The European Commission’s proposal to revise how emissions are calculated for imported electricity under the Carbon Border Adjustment Mechanism is not, in practice, an energy-market story. For Serbia, it is primarily an export competitiveness story. The change directly affects Serbian companies whose products fall under CBAM and whose carbon exposure is materially influenced by the electricity embedded in their production processes.
From 1 January 2026, electricity imported into the EU will no longer be assessed under a methodology that implicitly assumes fossil-based generation in non-EU countries. Instead, default emission values will be based on the overall emission intensity of the exporting country’s electricity system, and the use of actual, verifiable electricity emissions data will become easier in practice. For Serbian exporters, this fundamentally changes how much carbon cost is attributed to their goods at the EU border.
Under the current CBAM framework, Serbian exporters of steel, aluminium, cement, fertilisers and other covered products face a structural disadvantage that has little to do with their own decarbonisation efforts. Even when production is efficient, and even when electricity consumption is partially or fully covered by hydro or renewable generation, the embedded electricity emissions are effectively treated as if they were coal-based. This has inflated reported emissions and, by extension, future CBAM financial exposure.
The Commission’s proposal explicitly recognises that this approach no longer reflects reality. For exporters, that acknowledgement matters more than the technical details. It means that electricity used in Serbian production will no longer be automatically penalised as fossil electricity, provided the system-average emissions or actual emissions can be credibly demonstrated.
For CBAM-affected exporters, the most immediate consequence is a change in the baseline. Serbia’s electricity mix is not decarbonised, but it is not uniformly fossil either. Large hydro assets, seasonal renewable output and non-thermal generation materially reduce the system-average emissions intensity compared with a pure lignite benchmark. Once the revised default methodology applies, Serbian exporters using default values will face lower embedded electricity emissions per unit of output, without changing anything operationally.
This alone reduces CBAM exposure for exporters selling into the EU. In sectors where margins are already under pressure from energy costs, logistics and financing, even modest reductions in reported emissions can have a tangible impact on profitability and pricing flexibility.
The more important shift, however, lies in the practical usability of actual electricity emissions data. Until now, Serbian exporters had little realistic ability to demonstrate that the electricity used in their production was cleaner than the default assumption. The administrative, technical and verification hurdles were such that, in practice, electricity emissions were treated as fixed and unavoidable.
The proposed reform changes that dynamic. By relaxing and adjusting the conditions for reporting actual emissions, the Commission is effectively enabling exporters to differentiate their electricity footprint, rather than inheriting a generic national or fossil-based assumption.
For CBAM-affected exporters, this creates a clear hierarchy of outcomes.
At the lowest level, exporters relying on default values benefit from a more realistic system-average emission factor. This is already an improvement compared with the current framework.
At the next level, exporters able to document electricity sourced from low-carbon generation – particularly hydro-backed or renewable-backed supply – can materially reduce the electricity component of their CBAM emissions. For electricity-intensive industries, this can translate into a meaningful reduction in total embedded emissions per tonne of product.
At the highest level, exporters that integrate electricity sourcing, metering, dispatch correlation and third-party verification into their compliance strategy can turn electricity into a CBAM optimisation lever rather than a cost centre. In this scenario, electricity choice, contract structure and data governance directly influence CBAM liabilities.
This matters most for sectors where electricity represents a significant share of total emissions. Serbian steel producers using electric arc furnaces, aluminium processors, chemical producers and certain mineral processors fall squarely into this category. For these companies, electricity emissions are not a marginal detail but a core component of CBAM exposure.
The reform also has implications for how Serbian exporters interact with EU importers, banks and verifiers. Under CBAM, the compliance obligation formally sits with the EU importer, but the data burden and economic impact are pushed upstream. Importers increasingly expect exporters to provide credible, verifiable emissions data, including electricity inputs. Exporters that cannot do so risk being priced conservatively or excluded from preferred supply chains.
By making actual electricity emissions easier to report, the Commission is effectively raising expectations. Serbian exporters who continue to rely solely on defaults may find themselves compared unfavourably to peers who can demonstrate lower-carbon electricity use, even within the same country.
This is where the link between exporters and the electricity system becomes unavoidable. Coordination with Elektroprivreda Srbije, grid operators and independent verifiers becomes part of export compliance strategy. Electricity data quality, transparency and auditability move from the technical back office into the commercial and financial core of export operations.
There is also a timing dimension that exporters should not underestimate. The revised rules apply from 1 January 2026, but CBAM reporting obligations are already shaping contractual behaviour. EU buyers are increasingly asking not just whether a product will be CBAM-compliant, but how defensible the emissions data will be under future scrutiny. Exporters that wait until the last moment to address electricity emissions risk being locked into unfavourable assumptions.
From a strategic perspective, the reform changes the narrative for Serbian exporters. Under the old regime, electricity emissions were largely an exogenous penalty. Under the new proposal, they become a variable that can be influenced through sourcing, contracts, verification and data governance.
This does not eliminate CBAM costs, nor does it neutralise Serbia’s exposure to carbon pricing differences with the EU. Lignite remains a dominant part of the system, and marginal emissions will still matter. But the regulatory signal is clear: CBAM is moving away from blanket assumptions and toward evidence-based differentiation.
For Serbian exporters, the implication is straightforward but demanding. Those who treat CBAM as a static tax will absorb higher costs than necessary. Those who integrate electricity emissions into their compliance, procurement and investment decisions will be better positioned to defend margins and market access.
The Commission’s electricity reform does not reward promises or long-term decarbonisation plans. It rewards measured, verifiable reality. For CBAM-affected Serbian exporters, the question is no longer whether electricity emissions matter, but whether they are prepared to prove what their electricity actually is.
Elevated by cbam.rs