At the Berlin Process Summit in Montenegro on 22 October 2026, the Energy Community Secretariat called for closer coordination between Western Balkan electricity market integration and the EU’s Carbon Border Adjustment Mechanism (CBAM). It warned that poorly aligned rules could deter renewable investment and create new commercial divisions between EU and non-EU electricity markets.
The EU aims to integrate Western Balkan electricity markets before countries in the region become full members of the bloc. Under the Energy Community framework, the countries are progressively adopting EU electricity market rules, with work covering market coupling, transparency, transmission-capacity allocation, balancing arrangements and regulatory alignment.
Closer integration could support price convergence and more efficient use of regional generation and interconnection capacity. But market integration and CBAM compliance operate under different legal requirements: linking markets does not by itself remove carbon-related obligations on electricity imported into the EU.
CBAM conditions and regional trade
Article 2(7) of the CBAM Regulation provides for a conditional exemption for electricity imports, subject to defined requirements. These include market coupling, regulatory alignment, climate-policy commitments and an assessment by the European Commission; market coupling alone is not sufficient to secure an exemption.
During the transition, Western Balkan power exchanges may align more closely with European trading practices even as electricity exports from the region remain subject to carbon-related obligations. Transmission corridors connect the region with Hungary, Croatia, Romania, Bulgaria and Italy, supporting supply, commercial trading and security of supply.
Additional border costs could alter how those interconnections are used, even when wholesale price differences would otherwise make cross-border trade attractive. The issue may be especially relevant during periods of strong renewable generation, when lower-cost Western Balkan electricity could serve demand in neighbouring EU countries.
The commercial value of interconnectors, renewable generation and cross-border power purchase agreements depends in part on how the two policy frameworks interact. For Serbia and Montenegro, the outcome could shape export strategies, renewable-project financing and participation in European power markets for the remainder of the decade.
Amendments remain under negotiation
The European Commission has proposed changes to the CBAM framework, including revised 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 include Regulation (EU) 2023/956, Article 2(7), the Commission proposal COM(2025)989 and European Parliament procedure 2025/0419(COD).
Western Balkan governments therefore face the parallel tasks of advancing electricity market integration and developing carbon-pricing, emissions-monitoring and verification arrangements for durable access to EU markets. The policy objective is for integration and decarbonisation to reinforce each other, while the central question for investors is whether regional electricity can reach EU market prices on commercially equivalent terms before regulatory uncertainty weakens investment incentives.
