Serbia’s steel industry is facing closer links between electricity procurement, carbon reporting and export competitiveness as industrial companies prepare for evolving European Union climate-trade requirements. For major producers such as HBIS Serbia, renewable electricity can influence energy costs, supply security and environmental reporting, although it does not automatically reduce current CBAM certificate obligations for relevant steel products.
HBIS Serbia’s Scale Highlights Industrial Power Demand
HBIS Serbia operates steel facilities in Smederevo and Šabac, employs more than 5,000 people and has annual finished-product capacity of approximately 2.2 million tonnes, according to Serbia’s trade ministry.
At this scale, electricity prices and supply reliability are significant industrial considerations independently of the carbon costs associated with exports to the EU.
Under the current Carbon Border Adjustment Mechanism (CBAM) framework, listed iron and steel goods within the relevant Annex II category are assessed on the basis of direct emissions rather than emissions from purchased electricity. Signing a renewable power purchase agreement (PPA) therefore does not, by itself, reduce the current CBAM certificate requirement for these goods through purchased-electricity emissions alone.
Renewable Power Offers Benefits Beyond Current CBAM Charges
Industrial renewable electricity contracts can provide greater visibility over energy prices, support decarbonisation strategies, strengthen customer positioning and improve corporate reporting. They can also help companies develop product-level environmental evidence and prepare for potential changes in the scope of EU carbon regulations. Renewable electricity may also support industrial electrification where production technologies shift from fossil fuel consumption towards electricity.
For lenders, the distinction between direct process emissions and electricity procurement is essential. The first concerns a steel producer’s direct carbon exposure under the existing CBAM methodology. The second covers electricity prices, contracted volumes, renewable attributes, grid risks, PPA counterparty creditworthiness and metering-data quality.
Treating renewable electricity procurement as an automatic reduction in current CBAM liability could therefore distort assessments of both industrial energy contracts and carbon-related costs.
Downstream CBAM Expansion Could Affect More Manufacturers
The proposed expansion of CBAM would extend the mechanism to selected steel- and aluminium-intensive downstream products, with the Commission targeting implementation from 2028. Both the Council of the European Union and the European Parliament have supported broad product coverage, although Parliament’s proposed scope is substantially wider.
Serbian manufacturers producing machinery, components, fasteners, wire products and other fabricated goods using steel should consider how supplier information could feed into future export documentation.
The potential expansion makes the quality and traceability of steel-related data increasingly relevant beyond primary steel production. Manufacturers may need to connect information from material suppliers with their own product-emissions reporting where the applicable rules require it.
Electricity Suppliers Can Offer Integrated Industrial Contracts
Electricity traders can serve industrial buyers through structured supply arrangements rather than offering an undefined volume of green power. Such packages can combine a physical electricity supply contract, transparent allocation of renewable attributes, metering and reconciliation procedures, and data interfaces that support the buyer’s product-emissions reporting where legally relevant.
These services can provide commercial and reporting value even when they do not directly reduce the current number of CBAM certificates required for a particular steel product. For HBIS Serbia and other large industrial electricity consumers, the financial structure of a long-term PPA is also important. A contract can support investment in new renewable generation when the offtaker has sufficient creditworthiness and the agreement provides predictable cash flow.
PPA Terms Must Address Industrial and Regulatory Risks
Project lenders will need to assess how a renewable energy project would perform if the industrial buyer’s electricity demand declines, production volumes change, the buyer undergoes restructuring or CBAM requirements expand further downstream.
Flexible volume bands, change-in-law clauses and clearly defined ownership of renewable attributes can therefore form part of the contractual and financing arrangements.
For steel producers, electricity procurement and direct process decarbonisation need to be assessed alongside the evidence systems used for environmental reporting. Their respective contributions to costs, financing and regulatory compliance should remain distinct under the applicable legal framework.
Serbia’s steel industry must consequently evaluate renewable electricity as a strategic industrial input while determining its precise CBAM implications according to the product concerned, the applicable emissions category and the EU rules in force.
Supported by CBAM.Clarion.Engineer
