The European Commission has put forward a proposal to revise how emissions are calculated for imported electricity under the Carbon Border Adjustment Mechanism. The change is set to take effect for electricity imported from 1 January 2026, with implications for non-EU power exporters including Serbia. The proposal targets the methodology used to determine emissions tied to cross-border electricity flows.
Under the previous approach, CBAM treatment of electricity relied on default emission values anchored to fossil-fuel benchmarks. This applied regardless of whether the exporting country had substantial low-carbon generation in its system. For Serbia, the outcome was that exported electricity could be treated as predominantly coal-based even when hydro contributed a significant share of domestic output and exports during parts of the year.
The Commission says existing rules do not adequately reflect decarbonisation efforts outside the EU and that the methodology needs to change. It describes the current framework as producing a distortion between regulatory assumptions and generation realities. The Commission’s proposal therefore focuses on both default calculations and how actual emissions can be reported.
Revised default emission factors based on national generation mix
A central element of the reform is a shift in how default emission factors are calculated for electricity. Instead of using emission factors derived only from fossil-fuel generation, future default values would be based on the overall emission intensity of all electricity generation sources in the exporting country. For Serbia, this would amount to a structural reclassification rather than a marginal adjustment.
Serbia’s electricity system combines lignite-fired thermal plants with a substantial hydro fleet and a growing base of wind and solar capacity. While lignite remains dominant in marginal dispatch, the system-average carbon intensity is described as meaningfully lower than a pure coal benchmark. Under the revised methodology, exports using default values would be assessed against a national average reflecting hydro, renewables and thermal generation together.
This change is expected to reduce CBAM exposure per exported megawatt-hour compared with the prior fossil-anchored defaults. The reduction would apply even before any additional reporting or verification effort is undertaken by exporters. For pricing, the Commission’s approach affects how carbon costs are incorporated into cross-border power transactions.
Conditions for reporting actual emissions and differentiated export treatment
Alongside default factor changes, the Commission proposes adjustments to make it easier to report actual emissions from electricity under CBAM. Under the existing framework, actual data use was described as theoretically possible but practically inaccessible for most non-EU exporters. Requirements related to tracing electricity flows, attributing generation sources, aligning dispatch data and securing EU-acceptable verification were said to create an effective barrier.
The proposal aims to reduce that barrier by improving access to actual emission data in practice. It would enable differentiated treatment of electricity exports based on verifiable carbon performance rather than treating all exports uniformly. For Serbia, this introduces segmentation across categories of power.
Under the new approach described by the Commission, system-average exports could rely on improved default values. Exports backed by hydro or renewables could be supported by actual emissions data approaching zero, depending on verifiable documentation. Electricity supplied under specific contracts to export-oriented industrial facilities could also be documented as low-carbon input electricity, affecting both power exporters and Serbian manufacturers selling into the EU.
Implications for Elektroprivreda Srbije and regional power flows
The changes have direct consequences for Elektroprivreda Srbije and Serbian power traders involved in cross-border sales. Under the previous logic, incentives to invest in granular emissions accounting were limited because regulatory payoff was uncertain and administrative requirements were high. With credible emissions data becoming more economically relevant under the revised regime, hydro plants, renewable portfolios and clean dispatch periods could gain monetary value in cross-border trade.
Seasonality is highlighted as a factor because Serbia’s hydro generation peaks during spring and early summer. These periods coincide with times when exports to the EU often increase. Under the revised CBAM approach, these export windows could be monetised more effectively if actual emissions data is available and accepted.
The reform also affects Serbia’s role as a regional electricity hub even though it is framed around EU imports. CBAM is described as reshaping cross-border power flows across South-East Europe, with Serbia acting both as exporter and transit country. Flows into Hungary, Romania, Bulgaria and Croatia are cited as part of this broader impact.
Data governance requirements for using actual emissions
The ability to benefit from differentiated treatment depends on institutional readiness rather than automatic outcomes. Serbia would need credible national electricity emission factors that EU importers and verifiers are willing to accept. Grid-level emissions data must be transparent, consistent and auditable under EU expectations.
The proposal also points to operational measurement requirements, including hourly or sub-hourly generation tracking at least for major hydro and renewable plants. Independent third-party verification aligned with EU expectations is described as essential for actual emissions claims. Without these elements, Serbian exporters would continue relying on default values even if those defaults are improved.
Industrial competitiveness linked to embedded electricity emissions
The reform has implications for industrial exporters facing CBAM-covered goods such as steel, aluminium, cement and chemicals produced in Serbia. These producers face carbon costs from their process emissions as well as from the electricity they consume. If electricity supplied to industrial facilities can be documented as low-carbon under revised CBAM electricity rules, embedded emissions of exported goods would decline accordingly.
This would affect competitiveness of Serbian industrial exports into the EU through lower embedded carbon liabilities tied to electricity inputs. The Commission’s proposal therefore links power market accounting with downstream reporting outcomes for industrial products covered by CBAM. It also places emphasis on how electricity data governance intersects with broader industrial policy implementation.
Implementation timeline starting with imports from 1 January 2026
The revised rules apply to electricity imported from 1 January 2026, leaving a limited window for regulatory alignment, technical preparation and market communication. Countries that prepare early are expected to influence how EU traders, utilities and banks interpret and price electricity carbon risk. Countries that are late would be assessed conservatively regardless of their actual generation mix.
The Commission’s framing also emphasizes that Serbia’s system is not limited to coal-only exposure under CBAM calculations. It is described as mixed, combining meaningful low-carbon capacity with geographic relevance and export optionality that had been less visible under earlier CBAM electricity rules. Under the updated approach, that system reality becomes more actionable through revised defaults and potential use of actual data where verification requirements can be met.
Elevated by cbam.engineer