The EU Carbon Border Adjustment Mechanism is changing the logic of electricity trade between the Western Balkans and neighbouring EU markets. Price spreads still matter, but they are no longer enough. From 2026, traders must also price carbon, compliance and documentation risk.
CBAM entered its definitive phase on 1 January 2026. The European Commission says importers of CBAM goods, including covered electricity imports, must apply for authorised CBAM declarant status and buy CBAM certificates from national authorities. The Energy Community states that from 1 January 2026, electricity imports from the Energy Community to the EU are subject to CBAM-related administrative and financial obligations.
The first market effects are already visible. The Energy Community’s Q1 2026 CBAM report found that scheduled commercial exchanges between the Western Balkans and the EU fell significantly compared with Q1 2025. Western Balkan-to-EU scheduled commercial flows declined by 8.1%, while EU-to-Western Balkan flows fell by 40.7%. Overall commercial trade across the EU–WB6 border contracted by roughly 25%.
This is striking because prices alone would have suggested stronger trade. The same report found that Western Balkan day-ahead prices were on average about €30/MWh lower than neighbouring EU markets, except Greece. Montenegro averaged €85.8/MWh, Serbia €94.7/MWh and North Macedonia €96.7/MWh, while Hungary averaged €127.5/MWh and Italy Central-South €130.3/MWh in Q1 2026.
In a pre-CBAM world, those spreads would normally encourage exports from lower-price Western Balkan markets into higher-price EU markets. But CBAM changes the economics. A trader must now ask whether the apparent spread survives after carbon costs and compliance friction.
The Montenegro–Italy corridor illustrates the new logic. The Energy Community found that the Montenegro–Italy spread was roughly €43/MWh in Q1 2026, favouring export from Montenegro to southern Italy. Yet scheduled flows declined. The report argues that Montenegro’s default emissions factor implied CBAM costs that largely offset the apparent price advantage.
That is the essence of the new market: electricity is no longer traded only as electricity. It is traded as electricity plus carbon attribute plus route risk plus documentation quality.
For Western Balkan utilities, CBAM creates a strategic challenge. Coal-heavy systems face the risk that their exports become less competitive in EU markets. Countries with lower-carbon generation, especially hydro-heavy systems in favourable hydrological periods, may be better positioned. But default emissions factors and verification rules can still create complexity.
For traders, CBAM creates both risk and opportunity. Some traditional routes may become less attractive. Other corridors may gain value if they avoid carbon friction or connect lower-emission supply to higher-price demand. The Energy Community also found growing divergence between commercial schedules and physical flows, which can complicate system operation and transmission planning.
For policymakers, the message is clear. Market coupling, emissions-data quality, domestic carbon pricing and power-sector decarbonisation are now commercial necessities, not only climate-policy goals. The Energy Community notes that electricity market coupling is strongly intertwined with CBAM because the CBAM regulation outlines the possibility of a time-limited exemption for electricity imported from non-EU countries whose markets are coupled with the EU.
CBAM is not simply a tax at the border. It is a force that is repricing regional electricity trade. The Western Balkans can still export power to the EU, but the cheapest electron on the screen may no longer be the cheapest electron after carbon is counted.
