The Energy Community Secretariat urged Western Balkan electricity market integration to be better aligned with implementation of the Carbon Border Adjustment Mechanism (CBAM). The call was made at the Berlin Process Summit in Montenegro on 22 October 2026. The Secretariat warned that poorly coordinated arrangements could deter renewable investment and create new commercial divisions between EU and non-EU markets.
The EU’s approach is to integrate Western Balkan electricity markets before the countries achieve full membership. Countries are expected to progressively adopt 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 market integration and CBAM compliance involve different legal requirements. Electricity imported into the EU remains subject to the applicable CBAM framework unless a specific legal exemption is available.
CBAM obligations and conditional electricity exemption
Article 2(7) of Regulation (EU) 2023/956 provides for a conditional electricity exemption for imported electricity. The conditions include market coupling, regulatory alignment, climate-policy commitments and an assessment by the European Commission. The Secretariat noted that market coupling alone does not grant an exemption.
The European Commission proposed amendments to CBAM treatment of imported electricity, including changes to emissions calculations. The proposal also includes more flexibility in demonstrating actual emissions. The initiative 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, corridors and carbon-related exposure
Energy Community materials describe a transitional commercial challenge for Western Balkan power exchanges. Exchanges may align more closely with European trading practices while exports from the region continue to face carbon-related obligations. The challenge affects Serbia, Montenegro and neighbouring countries seeking access to European wholesale markets.
The same transitional exposure extends to 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 support supply, commercial trading and regional security of supply.
The materials state that additional border costs can affect how interconnections are used even when wholesale price differences would otherwise make trade economically attractive. They add that effects could be particularly important during periods of strong renewable generation. In such periods, low-cost Western Balkan electricity could serve demand in neighbouring EU countries.
Carbon-pricing readiness alongside market integration
The Secretariat said governments in the region face two tasks: advancing market integration and developing carbon-pricing, emissions-monitoring and verification arrangements for durable access to the EU market. It said outcomes would affect investors’ assessment of the commercial value of interconnectors, renewable generation and cross-border power purchase agreements.
For Serbia and Montenegro, the materials indicate that developments could shape export strategies, renewable project financing and participation in European power markets for the remainder of the decade. They also describe a longer-term objective for market integration and decarbonisation to reinforce one another rather than send conflicting investment signals.
A key policy question highlighted is whether Western Balkan electricity can access EU market prices on commercially equivalent terms before regulatory uncertainty weakens investment incentives.