As Serbia’s energy-intensive industries grapple with the evolving landscape of the European Union’s Carbon Border Adjustment Mechanism (CBAM), the implications for electricity pricing and competitiveness are becoming increasingly pronounced. The definitive phase of CBAM commenced on January 1, 2026, encompassing electricity alongside sectors such as iron and steel, cement, aluminium, fertilisers, and hydrogen. This regulatory shift is particularly significant for Serbia, where coal remains a dominant source of power generation, influencing both domestic costs and export pricing structures.
In 2024, approximately 60% of Serbia’s electricity was generated from coal—primarily lignite—while hydropower contributed around 30%, and other renewables made up about 10%. The Energy Community’s report indicates that Serbia had a renewable capacity of 3,985 MW in the same year, with an ambitious target of achieving 45.2% renewables in electricity generation by 2030. However, the transition away from coal is progressing slowly, leaving industries vulnerable to rising carbon costs associated with their energy sources.
The EU’s benchmark carbon price reached €64.93/tCO2 on March 17, 2026. Despite a recent decline due to potential market interventions by the European Commission, this price remains substantial. Serbia’s lignite-fired power plants emit approximately 1.0–1.1 tCO2 per MWh of electricity produced. Consequently, the carbon cost for coal-based electricity could range between €65 and €72/MWh when aligned with EU carbon pricing standards. In contrast, Serbia’s national carbon tax—set at €4/tCO2—translates to only about €4–5/MWh under current conditions, highlighting a significant disparity between local and EU carbon costs.
This situation poses a critical challenge for Serbian industrial buyers such as steel mills and cement producers. While they may perceive domestic electricity prices as competitive compared to some EU counterparts, their export customers increasingly factor in embedded emissions when pricing products. With the EU accounting for over half (58.3%) of Serbia’s total trade in 2024—valued at nearly €19 billion—the pressure to comply with stringent emission standards is mounting.
Industries most affected include major players like HBIS Serbia in Smederevo and various cement and fertiliser manufacturers. These sectors face multiple pressures: they are significant consumers of electricity, exporters to the EU market, and potential participants in renewable energy initiatives aimed at lowering their carbon footprints.
The Serbian electricity market is undergoing notable changes that exacerbate these challenges. The liquidity of the organized day-ahead market has improved significantly; for instance, SEEPEX traded over 404,970 MWh in January 2026 alone. Day-ahead prices have fluctuated between €89.24/MWh and €109.53/MWh during mid-March 2026. Additionally, ongoing market coupling efforts with Hungary and Bulgaria are reshaping how domestic industrial power costs are determined—shifting from a national focus to regional influences.
As a result of these developments, energy-intensive industries are increasingly exposed to wholesale market volatility while also facing upward pressure on prices due to regional factors such as gas prices and hydrology impacts on supply availability. This dual exposure complicates the competitive landscape for Serbian firms that do not fully benefit from a low-carbon grid while simultaneously lacking the cost advantages typically associated with lignite-based power systems.
The discourse within Serbian industry is shifting from prioritizing “cheap electricity” to seeking “qualified electricity.” For exporters in sectors like steel or cement, it is now crucial not only to secure affordable power but also to ensure that this power can be certified as lower-carbon through mechanisms such as Power Purchase Agreements (PPAs) or Guarantees of Origin (GOs). As Serbia aims for its NECP target of 45.2% renewables by 2030, companies will need to adopt strategies that position them as proactive managers of their carbon profiles.
This evolution creates new opportunities for renewable energy producers within Serbia’s changing landscape. Projects focused on solar or wind energy can offer more than just megawatt-hours; they can provide essential documentation that enhances trade competitiveness for CBAM-affected exporters by lowering their embedded emissions.
The contrast between coal-generated and renewable-generated electricity will increasingly impact profit margins across Serbian industries. While coal-linked buyers may face high wholesale costs exacerbated by CBAM exposure, those linked to renewable sources may achieve lower effective export costs despite potentially higher nominal prices due to reduced carbon penalties at borders.
Looking ahead, Serbia’s industrial landscape appears poised for transformation as firms adapt to these new realities. As coal-based power continues to play a vital role in maintaining domestic supply stability, its diminishing suitability as an export enabler under CBAM highlights an urgent need for strategic shifts among energy-intensive companies—from relying solely on grid purchases to integrating more sustainable sourcing strategies through renewables.
