Europe’s Carbon Border Adjustment Mechanism (CBAM) has introduced a new dimension of industrial competitiveness: the carbon clock. Every year that passes without decarbonisation increases the cost burden for exporters selling into the European Union. For Serbia, whose manufacturing base is heavily reliant on electricity-intensive processes, CBAM represents both a challenge and an opportunity. The challenge is immediate: Serbia’s electricity mix has one of the highest carbon intensities in the Western Balkans. The opportunity lies in the fact that Serbia can still transform its energy system before CBAM impacts expand into more product categories.
As serbia-business.eu stresses, CBAM compliance will not remain limited to raw materials. Over this decade, the mechanism will likely expand to include manufactured components, semi-finished goods, fabricated structures and certain machinery categories—precisely the areas in which Serbia excels. If Serbia fails to decarbonise its electricity, exporters will face rising carbon costs that cannot be passed on to buyers.
Electricity is the defining variable. Industries such as fabrication, metallurgy, machinery, HVAC systems, electronics and EV components rely heavily on electricity not only during production but during testing and validation. As serbia-energy.eu notes, FAT cycles, environmental testing, high-voltage labs and industrial validation benches consume large amounts of energy. If this energy is carbon-intensive, embedded emissions rise quickly, triggering higher CBAM exposure.
Renewable PPAs therefore become a defensive and offensive strategic tool. Defensively, they shield exporters from carbon-cost escalation. Offensively, they position Serbian manufacturers as low-carbon suppliers in a market where green procurement increasingly determines access. A battery-housing producer operating under a wind-powered PPA will outcompete a similar producer relying on lignite-heavy grid power. A machinery producer using renewable electricity gains scoring advantages in European tenders. A fabrication firm with low-carbon documentation gains access to projects requiring ESG transparency.
Time, however, is the critical factor. CBAM’s timelines will not wait for Serbia’s energy-transition schedule. The faster Serbia deploys renewable generation, expands grid capacity, and facilitates industrial PPA markets, the more insulated its exporters will be. The slower the transition, the higher the carbon penalties Serbian manufacturers will face. In a competitive global environment, these costs can rapidly erode Serbia’s nearshoring advantage.
There is also a strategic geopolitical dimension. As the EU reduces reliance on external high-carbon suppliers, it will favour nearshore partners with low-carbon manufacturing capabilities. Serbia is ideally positioned geographically, but geography alone is insufficient. Green electricity must become a central element of Serbia’s industrial identity. By aligning energy policy with manufacturing needs, Serbia can become a preferred supplier in Europe’s decarbonised industrial system.
The carbon clock is ticking. Serbia can meet it by transforming its electricity system or fall behind as carbon costs reshape market access. The opportunity remains open, but only for as long as Serbia moves decisively toward green, stable, affordable electricity.
