At the Berlin Process Summit in Montenegro on 22 October 2026, the Energy Community Secretariat urged closer coordination between Western Balkan electricity market integration and the European Union’s Carbon Border Adjustment Mechanism (CBAM). It warned that poorly aligned arrangements could discourage renewable investment and create new commercial divisions between EU and non-EU electricity markets. The EU plans to integrate the region’s power markets before Western Balkan countries become full members of the bloc.
Western Balkan countries are progressively adopting EU electricity rules through the Energy Community framework. The process covers 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.
However, market integration does not remove CBAM obligations on electricity imported into the EU: the two policy tracks operate under different legal requirements. Western Balkan power exchanges may align more closely with European trading practices during the transition while electricity exports remain subject to carbon-related obligations.
Conditional exemption and cross-border trade
Article 2(7) of the CBAM Regulation provides for a conditional exemption for electricity imports. Its conditions include market coupling, regulatory alignment, climate-policy commitments and an assessment by the European Commission. Market coupling alone does not automatically qualify imported electricity for an exemption.
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. Additional border costs could change how the interconnections are used even when wholesale price differences would otherwise make trade economically attractive.
The issue could be especially relevant during periods of strong renewable generation, when low-cost Western Balkan electricity could serve demand in neighbouring EU countries. The treatment of cross-border electricity will affect the commercial value of interconnectors, renewable generation and power purchase agreements. For Serbia and Montenegro, it could shape export strategies, renewable-project financing and participation in European power markets for the remainder of the decade.
Western Balkan governments face the parallel tasks of advancing market integration and developing carbon-pricing, emissions-monitoring and verification arrangements needed for durable access to EU markets. A central policy question is whether electricity from the region can access EU market prices on commercially equivalent terms before regulatory uncertainty weakens investment incentives.
CBAM amendments remain under negotiation
The European Commission has proposed amendments to improve the treatment of imported electricity, including changes to emissions calculations and greater flexibility for demonstrating actual emissions. The Council adopted its negotiating position 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). The longer-term policy objective is for electricity market integration and decarbonisation to reinforce one another rather than create conflicting investment signals.