December 19, 2025

by AEA in News

CBAM tests market integration and green investments

Author: Zoran Gjorgjievski, CEO of North Macedonia’s National Electricity Market Operator MEMO

This text reflects a personal viewpoint and represents an attempt to present the Macedonian position in an argument-based manner — with respect for European objectives, but also with a clear message that the implementation of CBAM must be just, proportionate, and based on clearly defined implementation phases.

The Carbon Border Adjustment Mechanism (CBAM), which is scheduled to enter into force on 1 January 2026, represents one of the most ambitious instruments within the European climate package. Its objective – to create a level playing field between industries within the European Union and those outside the Union – is, at a theoretical level, justified and logical. However, the application of CBAM to electricity in regions such as ours, where market and regulatory conditions are still transforming, raises serious risks and challenges that deserve careful assessment. This is particularly relevant given the increased volume of investments in renewable energy sources (RES) recorded in recent years, accompanied by ambitious plans for their further expansion through active institutional support.

For Macedonia, which has invested significant efforts in the development of an organized electricity market – currently operating at the day-ahead level and, as of next year, also at the intraday level – as well as in its gradual integration with the single European market, the application of CBAM may create structural imbalances.

Changes in the structure of electricity generation and price formation on European markets in recent years indicate high volatility, which is even more pronounced in markets of a similar size to ours, primarily due to limited liquidity and the specific characteristics of the generation mix. The introduction of an additional carbon component, based on indirect verification methodologies, may introduce further unpredictability and reduce the competitiveness of domestic RES producers.

At the same time, subjecting exports to CBAM could create pressure during hours of low consumption and increased RES production – periods in which the majority of electricity exports from our country are concentrated. This could lead to a paradoxical situation in which RES producers are forced to curtail or suspend production in order to avoid imbalance costs.

Risks for the organized electricity market

Although initial analyses suggest that an increase in trading volumes on the day-ahead market may be expected in the short term, the inability to place total production through the organized market will encourage market participants to seek alternative channels. This carries the potential to undermine the development of a transparent and competitive market and to reduce trading liquidity.

For a young market like ours, which has recorded significant liquidity growth of over 40% and a record number of active participants in just the past year, this could represent a real slowdown of its development momentum.

The energy crisis of the 2021–2023 period clearly demonstrated that security of supply and price stability cannot be ensured without functional, liquid, and investment-attractive electricity markets. Under such conditions, the application of CBAM to electricity, without taking into account the specific characteristics of organized markets in non-EU countries, may produce the opposite effect: reduced liquidity, increased uncertainty, and delayed investments in renewable energy.

Differing speeds of two interrelated mechanisms – market coupling and CBAM – call into question the integration of electricity markets

This is particularly important given that regional integration into the single European market has been slowed by a number of objective and subjective factors, both in the Energy Community Contracting Parties and within the EU itself, and cannot proceed at the same pace as the implementation of CBAM. These differing speeds of two interrelated mechanisms – market coupling and CBAM – call into question the very rationale of the Energy Community, namely the integration of electricity markets.

It thus becomes evident that introducing CBAM without adequate progress in market integration with the EU creates a structural imbalance, whereby Energy Community countries incur additional costs without fully benefiting from an integrated market. Therefore, accelerating market coupling and aligning the start of CBAM implementation accordingly is a key prerequisite for mitigating the economic and investment impacts of CBAM.

Potential slowdown of renewable energy investments

Although CBAM is theoretically intended to stimulate green investments, in practice, there is a risk that it could have the opposite effect on already implemented projects, primarily due to the seasonal and daily characteristics of RES generation and the limited capacities for electricity storage.

A premature and insufficiently calibrated introduction of CBAM for electricity may create a perception of increased regulatory risk

This situation may place serious pressure on the financing sources of RES projects, exposing them to increased credit risk, especially in cases where expected returns on investment (ROI) are brought into question due to CBAM-related effects. This analysis does not even address the distorted investment expectations created during the energy crisis, when extreme electricity price growth further skewed investment projections.

Furthermore, Macedonia’s energy transition largely depends on private capital and strategic investors, who expect a stable, predictable, and competitive market environment. A premature and insufficiently calibrated introduction of CBAM for electricity exports by the EU may create a perception of increased regulatory risk, which could result in the postponement or redirection of investments to other markets.

Need for a transitional period and regional coordination

Despite the challenges outlined above, it is important to emphasize that Macedonia supports the objectives of European decarbonization and is already making substantial efforts to align with EU policies. What is essential is the provision of an appropriate transitional period, aligned with the pace of integration into the single European market.

Such a transitional period would allow the domestic industry and the energy sector to adapt gradually, without compromising already established market instruments and ongoing investments.

The regional context is equally important. The electricity systems of the Western Balkans are highly interconnected, and the risk of destabilization in one country can easily spill over into others. Therefore, it is necessary for the European Commission to consider a model that rewards reforms, supports the gradual phase-out of coal, and enables the integration of electricity markets without creating new barriers.

Where is the market headed?

Although CBAM has a clear climate and economic rationale, the question remains whether its application at this point in time is aligned with the realities in the countries of the Energy Community.

Macedonia demonstrates a clear commitment: market liquidity is increasing, renewable energy sources are developing dynamically, and concrete steps are being taken toward market coupling with the EU. Excessive rigidity in the application of CBAM could undermine this positive trajectory.

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December 19, 2025

by AEA in News

EU simplifying CBAM exemption for electricity, improving emissions calculation

The European Union is further simplifying the Carbon Border Adjustment Mechanism (CBAM), but with stricter oversight and an extension to 180 steel- and aluminium-intensive downstream products. From January 1, importers of designated goods and commodities will be paying the emissions tax.

Among the novelties, countries in the Energy Community that transposed the relevant EU regulations are getting an opportunity for exemptions for CBAM for electricity earlier than initially planned. The new legislation is tackling the hurdles for electricity transit as well. The calculation of emissions on national levels in the same sector is becoming more favorable for the payers of the cross-border CO2 tax. There is even a possibility, in theory for now, to declare the actual emissions level, which would suit renewable energy producers.

In response to feedback from industrial producers and other stakeholders, the European Commission proposed measures to prevent circumvention of CBAM and strengthen its efficacy. The next step is to expand it to 180 manufactured products with high steel or aluminum content, 79% on average. The list mostly consists of machinery and hardware, and 6% of the items are household appliances.

From January 1, importers will be paying a carbon price within the Carbon Border Adjustment Mechanism, which is tied to the Emissions Trading System (EU ETS). It concerns aluminum, cement, electricity, iron and steel, hydrogen and fertilizers, and the expenses will spill over to their suppliers in third countries such as the Western Balkans and Turkey.

The charge for downstream products is planned to be rolled out in January 2028.

Striving for level playing field

The system gradually levels the field, by the beginning 2034, with producers of the same goods and commodities in the EU. The measures are introduced in the form of delegated and implementing acts. They enter into force if other institutions responsible for them, like the European Parliament, don’t block them.

Hoekstra: Our system was too broad, too clunky and had too many loopholes.

“CBAM makes sure there is a level playing field – that we’re not asking anything more, or asking anything less for those goods that come into the EU. And in doing so, we’re rewarding investments in low carbon… We’re not going to ask anything more from others, than we’re asking from ourselves. During the CBAM transition period, we learned important lessons. Our system was too broad, too clunky and had too many loopholes,” said European Commissioner for Climate, Net Zero and Clean Growth Wopke Hoekstra.

Thoroughly against evasion

The tax level is envisaged to be proportional to an established quantity of greenhouse gases released in production. However, if the authorities notice attempts to evade the levy, they can make the process of providing evidence stricter and, in the meantime, switch to a charge under the emissions factor of the particular country of origin.

“If I had to summarize these points in a few words, I would say: a simpler CBAM, more robust in its application, and fairer in its scope,” said the European Commission’s Executive Vice-President for Prosperity and Industrial Strategy Stéphane Séjourné.

Shortcut to exemption from CBAM for electricity

One of the measures is intended for easing the administrative burden for countries in the process of electricity market coupling with the EU, namely the Energy Community contracting parties.

There is going to be a possibility to sign an MoU with the European Commission with a detailed schedule

The commission may sign a memorandum of understanding with a third country, once the commission has assessed that the country has fully transposed the electricity market acquis, the proposal reads. The document would lay down details on the timeline for the CBAM exemption, including in relation to technical work still to be carried out between transmission system operators (TSOs), and for implementing a carbon pricing instrument equivalent to the EU ETS as far as electricity generation is concerned.

Hoekstra said technical adjustments to CBAM would be made to facilitate market coupling when the relevant countries are ready.

Import tax for electricity from Energy Community to be 30% lower on average

Stakeholder feedback and the experience with the implementation of CBAM during the transitional period – before the actual charge – demonstrated that the rules for electricity imports are overly rigid, the European commissioners added. In particular, they ascertained that progress in decarbonizing electricity production isn’t sufficiently acknowledged or encouraged.

Unlike with the goods, for electricity there is a default country-specific emissions value. It is based on production from fossil fuels and a five-year average. Coal is mostly dominant in the Western Balkans, except for Albania, which has a completely green mix. In addition, the conditions which must be met to declare actual emissions of electricity have proven to be almost impossible.

The proposed package is introducing solutions for electricity transit and cross-border PPAs

In the new setting, the national value will reflect the carbon intensity of all sources of electricity. The estimated taxes in the Energy Community would be over 30% lower on average.

The procedure is being streamlined for declaring actual emissions. On the other hand, at least in the Western Balkans, there has been almost no progress in that area. The proposed package is also introducing solutions for the hurdles in electricity transit through Energy Community Contracting Parties and cross-border power purchase agreements (PPAs).

Power imports from the Western Balkans account for 1% of the EU’s demand, but their share in Croatia, Bulgaria and Greece is significant, the European Commission explained. Importantly, exports of electricity to the EU represent some 58% of Montenegro’s exports to the EU, compared to 5% for Serbia and Albania.

Funds for maintaining competitiveness of domestic industrial producers in third countries

A fund has been launched to temporarily support EU producers of CBAM goods and mitigate carbon leakage risks. It addresses the competitiveness loss in third-country markets with a weaker climate policy and lower costs. Potential beneficiaries will have to demonstrate decarbonization efforts.

Th European commission is also preparing proposals for limiting scrap aluminum exports and using more scrap metal. Furthermore, it said pre-consumer metals scrap, from manufacturing, would come under CBAM.

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December 11, 2025

by AEA in News

Energy Community: Serbia best in Western Balkans in alignment with EU regulations

Integration with the European Union is advancing in practice, and the decade ahead must sustain the momentum with focus and determination, Energy Community Secretariat Director Artur Lorkowski pointed out in this year’s Annual Implementation Report.

Serbia fares best in the Western Balkans, as it advanced to 63% from 55%. Bosnia and Herzegovina is at the bottom of the entire Energy Community chart, with alignment at just 26%.

Following the 2025 CBAM Readiness Tracker, the Energy Community Secretariat also published its Annual Implementation Report 2025. The international organization marked its 20th anniversary this year.

“The message from Athens was clear: integration with the European Union is advancing in practice, and the decade ahead must sustain this momentum with focus and determination. The 2025 Implementation Report reflects this direction. It shows a region taking decisive steps toward alignment with the EU acquis and strengthening the foundations required for accelerated integration. It also highlights where further effort is needed for gradual integration with the EU energy markets – completing the electricity market coupling, boosting the cross-border trade in renewables, eliminating bottlenecks for gas flows, synchronising energy infrastructure development and gradual alignment of carbon pricing mechanisms,” Energy Community Secretariat Director Artur Lorkowski stressed.

He added that electricity integration remains central. Several contracting parties completed the required transposition of the European Union’s Electricity Integration Package (EIP), while others advanced significantly.

Deadline for requests for 2028 market coupling to expire in seven months

Intensive market coupling efforts throughout 2025 by contracting parties and EU stakeholders have laid the groundwork for a compliant and sustainable integration process, according to the Annual Implementation Report. Of note, market coupling is the requirement for an exemption from the EU’s Carbon Border Adjustment Mechanism (CBAM) for electricity.

Contracting parties aiming to go live in 2028 must submit a formal request by July, the secretariat warned.

Energy Community Serbia best score Western Balkans — Photo: Energy Community Secretariat

Montenegro, North Macedonia advance slightly to match average

Five main indicators measure the integration with the EU energy markets and they are combined into an overall score. The Energy Community as a whole is at 53%.

Moldova has advanced the most in the process by far, climbing eight points from last year to reach 74%. Serbia fares best in the Western Balkans, as it advanced to 63% from 55%. It ranked the highest last year as well. Bosnia and Herzegovina is at the lowest level again. It retreated four points, to just 26%.

Montenegro and North Macedonia advanced slightly, both to 53%, to match the Energy Community average. Kosovo* has weakened to 46% while Albania remained at 50%.

At 61%, North Macedonia is in the lead in the Western Balkans in the markets and integration segment. Serbia reached the highest level in the Energy Community in energy sector decarbonization, 83%.

Post Views:52

* This designation is without prejudice to positions onstatus and is in line with UNSCR 1244/99 and the ICJ Opinion on the Kosovo declaration of independence.

December 2, 2025

by AEA in News

3rd Conference on Advancing Renewable Investments – guarantees of origin could drive Europe’s green energy integration

As CBAM nears implementation, the Ljubljana conference highlighted market tools and partnerships to accelerate clean energy integration with the European Union, the Energy Community Secretariat said. It pointed out that as more renewables capacity is connected to the grid, storage and flexibility solutions would become increasingly vital to enable the sector’s continued growth and integration.

The rollout of national electronic registries for guarantees of origin was recognized as essential to verifying the low-carbon value of regional electricity exports and advancing market-based integration with the EU.

Ministers, regulators, investors, and private sector representatives from across South East and Eastern Europe gathered in Ljubljana for the 3rd Conference on Advancing Renewable Investments, hosted by the Energy Community Secretariat and the Government of Slovenia, to boost renewable investment and advance the region’s shift toward clean, interconnected energy systems.

“Energy Community contracting parties are advancing accelerated integration with the EU’s electricity market – a process that, thanks to the Energy Community framework, with market coupling nearing completion, can be achieved even ahead of full EU membership. Expanding renewables is central to this effort, enabling countries to align with EU policy targets and speed up decarbonisation,” the update reads.

Integration with the EU’s electricity market can be achieved ahead of full membership

The results are tangible, according to the Energy Community Secretariat’s 2025 CBAM Readiness Tracker. Renewable energy excluding large hydropower has increased by more than 50% since 2020 – reaching 5.1 GW, fuelled largely by governmental support schemes.

While it is a notable success, continued progress will depend on the contracting parties’ ability to build on this momentum and mobilize efforts beyond government support to fully meet the ambitious 2030 targets set out in their national energy and climate plans (NECPs) and achieve carbon neutrality by 2050. As more renewables capacity is connected to the grid, storage and flexibility solutions will become increasingly vital to enable the sector’s continued growth and integration, the organizers said.

Uncertanties emerging ahead of CBAM charge introduction

At the same time, as the definitive phase of the EU’s Carbon Border Adjustment Mechanism (CBAM) begins on January 1, uncertainties are emerging for renewable energy investors, the secretariat stressed.

Discussions at the conference highlighted stakeholders’ expectations for the European Commission to clarify CBAM implementation rules, while continuing to rely on the secretariat to raise concerns about potential risks to renewable energy investments arising from unintended CBAM impacts.

As a no-regret pathway, participants discussed measures to accelerate the shift toward market-driven renewable investments, strengthening the sector’s credibility and long-term financial stability. A matchmaking dialogue brought together renewables producers and corporate buyers, reflecting growing private-sector interest in long-term power purchase agreements (PPAs) to boost investment and market confidence.

Lorkowski: GOs turn transparency into trust, trust into investment

Finally, the rollout of national electronic registries for guarantees of origin (GOs) was recognized as essential to verifying the low-carbon value of regional electricity exports and advancing market-based integration with the EU.

“Guarantees of origin are the compass guiding Energy Community markets toward the EU’s clean energy future. They turn transparency into trust, and trust into investment, enabling regional producers to access new markets, attract financing, and build confidence in the energy transition,” said Energy Community Secretariat Director Artur Lorkowski.

Ongoing efforts to establish a mutual recognition framework with the EU are underway, in close coordination with the European Commission and the Association of Issuing Bodies (AIB), to enable cross-border trade in renewable electricity.

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October 30, 2025

by AEA in News

Renewable electricity should not be subject to EU’s CO2 import tax

The European Commission is collecting evidence to come up with solutions for unintended effects of the Carbon Border Adjustment Mechanism (CBAM) on renewable electricity in the Western Balkans, Director of the Energy Community Secretariat Artur Lorkowski pointed out in an interview with Balkan Green Energy News, as one of the most important developments in the sector. Boosting renewable energy development and trade with third countries such as the Western Balkans was supposed to be accelerated by the European Union’s CO2 import tax.

To reduce the payment obligations of EU importers under CBAM, the contracting parties in the region are planning carbon pricing systems, but under different models. The ultimate goal is eventually joining the EU Emissions Trading System, implying the need for coordination and cooperation between the governments in the process, Lorkowski stressed.

Looking back twenty years since the Energy Community Treaty was signed, it proved to be a successful format of cooperation, the Energy Community Secretariat Director Artur Lorkowski said. On the occasion of the anniversary, Balkan Green Energy News sat down with the head of the international organization to speak about the achievements and benefits for the contracting parties, and the remaining milestones that the Western Balkans need to reach in order to integrate with the EU’s energy union.

“Economic growth depends on energy security and fair pricing. There is visible progress in transformation, clearly seen from the 2024 figures. And the final element is the accelerated energy market integration with the EU, and this is what we can be really proud of,” Lorkowski asserted.

Among the segments with tangible improvements, he also highlighted the convergence on the wholesale gas and electricity markets. It is facilitating competitiveness in the Energy Community, the secretariat’s chief added.

Renewables capacity doubled in four years

Fossil fuels used to account for 60% of electricity production in the contracting parties five years ago, compared to 50% now, Lorkowski noted. The significant results in renewables except for large hydro are illustrated by the fact that the overall capacity in the segment has more than doubled between 2020 and 2024, he stressed. More importantly, the carbon footprint – the CO2 emissions per unit of the nominal gross domestic product, fell 11% last year alone.

CO2 emissions per unit of the nominal GDP fell 11% last year in the Energy Community

As for EU integration, electricity market coupling is progressing very well, as a good example, in Lorkowski’s view. The legislation is mostly aligned, so most countries are just waiting for the process to be concluded, the director of the Energy Community Secretariat explained.

“There are operating wholesale markets everywhere in the Western Balkans except in Bosnia and Herzegovina, which is about to adopt the required law. Serbia is at the forefront of that process. North Macedonia and Montenegro are very close, with small elements yet to be achieved. It is a non-reversible point, point of no return on a path towards EU integration,” Lorkowski said. He recalled that when capacity calculations regions (CCRs), operationalization and verification are cleared from the to-do list, it would take 18 months to join the EU’s market coupling project.

Electricity can be exempted from CBAM at later stage

Energy Community contracting parties may become eligible for exemption until 2030 from CBAM in electricity, if they meet the CBAM requirements. However, the EU is starting to charge the CO2 import tax already on January 1.

“I wish the contracting parties followed my messages from the Belgrade Energy Forum in 2023, because you might remember me saying that CBAM is coming and we have to prepare for that. But unfortunately, we have observed a lot of delays and hiccups in the preparatory process. Fair enough, this is the reality we have to face now – no country of the Energy Community will be exempted on 1 January 2026. But we can still work to be exempted at a later stage,” Lorkowski underscored.

Artur Lorkowski was a keynote speaker at Belgrade Energy Forum 2025, organized by Balkan Green Energy News

European Commission expected to clarify rules by end of year

The second part of the story is that CBAM, in addition to its intended impacts, especially on coal power, also has unintended impacts, Lorkowski explained. For example, electricity transit between EU member states through the contracting parties, in practice, may also be subject to the tax, even if it was not intended by the European legislators.

CBAM was intended to provide equal treatment for products produced inside and outside the EU when it comes to carbon payments. “Renewable energy, not being subject to the EU ETS, would – logically – not need to be subject to CBAM, but with the current rules, even EU off-takers with cross-border power purchase agreements (PPAs) may still be subject to payment obligations, as the implementing rules remain overly complex, effectively treating them in the same way as fossil fuel importers. These are real problems that stakeholders have been raising with us in our targeted outreach to power companies, traders, and other stakeholders both from the EU and Energy Community,” Lorkowski added.

Legislative efforts to further improve trade in renewables with the EU continue under the Energy Community

The Energy Community Ministerial Council reported it in Athens to the European Commission and asked it to find a solution.

Lorkowski said he expects the EU’s top executive body to soon issue implementing and delegated acts, by the end of 2025, clarifying the CBAM implementation rules, and to follow it up in 2026 with a targeted amendment proposal on electricity.

Legislative efforts to further improve trade in renewables with the EU continue under the Energy Community. “The European Commission has presented to the contracting parties a draft decision on the mutual recognition of guarantees of origin and is now awaiting their feedback. I hope that in 2026 we can have a decision. But it does not mean that the guarantees of origin can be used as the currency for paying the CBAM fee. That would require amending the CBAM legislation,” he stated.

Carbon pricing systems need to evolve toward matching EU ETS

For a potential reduction of CBAM payments in other areas as well – iron and steel, aluminum, fertilizers, cement and hydrogen – third countries need to introduce carbon pricing systems. Serbia recently drafted legislation for a CO2 tax and for a tax on imports of carbon-intensive products. It is a good step forward, according to Lorkowski.

“We expect each and every country to make a decision on the carbon pricing. All of the countries of the Energy Community, with the exception of Kosovo*, have communicated to the secretariat which model they will implement. And the models vary: from Serbia’s carbon tax to a domestic emissions trading system of Montenegro, which is already in place,” he revealed.

There is no uniform carbon pricing model for the Energy Community

Namely, the Energy Community Ministerial Council decided not to implement a uniform regional carbon pricing mechanism but opted for individual models. They should all be built with the perspective of aligning eventually with the EU Emissions Trading System (EU ETS), Lorkowski said.

“The key challenge now for the Energy Community is how to maintain the integrity of the electricity market between the contracting parties and the European Union after CBAM enters its definitive phase from next January. We need to figure out how to coordinate among the systems. It implies not only the existence of the domestic carbon markets, but also the cooperation within the region,” he pointed out.

Ministerial Council to announce way forward on carbon pricing coordination

The Ministerial Council is due to conclude on carbon pricing at its regular annual meeting in December, Lorkowski said.

“The three critical elements are how much the CO2 will cost, who will pay – which businesses and sectors are in scope – and when those carbon pricing systems will be introduced. They need to maintain the integrity of the market, the level playing field of the market, and avoid market distortions,” the top Energy Community official added.

Practical policies more important than coal phaseout dates alone

Turning to the coal phaseout, essential for the decarbonization of the economy, Lorkowski acknowledged the significance of political declarations such as the Sofia Declaration and commitments from the national energy and climate plans (NECPs).

“That said, it is critically important to anchor the actions for the future with practical policies. The decisions on the establishment of carbon pricing mechanisms are even more important. In addition, we should focus on monitoring, reporting and verification – MRV systems. The contracting parties need to identify emitters and measure quantities,” the director of the Energy Community Secretariat underscored.

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* This designation is without prejudice to positions onstatus and is in line with UNSCR 1244/99 and the ICJ Opinion on the Kosovo declaration of independence.

August 6, 2025

by AEA in News

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

by AEA in News

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

by AEA in News

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:

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.
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.
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%.
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.
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 18, 2025

by AEA in News

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 AEA 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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