October 3, 2025
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Serbia proposes taxes on greenhouse gas emissions, imported carbon-intensive products

The Ministry of Finance of Serbia launched public consultations on the draft Law on Greenhouse Gas Emissions Tax and Law on Carbon-Intensive Product Imports Tax, both at EUR 4 per ton of CO2 equivalent.

On January 1, importers of electricity, cement, iron and steel, aluminum, hydrogen and fertilizers to the European Union will start paying the CBAM carbon dioxide tax. If the country of origin also has a CO2 pricing system and the EU recognizes it, the sum will be deducted from CBAM.

The greenhouse gas emissions tax won’t be a new fiscal burden, but an incentive for modern and cleaner production, the Ministry of Finance of Serbia stressed in its public consultation call on what it said would be two key laws for the country’s green transition. It intends to charge producers and importers of certain goods EUR 4 per ton of CO2 equivalent.

The draft Law on Greenhouse Gas Emissions Tax and draft Law on Carbon-Intensive Product Imports Tax are intended to lower pollution, improve energy efficiency and secure a more equal position for the Serbian industry in the domestic and international markets, according to the announcement.

The public consultation process lasts until October 21, the deadline for submitting comments and suggestions. Presentations and discussions are scheduled for October 8 and October 15 in Belgrade, and online meetings are to be held on October 10 and October 17.

Both laws to enter into force on January 1, when EU also starts charging CBAM

The first of the two taxes is for big industrial emitters in the sectors of cement, fertilizers, iron and steel, aluminum and electricity. The ministry added that it is targeting January 1 for both laws to come into effect.

On the same date, the EU is set to start charging its Carbon Border Adjustment Mechanism (CBAM) tax on imported electricity, the other said goods as well as hydrogen. If the country of origin also taxes CO2 and the EU recognizes its system, the sum that was paid will be deducted from CBAM.

The CBAM tax is envisaged to rise every year until in 2034 it becomes equal as the prices of grenhouse gas emission certificates in the EU’s Emissions Trading System (EU ETS). Of note, the plan is also to expand the mechanism to other segments that EU ETS covers. The price has held above EUR 75 per ton of CO2 equivalent in the past month.

Institutional infrastructure isn’t sufficiently developed to roll out domestic ETS

The draft Law on Carbon-Intensive Product Imports Tax, envisaged as an equivalent to CBAM on the home market, doesn’t include hydrogen (and neither does the other draft), due to negligible production, while electricity wasn’t included because of technical limitations and a lack of a precise taxing methodology, the ministry explained.

The tax on imported carbon-intensive products would cover only the entities that import more than five tons of the designated products per year

Importers would be taxed based on emissions embedded in the production of the goods from abroad, but they will be able to use tax credits if an emissions levy has already been paid in the country of origin, similar to the EU system. The obligation is only for companies importing more than five tons of designated products per year.

The government opted for a tax instead of an ETS because “an emissions trading system requires a developed institutional infrastructure and market mechanisms that currently aren’t completely established,” an accompanying document reads.

Importantly, an independent verification system is under development.

The taxes would cover CO2, nitrous oxide (N2O) and perfluorocarbons (PFCs).

CO2 tax scope limited to certain larger producers

The ministry pointed out that the draft law wasn’t made to be applied extensively, but only to the firms obligated to have a license for emissions from their plants. Mostly they are large and medium-sized companies. The increase in administrative expenses would be limited, as the entities in the group already measure emissions data, in line with the Law on Climate Change, and send them to the Ministry of Environmental Protection.

The production of synthetic fertilizers and nitrogen compounds, cement, pig iron, steel and ferroalloys, aluminum and electricity accounts for over 57% of emissions in Serbia and more than 90% within the national monitoring and reporting system.

Tax deductions for large electricity producers that invest in decarbonization

A payer of the greenhouse emissions tax that predominantly generates electricity, accounting for at least 80% of its income in the previous annual tax period, is eligible for a tax credit amounting to 20% of the sum that it invested in decarbonization measures, the draft shows.

The deduction wouldn’t exceed 80% of the due tax. The government determines the said measures.

The draft greenhouse gas emissions tax envisages incentives for the taxpayers to finance green projects, the just transition and protection of vulnerable households

In addition, entities that pay the tax would be eligible for incentives, from the state budget, for financing climate and energy transformation through investing in renewables and energy efficiency, innovative low-carbon technologies, decarbonization of industrial production, green construction and support to the just transition and protection of vulnerable households.

In the short term, the new fiscal obligation can cause a moderate increase in production costs for facilities with significantly high emissions, the ministry said. Then there is a possibility, over the long term, for a moderate indirect effect on prices of some products, like construction materials and energy, but it would be limited and gradual, the law’s authors claim.

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September 9, 2025
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EU mulls steps to prevent bypassing of CBAM

The European Commission plans to propose measures by the end of the year to prevent exporters to the European Union from avoiding the bloc’s carbon border tax.

Brussels fears exporters from third countries could ship low-emission goods to the EU, while selling high-carbon products in other markets, without reducing their overall emissions, Reuters reported.

The Carbon Border Adjustment Mechanism (CBAM), set to come into force on January 1, 2026, will impose fees on the CO2 emissions of goods imported to the EU from countries without a carbon pricing scheme. The tax will cover cement, iron and steel, aluminum, fertilizers, electricity, and hydrogen.

The carbon border tax is expected to severely affect the EU’s neighbors, including the Western Balkan countries.

CBAM could be extended to other products

The European Commission is concerned that CBAM could be bypassed if foreign firms redirect their low-carbon products to Europe while still producing high-carbon goods for export to other markets. This way, they would avoid the EU’s carbon border tax without actually reducing their overall emissions.

To address the problem, the EU executive intends to propose extending CBAM to other products, a European Commission spokesperson has said, according to Reuters.

Imported goods could be given a fixed emissions value per country or per company

The Commission is also considering a system under which goods are given a fixed CO2 emissions value per country or per company rather than calculating specific emissions per shipment, Reuters reported, quoting an unnamed senior EU official.

According to the news agency, the official also hinted that Chinese exporters could potentially attempt to circumvent CBAM in this way.

Exporters from these countries are struggling to adjust to the new system, especially in the electricity sector, and have requested a postponement of CBAM.

However, the administration in Brussels is not willing to consider delaying its implementation date.

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August 20, 2025
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Šahmanović: Montenegro expects first large private wind and solar plants to be online in 2026

Over the past year, Montenegro has adopted two reform laws – on energy and on renewable energy sources – and scheduled its first auctions for market premiums. Admir Šahmanović, Minister of Energy and Mining, told Balkan Green Energy News that the new regulations fully align the sector with the European Union acquis, sending a clear signal to investors that Montenegro now has a stable regulatory framework and market-based prices that safeguard citizens’ interests. Becoming part of the European energy space, he added, is not only a political goal but also the path Montenegro should follow to ensure cleaner and more secure energy for future generations.

Admir Šahmanović served as Minister of Mining, Oil and Gas in the government of Prime Minister Milojko Spajić. In February this year, he became the coordinator of the Ministry of Energy, and since April, he has served as Montenegro’s Minister of Energy and Mining. In an interview with Balkan Green Energy News, Šahmanović discusses his plans to mobilize larger investments, Montenegro’s timeframe for coupling its electricity market with Italy and the EU, the ministry’s steps to prepare the country for the EU’s carbon border tax, and plans for investments in the natural gas sector.

What are the key innovations introduced by Montenegro’s law on renewable energy sources?

The law on renewable energy sources introduced, for the first time, a clear, competitive and fully transparent support mechanism for green energy production – an auction scheme.

Over the past months, we have worked hard to ensure the law really takes hold. We have prepared about 15 by-laws that enabled us to launch the first auctions. I believe this is one of the most important contributions of the new law, as it sends a clear message to investors that Montenegro has a stable framework and market-based prices that safeguard citizens’ interests.

In this way, we are laying a solid foundation for a rapid energy transition, which is both our strategic choice and our responsibility to future generations.

Montenegro has also adopted a new law on energy. What does this regulation bring?

The Law on Energy is our umbrella regulation, providing a framework that fully aligns the sector with the EU acquis. It introduces stricter standards, greater protection of end consumers, better competition, and stronger institutional oversight.

It also opens Montenegro’s energy sector to the European market and creates a stable, predictable environment. This is important not only for investors but also for all consumers, as people are ultimately the ones affected by any change in the system.

You stated that these reforms set a clear strategic path for Montenegro, which sees its energy future within the European market. What will this future bring to Montenegro, its economy, and its citizens?

Our ambition is to make Montenegro a country with clean energy and a stable system. Being part of the European energy space ensures greater security of supply, lower costs in the long term, and a strong inflow of investments. Our economy will have access to a larger market, and our citizens will benefit from safe, sustainable, and environmentally friendly energy.

It is not just a political goal – it is a path I want us to follow in our development, so that we leave our children a country with cleaner and more secure energy.

Admir Šahmanović visiting northern Montenegro with EPCG Director Ivan Bulatović

Applications have been invited for Montenegro’s first auctions for market premiums. What benefits do you expect from auctions?

The auction mechanism allows us to select the most favorable and serious investors through a fair and competitive process. Projects are implemented without budget subsidies and with minimal risk to the state.

We expect auctions to ensure new capacities, create jobs, improve the use of our natural resources, and strengthen overall energy stability. These are the benefits citizens will feel, both on their electricity bills and through new opportunities that will open up in local communities.

Investor interest in wind and solar is strong, with requests to build power plants totaling around 5.5 GW. When do you expect these projects to be realized?

Such strong interest is the best proof that the reforms are yielding results. We expect the first large projects to be online in 2026, with significant capacities ready by 2030. Transparent procedures, good cooperation with local communities, and improved grid infrastructure will be key to making these investments a reality.

What are the main obstacles to these projects? How to remove them?

The biggest challenges are administrative procedures, transmission network limitations, and spatial planning documents. We are working to address them through interdepartmental cooperation, digitalization of processes, and the state’s commitment.

We are strengthening capacities, speeding up permitting, and modernizing regulations. I want to ensure that investors coming to Montenegro know they can work in a clear, predictable, and fair environment.

Admir Šahmanović at the ministerial panel at Belgrade Energy Forum 2025 in May

Preparations are underway to link Montenegro’s electricity market with the EU via Italy, with 2027 featuring as the target year.

Yes, we are working diligently on institutional and market integration. This involves harmonizing the rules, passing the remaining by-laws, and preparing the market operator. With the support of the EU and the Energy Community, I am confident that 2027 will remain the year when we will fully open our market to Europe.

All countries in the region are facing CBAM. How prepared is Montenegro?

CBAM will change the rules for electricity exports to the EU, bringing new costs as well as opportunities. We are aware that it will be a financial burden on our economy, but that is precisely why we view it as an additional incentive to accelerate the implementation of renewable energy projects and increase our own production of green electricity.

We are working on adjusting the regulatory framework, harmonizing economic activities, and ensuring the largest possible share of clean energy to remain competitive and maintain full access to the European market while reducing emissions.

Montenegro also has ambitious plans in the natural gas sector – a gas pipeline, a terminal for liquefied natural gas (LNG), and gas-fired power plants. How far along are these projects?

I see gas as a development opportunity – to ensure greater security of supply, diversification, and new opportunities for the economy. But I also believe that such strategic projects must be developed through dialogue with local communities, with full respect for their views.

We are currently preparing and developing the Ionian Adriatic Pipeline (IAP) project and assessing the potential for an LNG terminal. We are doing this responsibly, one step at a time, and in line with the EU’s energy transition goals.

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August 6, 2025
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Federation of BiH prime minister says ETS could be introduced by end-2025

State institutions of Bosnia and Herzegovina and one of its two political entities, the Federation of BiH, will take joint steps aimed at introducing an emissions trading system by the end of the year, according to Nermin Nikšić, the entity’s prime minister.

According to Nikšić, the European Union’s carbon border tax, which is set to take effect on January 1, 2026, poses a serious challenge that demands swift and decisive action at the state level to protect thousands of jobs and prevent a dramatic drop in BiH’s industrial exports, the Fena state news agency reported.

Nikšić announced joint activities by entity and state institutions aimed at establishing an emissions trading system (ETS) by the end of 2025.

With the full rollout of the Carbon Border Adjustment Mechanism (CBAM) at the beginning of next year, importers in the EU will pay a tax on cement, iron, steel, aluminum, fertilizers, hydrogen, and electricity from countries without CO2 pricing systems. It applies to Bosnia and Herzegovina as well as other countries of the Western Balkans.

Nikšić: To maintain exports to the EU, Bosnia and Herzegovina must urgently establish a framework recognized by the bloc

To maintain its exports to the EU, BiH must urgently establish a framework that the bloc recognizes, Nikšić explained. He recalled that BiH is the only country in the region without an electricity exchange, and said it is time for all levels of government to act jointly and responsibly.

FBiH Minister of Energy, Mining and Industry Vedran Lakić expressed the belief that the best way for Bosnia and Herzegovina to protect its economy and keep carbon tax revenues for itself is to establish its own emissions trading system. Without such a scheme, he warned, tens of millions of euros will end up in the EU budget

The revenues would be used to modernize production facilities, reduce emissions, and speed up the green transition, said Lakić.

According to him, the ministry is preparing financial support, through the FBiH Development Bank, for businesses that decide to install solar panels. This, he claims, will enable them to produce electricity for their own needs and avoid CBAM.

Hope dies last

Bosnia and Herzegovina and Montenegro have requested delaying the CBAM implementation, as did the European Network of Transmission System Operators for Electricity (ENTSO-E), but the EU confirmed it would proceed as planned. The Energy Community Secretariat pointed out that none of its contracting parties, including Western Balkan countries, would be able to get an exemption for electricity before the tax begins to be charged.

As January 1 is just months away, CBAM’s impact will become clear relatively soon. In Serbia, the National Alliance for Local Economic Development (NALED) recently warned that the carbon border tax would threaten jobs and businesses that employ about 7% of the country’s workforce and account for 11% of its GDP.

In Bosnia and Herzegovina, an official analysis has shown that CBAM could cost the country’s economy between EUR 369 million and EUR 1.62 billion through 2030.

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August 4, 2025
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Serbia adopts Just Energy Transition Plan until 2030

Serbia now has a Just Energy Transition Plan until 2030. The document contains suggested measures for the mitigation of the impact of reducing fossil fuel use, primarily coal, so that workers, firms and communities aren’t left behind.

Following last month’s completion of the public consultation process regarding the proposed Just Transition Action Plan, the Government of Serbia passed, at its last session, the Just Energy Transition Plan of the Republic of Serbia until 2030. The document leans on the Integrated National Energy and Climate Plan (INECP or NECP)

It lays out sustainable energy policy measures that would need or could be undertaken. The point is in reducing fossil fuel dependence and improving security and efficiency of electricity supply by switching to renewable energy sources, and in an energy efficiency boost.

A just transition aims to promote environmentally sustainable economies in a way that is fair and inclusive for all

“A just transition aims to promote environmentally sustainable economies in a way that is fair and inclusive for all – workers, businesses and communities – by creating opportunities for decent work and leaving no one behind. This initiative should not be seen as a fixed set of rules, but as a dynamic process based on dialogue with a focus on addressing the concerns and needs of local populations and affected stakeholders,” the plan reads.

The approach is based on mitigating the negative effects of the energy transition process. It implies significant investments in retraining and reskilling, to assist workers in adjusting to new industries, as well as education, the plan adds.

It highlights the importance of incentivizing the development of new industries, and supporting small and medium-sized enterprises, which can enable alternative sources of income and employment.

Electricity system collapse in December 2021 marked as turning point?

Until December 2021, domestic electricity production met domestic needs, although even before that, the power system had been making maximum efforts for many years to provide sufficient amounts of electricity or, rather, provide sufficient amounts of coal for the operation of thermal power plants, the document notes.

There is no elaboration on the time reference, but that’s when a major outage struck coal-fired thermal power plants of state-owned power utility Elektroprivreda Srbije (EPS). Of note, it was one in a string of serious incidents in the electricity system.

Coal plants are old and they mostly don’t comply with environmental standards

“The fact is that existing electricity generation plants are old and most of them are not in line with new operating conditions and standards when it comes to environmental protection. Therefore, it is quite clear that in the case of the Serbian energy sector, the energy transition should lead to a radical change in the structure of sources and methods of electricity production,” according to the plan.

Coal plants, open pit mines could be replaced with wide range of activities from culture to gas power plants

Listed among the possibilities for repurposing coal plants and coal mine land after shutting them down are green power plants (but also gas-fueled energy facilities), launching industrial production, logistical and commercial activities, together with sports, culture, education, agriculture, tourism and waste management.

In 2023. there were 25,288 employees in thermal power plants (22.2%) and coal mines (77.8%), the document notes. The oldest coal plant, Kolubara A of 239 MW, was built in 1956, and the newest unit is Kostolac B3, of 350 MW. It came online last year.

“Social dialogue mechanisms should be established to ensure that the voices of all stakeholders are heard and their concerns are addressed. This includes consultations with trade unions, local self-governments and civil society organisations,” the Just Energy Transition Plan of the Republic of Serbia until 2030 suggests.

Expenses are envisaged at EUR 75.4 million, of which EUR 12 million would be for incentives for entrepreneurship and self-employment and EUR 60 million for improving business structure at existing industrial parks.

Carbon pricing system to make coal power plants in Serbia increasingly uncompetitive

One section covers the upcoming rollout of charges within the European Union’s Carbon Border Adjustment Mechanism (CBAM). The tax affects imports of a group of raw materials and electricity. Third countries can be exempted if they establish their own carbon pricing and emissions trading systems.

“In order to balance the economic and environmental impacts of the introduction of domestic carbon pricing in Serbia, a phased approach could be adopted, starting with a modest carbon price and gradually increasing it. Support for affected industries, such as subsidies for low-carbon technologies and worker retraining programs, along with recycling revenues to finance green projects and providing direct rebates to citizens, can mitigate negative effects,” the plan adds.

NGOs have criticized the action plan draft for only describing preparatory activities

Actually, proceeds from greenhouse gas emissions allowances in the EU are used only for the green economic transition, and it is similar with most environmental levies.

The introduction of a carbon tax mechanism will make domestic coal-fired power plants increasingly uncompetitive, especially in regional electricity markets, the government warned.

Nongovernmental organizations and associations earlier criticized the draft, arguing that it delays the energy transition until 2030, only lists preparatory activities and that, inter alia, there is no targeted date for ending the use of coal for electricity production.

In any case, a just energy transition requires defining deadlines and projects and securing funds exclusively for the said purposes. Otherwise the market will trample coal plants and mines, and it will probably happen abruptly, which would jeopardize energy security and employment. Such effects are already tangible in Southeastern Europe, especially in Bosnia and Herzegovina, as well as in Bulgaria and Slovenia.

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July 23, 2025
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Germany supports Serbia in clean energy supply, environmental protection

The Republic of Serbia and Germany’s KfW Development Bank signed a loan agreement on July 18 for EUR 135 million for the second phase of the credit program Green Transition Development Policy Operation (DPO II).

The signatures underscore the joint activities by Germany and Serbia aimed at a climate-compliant and socially just energy transition, said Chargés d’Affaires ad interim Carsten Meyer-Wiefhausen from the Embassy of the Federal Republic of Germany in Serbia. “We will continue to be with Serbia on this path and support its reform efforts,” he stressed.

Within the financing for the reforms, the World Bank, French Development Agency (AFD) and the German KfW Development Bank are supporting the Republic of Serbia in conducting its ambitious reform agenda. The goal is to accelerate the transition to energy from clean sources and align with EU standards in environmental protection and climate.

Series of reforms through DPO II

Several successful reforms have been materialized within DPO II, among which:

  1. Promoting investments that are acceptable in environmental and climate terms: Public investments are graded under environmental criteria and with regard to the risk of natural disasters, and with models developed solely for the purpose. The citizens of Serbia benefit from the government’s more sustainable investment decisions.
  2. Enhanced transparency in the public budget: The Government of the Republic of Serbia has committed to publishing information on the execution of the public budget, not only at the end of the fiscal year, but also during the year. It improves the transparency of public expenditures, primarily concerning investments in environmental and climate protection.
  3. Affordable energy prices: The Government of the Republic of Serbia has rolled out temporary targeted subsidies for households with low income, like citizens with low pensions. The share of households receiving such aid has grown from 2.7%, registered in 2021, to last year’s 8%.
  4. Improvement in waste disposal: Aligning with EU standards brings a better approach to sanitary landfills, namely from 42% (2021) to last year’s 50%. The citizens of Serbia benefit from improved waste disposal and a cleaner environment.
  5. Prepared for CBAM: Since this year, large industrial facilities and power plants report their CO2 emissions in line with EU standards. That way Serbia is more prepared for the upcoming full implementation of the European Carbon Border Adjustment Mechanism (CBAM) for carbon prices. For instance, the country would be able to price CO2 emissions and charge them.

Financing reforms within climate partnership

Germany’s contribution to financing reforms is an integral part of Germany’s climate partnership with Serbia and the entire Western Balkans. The purpose of the partnership is to support Serbia’s work on achieving its national climate goals and adapting to climate change. The key goal of the partnerships is for the transformation that is necessary to meet climate goals, in the interest of Serbian citizens, to be socially just, a just transition.

This year, Serbia and Germany are celebrating the 25th anniversary of their development cooperation. In the meantime, KfW financed projects worth EUR 2.5 billion in Serbia.

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July 21, 2025
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Energy Community marks 20th anniversary as integration pillar for Southeastern Europe

The Energy Community Ministerial Council held its annual informal meeting in Athens, where the organization was founded twenty years ago. No contracting party is expected to meet the criteria for exemption from the Carbon Border Adjustment Mechanism (CBAM) in the electricity sector – the European Union is due to start charging the CO2 tax on January 1 – but the European Commission could propose amendments.

The Energy Community promotes integration, reforms and investments across the region, top officials stressed.

Ministers from the Energy Community contracting parties convened today at the Informal Ministerial Council in Athens to mark the organization’s 20th anniversary. The Energy Community Treaty, establishing the Energy Community, was also signed in the Greek capital. The purpose of the organization is to create a more integrated market, help attract investment and speed up decarbonization by aligning with the European Union’s rules on energy, environment and competitiveness.

In recent years, close cooperation has enabled the contracting parties to strengthen the security of supply, particularly against the backdrop of the ongoing Russian war in Ukraine, the Energy Community Secretariat said. During the annual gathering, hosted by the Greek Ministry of the Environment and Energy, the ministers underlined the need for an accelerated integration with the EU, grounded in delivering a secure, resilient energy transition.

Ministers agreed to revise capacity calculation regions

Many contracting parties are close to completing the reforms needed to launch the 18-month countdown to electricity market coupling – including full legal alignment under the Energy Community’s Electricity Integration Package and the appointment of nominated electricity market operators (NEMOs). If transposition is verified as compliant by the European Commission and the Energy Community Secretariat, integration will be initiated with the EU’s Single Day-Ahead Coupling (SDAC) and Single Intraday Market Coupling (SIDC).

Ministers made a breakthrough in regional coordination, backing a proposal by EU transmission system operators to revise capacity calculation regions (CCRs), now under review by the EU energy regulator ACER – Agency for the Cooperation of Energy Regulators. Recognizing the proposal’s importance for an effective operation of the interconnected grid, they called for swift follow-up, including the operationalization of regional coordination centers (RCCs) and system operation regions (SORs).

The aim is to boost electricity flows and grid security, especially along the north-south corridor of the Balkans, while laying the groundwork for full EU market coupling.

Decarbonization must accelerate ahead of CBAM implementation in 2026

To avoid disruptions to regional electricity trade, clarifying CBAM rules for electricity is a priority for the ministers, the secretariat pointed out. The EU is set to begin charging the carbon border tax on January 1.

Lorkowski: Electricity market integration and decarbonisation are two sides of the same coin

As no contracting party is expected to meet the exemption criteria by then, a proportionate and context-sensitive application of the mechanism is essential, as supported by active engagement in the European Commission’s ongoing call for evidence that precedes the future amendments of the CBAM regulation to be possibly proposed by the European Commission, in the secretariat’s view.

“Electricity market integration and decarbonisation are two sides of the same coin. The green energy transition unlocks meaningful integration with the EU market – and vice versa. Only by aligning policy, infrastructure, and pricing can contracting parties fully realise the benefits of clean, secure, and affordable energy,” said Energy Community Secretariat Director Artur Lorkowski.

The ministers called for carbon revenues to support vulnerable communities and mobilize investment in clean energy, stressing that just transition financing must go hand in hand with policy reforms.

Energy Community Treaty is now cornerstone of Europe’s energy architecture

Born out of crisis and shaped by cooperation, the Energy Community Treaty has become a cornerstone of Europe’s energy architecture, Lorkowski stressed. What began as an unlikely experiment in regional integration has grown into a dynamic framework – extending the EU’s internal energy market, strengthening energy security, and advancing the clean energy transition across South-Eastern and Eastern Europe, he asserted.

Energy Community contracting parties can fully integrate their electricity markets with the EU before joining it

“Our contracting parties are now on the cusp of a major breakthrough: full electricity market integration with the EU – even ahead of accession. This is the product of two decades of reform, dialogue, and trust-building. With the right political will, we can move from transposition to transformation,” Lorkowski stated.

In his view, Greece is the window for the Energy Community contracting parties to the liquefied natural gas (LNG) market and the access point to the European electricity system. Close cooperation with the Western Balkans has economic benefits for Greece – but beyond the economy, it is also about security and stability, Lorkowski said at the event.

Energy Community pioneered extension of EU energy market

Over the past two decades, the Energy Community has brought the EU closer to its neighbours, pioneering the extension of the trade bloc’s energy market across its borders, promoting integration, reforms and investments across the region, according to European Commissioner for Energy and Housing Dan Jørgensen.

“Now it is time to look ahead at our shared future based on a greener, sustainable and resilient system which will bring cheaper energy and more security to all,” he said.

Separately, in an interview with Kathimerini, Jørgensen noted that Southeastern Europe experienced electricity price spikes last summer, mainly in the evening hours, due to a lack of cross-border capacity and sufficient flexibility. The only solution is further infrastructure and market integration, as costs are separated and benefits are multiplied, he opined.

For every EUR 2 billion invested annually in cross-border infrastructure, the potential benefits reach up to EUR 5 billion, the commissioner added.

Papastavrou: Southeastern Europe’s is at disadvantage as its electricity market is not fully integrated with EU

Southeastern Europe is still not fully integrated with the EU, which is a structural disadvantage for citizens, said Minister of Environment and Energy of Greece Stavros Papastavrou.

“I am very optimistic after the first session of the meeting, because all the contracting parties expressed commitment, a strong commitment, to market coupling,” he stated. Papastavrou said a lot of work is required in the electricity sphere to bridge the gap for the prosperity of citizens and the entire region.

Energy integration is one of the pillars of EU accession

Energy integration is not just a technical issue – it is one of the fundamental pillars of the EU accession process, the minister told his counterparts from the Energy Community.

“Greece, too, has faced the same challenges that many of you are experiencing today. Back in 2005, our energy system was almost entirely dependent on lignite, by more than 60%. Today, we have reduced lignite use by an impressive 91% – a clear demonstration of our strong commitment to a clean, sustainable, and resilient energy future,” he stated.

Serbia’s Đedović Handanović sees possibility for market coupling with Hungary already next year

Serbia was the first in the region to fulfill the conditions for market coupling with the EU, the country’s Minister of Mining and Energy Dubravka Đedović Handanović said. She urged for the verification process to be accelerated, so that Serbia can connect with the Hungarian market in 2026 and, through it, with the other EU member states.

The minister acknowledged the challenge of the upcoming full implementation of CBAM.

Photo: Minister Dubravka Đedović Handanović (Nenad Kostić / Ministry of Mining and Energy)

Serbian institutions analyzed the available options from the study that the European Commission published. “We think that carbon pricing should be introduced gradually, in phases and fairly, with support from funds from the European Union,” she said.

The minister stressed that revenues from carbon taxes would be directed, like in the EU, to decarbonization, renewables, energy efficiency, just transition and support to companies.

“Without an adequate period of time for the transition from coal to renewable energy sources, without modernizing the network, increasing RES capacities and adjusting the industry, higher carbon costs can only increase the financial pressure on our industry and consumers, which is already happening in the EU, instead of resulting in a significant emissions reduction in the short term. Solving these issues requires careful planning, a phasein and the EU’s targeted financial support, so that climate goals would be aligned with the economic reality,” Đedović Handanović said.

She recalled that EU member states had more than two decades to gradually adjust to carbon emission levies. Đedović Handanović affirmed that Serbia is willing to continue its alignment with the EU’s energy and climate policy.

“All the reform measures that we are conducting are primarily for the benefit of our citizens and companies, and we won’t make decisions overnight that would jeopardize our energy stability,” she said.

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July 18, 2025
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Clean transition, decarbonization among priorities in EU’s draft budget

Within the European Union’s proposed budget for the period from 2028 to 2034, the EUR 409 billion European Competitiveness Fund is for investments in strategic technologies, including for the clean transition and decarbonization. The new Connecting Europe Facility (CEF), worth EUR 81.4 billion, would finance the completion of Trans-European Networks and foster the EU’s green and clean transition in energy and transportation.

The European Commission proposed the next long-term budget of almost EUR 2 trillion, of which 35% would be earmarked for climate and environment. Energy infrastructure spending in the so-called Multiannual Financial Framework (MFF) for 2028-2034 will be EUR 29.5 billion, five times higher than in the previous seven-year period, it said, arguing it would reinforce energy independence and accelerate the clean transition.

The entire proposed sum amounts to 1.26% of the expected gross national income, on average. The framework is aimed at an independent, prosperous, secure, and thriving society and economy, the update adds.

“Europe faces an increasing number of challenges in numerous areas such as security, defence, competitiveness, migration, energy and climate resilience. These are not temporary but reflect systemic geopolitical and economic shifts that require a strong and forward-looking response,” the EU’s top executive body said.

Adapting to local needs

The European Commission pointed out that the budget would be tailored to local needs. National and regional partnership plans based on investments and reforms would be introduced, for targeted impact where it matters most and ensuring a faster and more flexible support for more economic, social and territorial cohesion across the union, according to the outlined measures.

“Our new long-term budget will help protect European citizens, strengthen Europe’s social model and make our European industry thrive,” European Commission President Ursula von der Leyen stated.

For the first time, the spending plan would enable member states to invest more in the EU objectives, with loans of up to 150 billion EUR altogether. “We will call it Catalyst Europe. The loans are backed by the EU budget. It targets common European priorities. You can invest it – for example in defence industry or energy infrastructure or strategic technologies,” Von der Leyen said.

The budget plan includes a European Competitiveness Fund, worth EUR 409 billion, for investment in strategic technologies. Operating under one rulebook, and offering a single gateway to funding applicants, it aims to simplify and accelerate EU funding and catalyse private and public investment. The focus is on four areas:

  • clean transition and decarbonization,
  • digital transition,
  • health, biotech, agriculture and bioeconomy,
  • defense and space.

In close connection with the European Competitiveness Fund, the EU research framework, with its flagship Horizon Europe worth EUR 175 billion, will continue to finance world-class innovation, the commissioners revealed.

Commissioners line up EUR 81.4 billion in budget for next Connecting Europe Facility

The next Connecting Europe Facility (CEF), worth EUR 81.4 billion, would finance the completion of Trans-European Networks and foster the EU’s green and clean transition in energy and transportation. It covers cross-border projects for energy, transportation and military mobility that are essential for competitiveness and security and reducing strategic dependencies.

To simplify external action financing, the EU’s top executive body envisaged an item called Global Europe, of EUR 200 billion, to maximise impact on the ground and improve visibility of EU external action in partner countries. It would allow the EU budget to step up support to candidate countries and prepare for their accession.

Among other segments, the European Commission said it plans to direct 75% of revenues from the Carbon Border Adjustment Mechanism (CBAM) to the EU budget. It expects the resource to generate EUR 1.4 billion per year.

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June 23, 2025
by in News

EU institutions reach deal on CBAM simplification

The Council of the European Union struck a provisional agreement with negotiators from the European Parliament regarding the European Commission’s proposal to simplify the CBAM carbon border tax. The initial levy, which would be gradually increased year by year until it matches the EU ETS price, is coming into force on January 1. The administration in Brussels doesn’t seem willing to consider delaying the date, even though neighboring third countries and their exporters to the EU are struggling to adjust to the new system, especially in the electricity sector.

The Polish presidency of the Council of the EU and European Parliament’s negotiators reached a provisional agreement on one of the proposals of the so-called Omnibus 1 legislative package: a regulation that would simplify and strengthen the Carbon Border Adjustment Mechanism (CBAM).

The proposal seeks to ease compliance without compromising the scheme’s climate goals. The colegislators said it would reduce the regulatory and administrative burden, as well as costs for EU companies, especially small and medium-sized enterprises (SMEs).

CBAM is a tool to equalize the price of carbon paid for EU products operating under the EU Emissions Trading System (EU ETS) with that of imported goods, and to encourage greater climate ambition in non-EU countries.

No relief in scope so far for EU’s neighboring countries

Notably, third countries including the Western Balkans and Turkey and the companies there that export cement, iron and steel, aluminum, fertilizers, electricity and hydrogen to the EU are running out of time before charges are introduced on January 1 next year. Primarily, the governments need to introduce carbon pricing systems to be exempted.

ENTSO-E asked for a one-year delay of the initial CBAM charges for electricity

Earlier this month, the European Network of Transmission System Operators for Electricity (ENTSO-E) highlighted several contradictions in CBAM in its sector. It suggested to the European Commission to prolong the transitional period by one year. The latest update doesn’t indicate any willingness to suspend the levy.

Moreover, the European Commission needs to assess in early 2026 whether to extend the scope to other ETS sectors and how to help exporters of CBAM products at risk of carbon leakage. The EU is set to increase the tariffs every year until they match the EU ETS at the start of 2034.

Boosting EU competitiveness

The European Commission said in February that the measures it proposed would save EUR 6.3 billion.

“Simplification is a top priority for the Polish presidency. Today’s provisional agreement with the parliament is yet another step towards reducing administrative burden for our companies and further boosting EU competitiveness,” Minister for the European Union of Poland Adam Szłapka said about the deal with lawmakers.

The colegislators retained the key components of the commission’s proposal to simplify CBAM rules, according to the Council of the EU. There would be a broader de minimis exemption from obligations applicable to importers that do not exceed a single mass-based threshold set at a level of 50 tons per year. The revised regulation would also permit them to avoid any initial disruptions as they will be able to continue importing while awaiting CBAM registration.

Both institutions must formally adopt the measures before they enter into force, which is expected by September, the Council of the EU said.

According to the European Parliament, 90% of importers would be exempted and 99% of CO2 emissions from iron, steel, aluminium and cement imports are still covered.

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June 18, 2025
by in News

Joksimović: Serbia preparing to introduce carbon pricing

Serbia is preparing to introduce carbon pricing, Jovana Joksimović, Assistant Minister of Mining and Energy for International Cooperation and European Integration, has announced.

The authorities are preparing a comprehensive analysis of carbon pricing for all products that will be affected by the European Union’s (EU) Carbon Border Adjustment Mechanism (CBAM), Jovana Joksimović said at a conference on the introduction of the EU’s carbon border tax.

The Ministry of Mining and Energy has carried out an assessment of the impact of the EU regulation on Serbia’s electricity sector, she said, without providing further details.

A few days ago, the National Alliance for Local Economic Development (NALED) called on state institutions to protect Serbia’s energy-intensive industries from the impacts of CBAM, warning the EU’s carbon border tax would threaten jobs and businesses in that sector.

Serbia is the only Energy Community contracting party prepared to implement emissions monitoring, reporting, and verification

“When it comes to reporting, Serbia is the only contracting party of the Energy Community that is prepared to implement the monitoring, reporting, and verification (MRV) system by transposing the relevant EU legislation. MRV is a prerequisite for introducing a carbon pricing mechanism and can facilitate the implementation of CBAM,” said Joksimović.

She recalled that the European Commission has accepted alternative options for carbon pricing for the Energy Community contracting parties, including carbon taxes and a fixed-price emissions trading system until EU accession.

CO2 emission factors are the biggest concern

According to her, Serbia’s main concern is the discrepancy between the two CO2 emission factors set by the European Commission – one for electricity and another for electricity used in the production of other CBAM products, which is used for calculating indirect emissions.

She recalled that the European Network of Electricity Transmission System Operators (ENTSO-E) recently proposed to the European Commission to consider revising the CBAM methodology during the transition period to ensure a fair and consistent approach.

A unified methodology would encourage investments in renewable energy, support common climate goals, and promote a fair transition to a decarbonized economy.

The EU’s carbon border tax could disrupt electricity market coupling

“The economic implications of CBAM implementation require careful consideration, particularly with regard to its potentially disproportionate impact on the Western Balkans. We expect the European Commission to accept the national electricity mix emission factor in the application of CBAM for electricity, meaning that the cost of the levy decreases as the share of renewable energy increases,” she said.

Jovanović stressed that CBAM could disrupt ongoing efforts in electricity market coupling.

“The European Commission is expected to propose a constructive solution, given that market coupling and the implementation of CBAM are supposed to be compatible,” she pointed out.

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