EMISSIONS: Serbia Aims for EU Market Link by 4Q26, Seeks CBAM Exemption

Serbia plans to connect its day-ahead power market with the EU by 4Q26 through the Hungarian and Bulgarian borders as it hopes to potentially receive an exemption from the EU’s CBAM, Serbian electricity exchange Seepex said, cited by Argus.

• If CBAM applies to Serbian electricity flows, an EU ETS equivalent will be introduced, potentially increasing electricity costs by 13-29%, an Energy Community ministerial council report published in December showed.
• Energy Community members agreed to the 2022 Electricity Integration Package, which offers a CBAM exemption until 2030 if they couple with the European market by 2026.
• However, Energy Community Secretariat director Artur Lorkowski doubts that the exemption will be granted, as market coupling is not yet achieved.
• Also, there is uncertainty around how the CBAM will apply to Energy Community countries due to unclear criteria and procedural delays.
• And currently, electricity exports and transit flows can't be separated, so both may be subject to CBAM, with all electricity entering the EU from contracting parties declared as imports, according to an energy community report in October.
• Despite growing renewables, coal-fired generation still makes up 40% of annual output in the Balkans, with thermal plants benefiting from the EU electricity market without ETS obligations.
• CBAM is anticipated to be introduced in January 2026.