legal conditions tied to electricity generation, contractual arrangements and physical cross-border delivery. A guarantee of origin or renewable-energy label does not, by itself, establish eligibility to apply actual emissions values under CBAM.
The planned reform of electricity emissions calculations remains a proposal. Current imports must therefore be assessed under rules already in force rather than calculations that may apply after future legislative change. This affects how exporters’ electricity documentation is evaluated for current shipments.
Installation-level measurement and traceability shape competitiveness
Steel and aluminium exporters need reliable emissions measurements at installation level under CBAM requirements. They also need traceability for raw materials and precursor inputs, along with controlled allocation of emissions to the products being sold. Where upstream materials originate in a third country, processors must obtain supporting evidence needed for the relevant product-level calculation.
A generic national electricity-grid emissions factor or an annual company-wide emissions statement cannot replace the required product-specific calculation. Greater importance is placed on cooperation between exporters, upstream suppliers and European importers, particularly where production involves several facilities or countries.
The potential expansion of CBAM to downstream products could increase exposure for component manufacturers in Serbia and other Western Balkan industrial centres. European importers may begin requesting emissions documentation before final legislation is agreed. Exporters with established data and verification procedures may therefore be positioned to retain customers if documentation requests start ahead of any formal expansion.
Banks financing new industrial capacity also need to consider both current CBAM coverage and plausible future product classifications. Investment assessments that account only for today’s obligations may underestimate compliance requirements associated with products that could fall within a broader mechanism.
Verified emissions data can affect supplier selection
The Western Balkans’ geographical proximity to the EU and established commercial supply relationships are described as advantages for exporters. However, those advantages may be insufficient if customers cannot reliably determine the emissions associated with imported products. In such cases, buyer assessments can depend on whether documentation supports product-level emission calculations.
Producers that integrate emissions measurement, traceability and verification into their operations can provide European buyers with a clearer basis for assessing delivered costs and compliance exposure under CBAM. Exporters relying on unverified assumptions risk receiving more conservative cost estimates from customers. This could weaken their competitive position even before any proposed downstream expansion becomes law.