Serbia’s manufacturing export base is positioned close to the European Union, with steel production in Smederevo, copper activity in Bor, automotive components in Kragujevac, and electrical equipment in Niš. The country also produces thousands of specialised industrial products for export markets. The European Union’s Carbon Border Adjustment Mechanism (CBAM) is already seen as a challenge for steel, aluminium, cement and electricity producers.
- CBAM exposure starts with steel and expands into downstream products
- Automotive and electrical exports face potential CBAM coverage
- Electricity sourcing becomes a compliance factor
- Lignite dependence contrasts with renewable build-out plans
- Copper supply chains highlight demand for lower-carbon inputs
- 2027–2028 timelines point to wider supplier reporting requirements
Trade figures for 2025 show Serbia exported approximately €33.7 billion of goods and imported €39.1 billion. The European Union accounted for about 59% of Serbian exports, making it the dominant destination for industrial demand. Exports to EU member states therefore exceed €19 billion annually.
CBAM exposure starts with steel and expands into downstream products
Sectors directly covered by CBAM account for several billion euros of Serbia’s annual trade, with iron and steel products forming the largest category. Serbia’s steel industry, led by HBIS Serbia in Smederevo, exports products worth approximately €2–2.5 billion per year, much of it destined for European industrial consumers. The steel value chain extends beyond primary output to include pipes, tubes, reinforcement steel, structural products, wire rod and fabricated metal components used in European manufacturing networks.
Aluminium processing represents a second area of exposure. Serbia is not a major primary aluminium producer, but it has built downstream capacity producing profiles, extrusions, automotive parts and industrial components for export. Annual aluminium-related exports are estimated at €300–600 million, with Germany, Italy and Austria among key destinations.
The sectors currently covered by CBAM—steel, aluminium, cement, fertilisers and electricity—collectively account for approximately €3 billion of Serbian export activity. The next phase is linked to a European Commission proposal to expand coverage to around 180 downstream products from 2028 onward. The proposal targets products containing significant quantities of steel and aluminium, including machinery, industrial equipment, automotive components, construction systems, transformers, cables and electrical equipment.
Automotive and electrical exports face potential CBAM coverage
If adopted, the expansion would bring CBAM into the core of Serbia’s industrial economy rather than limiting it to sectors already covered today. Serbia’s automotive supply chain generates more than €3 billion in annual exports. Manufacturers supplying European vehicle producers increasingly face demands for carbon transparency, renewable-energy sourcing and product-level emissions reporting.
Electrical equipment exports exceed €2 billion, while machinery, industrial equipment and fabricated metal products add several additional billions of euros to the export portfolio. Taken together, sectors potentially affected by future CBAM expansion represent well over €10 billion in annual exports. For investors , this shifts the focus from whether companies produce steel or aluminium to whether they can document embedded carbon content in finished products sold to Germany, Italy or France.
Electricity sourcing becomes a compliance factor
The shift aligns with broader changes in European industrial policy through the Critical Raw Materials Act, Net Zero Industry Act and the CBAM framework. Brussels’ approach links carbon intensity with industrial competitiveness and supply-chain security. In that context, energy sourcing becomes a strategic variable alongside labour costs, logistics and product quality.
Electricity is emerging as the most important factor in compliance expectations. European Commission technical studies on CBAM indirect emissions indicate future frameworks will increasingly examine how electricity is sourced, measured and verified. Renewable power purchase agreements, guarantees of origin, smart-meter infrastructure and auditable electricity-consumption records are described as critical elements of industrial competitiveness .
Lignite dependence contrasts with renewable build-out plans
The risks for Serbia include continued reliance on lignite-based electricity generation. The carbon intensity of the Serbian power system remains significantly higher than the European average, which can disadvantage energy-intensive manufacturers under evolving rules. At the same time, Serbia is seeing an investment cycle in renewables.
More than 2 GW of wind, solar and battery-storage projects are at various stages of development. If integrated into the power system successfully, these investments could give industrial consumers access to lower-carbon electricity. That would strengthen the competitiveness of Serbian exports under future CBAM rules.
Copper supply chains highlight demand for lower-carbon inputs
The mining sector illustrates how carbon-linked procurement may develop alongside material supply needs. Serbia’s copper industry is centred around Zijin Mining Serbia, which occupies a strategic position within European supply chains. Copper is essential for grid infrastructure, renewable energy projects, electric vehicles and data centres.
As European manufacturers seek lower-carbon materials , access to renewable electricity may become as important as access to the resource itself. A similar logic is described for future lithium developments as well as aluminium processing, steel manufacturing and industrial equipment production. Carbon intensity is gradually becoming another production metric alongside cost, quality and delivery performance.
2027–2028 timelines point to wider supplier reporting requirements
Forecasts for 2027–2028 suggest faster implementation of reporting expectations across supply chains. By 2027, European manufacturers are expected to expand supplier carbon-reporting requirements beyond currently regulated sectors. By 2028—if the Commission’s proposal proceeds—downstream steel- and aluminium-intensive products could formally enter the CBAM framework.
This would shift CBAM from a sector-specific issue toward a broader industrial-policy challenge affecting a significant portion of Serbia’s manufacturing base . Banks, export-credit agencies and international investors are already incorporating emissions data into financing decisions. Industrial facilities able to demonstrate renewable-electricity sourcing, verified emissions accounting and transparent supply-chain management are increasingly treated as lower-risk investments.
Manufacturers that cannot document their carbon profile may face higher financing costs and weaker access to European customers. Serbia’s export model is therefore moving into a new stage where requirements related to carbon transparency, energy sourcing and environmental performance supplement earlier advantages such as proximity to Europe, skilled labour, trade agreements and manufacturing capability . The next phase depends on how products are manufactured and how electricity powering factories is generated within a rapidly evolving European regulatory landscape.
The scale of exposure remains tied to Serbia’s export orientation toward EU markets: an economy generating more than €19 billion annually from EU destinations faces substantial stakes as carbon-adjusted competitiveness becomes part of industrial performance expectations . By decade’s end pressures linked to CBAM-related reporting are expected to extend beyond traditional sectors already covered under current rules.
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