Serbia’s electricity exports to the European Union face a potentially significant cost disadvantage under the Carbon Border Adjustment Mechanism (CBAM), with an indicative charge of around €78.37/MWh when the national default emissions factor is applied. Such a cost could eliminate much of the price advantage that has traditionally supported Serbian power exports to neighbouring EU markets.
The calculation is based on Serbia’s default emissions factor of 1.041 tonnes of CO₂ per MWh and the CBAM certificate price of €75.28 per tonne recorded in the second quarter. The resulting carbon cost is substantially higher than many of the price differences historically seen between Serbia and EU electricity markets.
During the second quarter, for example, the average Hungarian electricity price was around €13/MWh higher than Serbia’s, leaving a significant gap between the potential market premium and the carbon cost calculated using the default factor.
However, the €78.37/MWh figure does not mean that every Serbian electricity export will automatically face this full cost. CBAM obligations are settled through the EU compliance system, while the commercial allocation of the resulting cost can depend on contractual arrangements between producers, traders and authorised CBAM declarants.
The key issue is therefore whether market participants can demonstrate installation-specific emissions and qualify for treatment based on actual emissions rather than the national default value. Where that evidence cannot be provided, the default factor represents the main source of CBAM exposure.
Renewable electricity producers have the potential to substantially reduce this exposure by demonstrating actual emissions associated with their generation. However, proving that electricity originated from a wind, solar or hydropower plant is only one part of the requirement.
The EU evidence framework requires a traceable physical delivery chain, including a qualifying power purchase agreement, hourly generation data, cross-border capacity nominations, documentation covering transit countries, the quantities allocated to individual importers and independent verification. The evidence must ultimately connect each claimed megawatt-hour with the authorised CBAM declarant using it in the EU declaration.
Serbia’s Guarantees of Origin system can support renewable electricity claims and help demonstrate that renewable attributes have not been double-counted. However, a Guarantee of Origin cannot replace evidence of physical electricity delivery. If the renewable certificate is sold separately from the electricity, the producer may not be able to demonstrate that the associated power was physically delivered to a specific EU importer.
The implications also extend beyond electricity exporters themselves. Serbian companies supplying electricity to manufacturers producing steel, aluminium, fertilisers and other carbon-intensive products for the EU market are likely to face growing demands from buyers and verifiers for reliable data on the emissions associated with their electricity consumption.
This is likely to create a growing commercial divide between generators selling undifferentiated Serbian electricity subject to the national default factor and renewable installations capable of providing a controlled, documented and independently verified low-carbon electricity package.
At approximately €78/MWh, the default CBAM route represents more than an additional reporting burden. For Serbian exporters, it could become a decisive factor in determining whether cross-border electricity sales remain commercially viable, particularly when the available price premium in neighbouring EU markets is significantly smaller than the potential carbon cost.
