The European Parliament has endorsed changes to the European Union’s Carbon Border Adjustment Mechanism (CBAM) that could reduce disruption in electricity trade with the Western Balkans. The move follows evidence cited around the levy weakening commercial exchanges and contributing to greater fragmentation of the regional power market. The Parliament’s negotiating position was adopted on 15 September 2026.
Lawmakers adopted the position with 464 votes in favour, 50 against and 159 abstentions. The decision sets up negotiations with EU member states on the final legislation. While the wider package focuses on steel, aluminium and manufactured goods, several electricity-related provisions are described as relevant for utilities, traders and renewable-energy developers.
Electricity flow exemptions and embedded emissions methodology
One proposal would exempt certain electricity flows used by transmission system operators to maintain network stability. The measure is intended to prevent emergency balancing, redispatch and other security-related exchanges from creating CBAM liabilities when flows are needed for safe operation of interconnected grids rather than commercial trading. The exemption would still require agreement with the Council.
The proposed exemption would not apply to ordinary electricity trading. Parliament’s inclusion of the provision is linked to concerns that applying a border carbon charge mechanically across interconnected power systems can complicate operation of regional networks. Additional changes focus on how embedded emissions are calculated for imported electricity.
Under the current approach, electricity imports may be assigned a national default emissions value influenced by the exporting country’s fossil-fuel generation. Parliament says this can lead to carbon charges that do not reflect electricity actually delivered, particularly when exported power is generated from hydropower, wind or solar. The proposed method would instead use default values based on each country’s entire generation mix, including non-fossil output.
Non-EU countries could also request lower default values where reliable data show their average system emissions, or those of their price-setting generators, are below the applicable EU default. Parliament’s proposal is presented as a way to align charges more closely with generation characteristics behind imported electricity. It also highlights potential implications for multiple Western Balkan markets.
Indicative border costs and comparison with wholesale price spreads
The document describes indicative border costs using existing default values and a Q2 2026 CBAM certificate price of €75.28 per tonne of CO₂. The estimated costs are approximately €86.42/MWh for Bosnia and Herzegovina, €78.37/MWh for Serbia, €74.08/MWh for Kosovo, €73.70/MWh for Montenegro and €66.77/MWh for North Macedonia. Albania is described as having a zero default factor reflecting a predominantly hydropower-based system.
In some cases, these liabilities are said to exceed wholesale price spreads that typically support cross-border trading economics. During Q2, Italian electricity prices averaged around €27/MWh above Montenegro, while Hungarian prices were about €13/MWh above Serbia. The material states that a CBAM liability above €70/MWh can remove economic value from an otherwise profitable export.
Trading patterns in 2026 and documentation requirements
The first six months of the definitive CBAM period are described as showing impacts on regional trading patterns. Gross scheduled electricity exchanges between the Western Balkans and neighbouring EU markets fell by around 15% year on year in Q2 2026 and by approximately 19% during the first half of the year. At the same time, trading volumes on four observed Western Balkan day-ahead power exchanges increased by 19% to 2.70 TWh in Q2.
The material says this combination indicates that trading has not stopped but is increasingly retained within regional markets rather than extending into EU markets. The Western Balkans also returned to a seasonal net-import position of about 1,048 GWh in Q2 after exceptional net exports of around 1,247 GWh in Q1. It attributes part of the shift to lower hydropower output, falling EU benchmark prices and changing fuel economics.
It also states that regional market structure has not returned to its 2025 pattern. Electricity is increasingly routed north through Serbia, while traditional corridors toward Croatia, Bulgaria, Greece and Italy remain commercially weaker. Governments are described as seeking stronger regional integration and closer links between Western Balkan power exchanges and the EU single day-ahead market.
Electricity exports and trading can continue under existing arrangements, but EU-bound transactions increasingly require a CBAM evidence package identifying electricity source and embedded emissions, according to analysts at Virtu.Energy. The documentation must be sufficiently complete and traceable for review by an EU-accredited verification body. While formal responsibility rests with the authorised CBAM declarant or EU importer, much of the required information must come from exporters and electricity producers.
Virtu.Energy analysts recommend introducing a pre-verification process early in transactions rather than relying on annual CBAM declarations and certificate-surrender deadlines. They say information not collected at generation or delivery can be difficult or impossible to reconstruct later. Parliament’s legislative revision is described as potentially reducing pressure on regional markets through lower default emissions values and improved ability for participants to demonstrate actual plant-level emissions.
Parliament and the Council still need to agree on final text covering treatment of emergency electricity flows and safeguards during severe market disruption periods. A final agreement is targeted before the end of 2026, with some electricity-related amendments potentially applying retroactively from 1 January 2026. Until negotiations conclude, traders are expected to continue pricing EU-bound electricity against existing default liabilities while building evidence supporting actual emissions.