Europe’s Carbon Border Adjustment Mechanism is often discussed as a technical climate policy, but in truth it is one of the most powerful instruments ever aimed at redefining industrial, trade and energy behaviour. For the Western Balkans, CBAM does something more decisive still: it ends comfortable ambiguity. It makes electricity not simply a domestic policy matter, but a competitive and geopolitical asset priced according to its carbon truth.
The Western Balkans has lived for decades on a high-carbon electricity identity, dominated by lignite, entrenched in politics, deeply connected to employment, and defended rhetorically under the banner of security and affordability. CBAM changes the cost calculus. Electricity moving toward the EU will increasingly be measured not only by price but by emissions content. That shifts electricity from being an issue of engineering and sovereignty to an issue of economic competitiveness and access.
Serbia stands directly in the path of this reality. With lignite still structurally dominant, it confronts the most direct exposure. CBAM does not remove Serbia’s electricity from the European market; it makes it more expensive and therefore less competitive unless serious transformation occurs. This forces Belgrade to confront what it has successfully delayed for years: the need for faster renewables, disciplined coal transition, serious system modernisation and credible decarbonisation strategy. The question is no longer whether Serbia needs to move. It is whether it moves willingly or is pushed by market pressure.
Montenegro finds itself in a more advantageous position because hydropower structurally limits its CBAM exposure. Rather than being penalised, Montenegro’s electricity position becomes more attractive in a Europe where carbon cost is a decisive differentiating factor. Its cleaner system gives it leverage, credibility and strategic relevance that countries tied to lignite no longer enjoy.
Bosnia and Herzegovina embodies perhaps the most conflicted CBAM story. Its hydropower provides relief, but its coal reliance and governance fragmentation combine into a structural vulnerability. CBAM requires clear policy decisions. Bosnia’s political architecture resists clarity. Unless that contradiction resolves, Bosnia risks watching the cost of indecision rise steadily.
North Macedonia confronts CBAM through vulnerability. Already import-dependent and structurally exposed to regional instability, it does not possess the resilience buffer to absorb new pressures easily. CBAM therefore amplifies urgency. It requires accelerated transition support, investment attraction and serious external engagement rather than slow adaptation.
EU SEE states such as Greece, Romania, Bulgaria and Hungary are subject to CBAM indirectly because their electricity ecosystems depend on a regional context. A carbon-stuck Western Balkans does not simply harm itself; it complicates the entire neighbourhood’s electricity stability, trade clarity and system predictability. Their strategic interest is therefore the same as Europe’s — a Western Balkans that finally chooses alignment over nostalgia.
CBAM is not punishment. It is Europe operationalising a future where industries should not lose because they decarbonised while their competitors did not. For the Western Balkans, it is both warning and opportunity. Those who move will gain relevance and competitiveness. Those who resist will pay at the border — and in their economies. Electricity has always been political in the region. Now it is becoming decisively economic as well.