Serbia’s electricity exports to the European Union are facing tighter carbon-cost and verification requirements as northbound power flows increase and renewable generators seek ways to document low-emissions electricity.
Electricity exported from Serbia under the EU Carbon Border Adjustment Mechanism carries an indicative default cost of €78.37/MWh, calculated using a national emissions factor of 1.041 tonnes of CO₂/MWh and a second-quarter CBAM certificate price of €75.28/t. The charge exceeds most electricity price differences between Serbia and neighbouring EU markets. Hungary’s average electricity price in the second quarter was around €13/MWh higher than Serbia’s, leaving conventional export arbitrage insufficient to cover the default CBAM cost.
Requirements for verified renewable electricity
The default treatment may be avoided when an authorised EU CBAM declarant uses verified emissions data from a specific generating installation. For Serbian wind, solar and hydro producers, however, qualifying for actual emissions requires detailed contractual and operational evidence. The European Commission’s August guidance requires a physical power purchase agreement between the named generator and authorised declarant. If a trader participates, the contracts must establish a single tripartite arrangement rather than a series of uncontrolled back-to-back agreements.
Electricity generation must be matched with firmly nominated interconnector capacity during the same period, with the matching period limited to one hour. Nominations must cover Serbia, the EU destination and all transit countries, while smart-meter data must confirm that the installation generated the corresponding volume. An accredited verifier must receive monthly evidence reports and issue a conclusion covering both the installation and the electricity allocated to each EU declarant. The verified report must include the declarant’s EORI number and the eligible quantity imported from the installation.
This framework reduces the usefulness of conventional portfolio electricity supply. Once renewable output is mixed with electricity from other sources without controlled allocation, the exported megawatt-hour may no longer be traceable to a specific generating installation.
Higher exports through Hungary
Scheduled electricity exports from Serbia to Hungary increased 111% year on year in the second quarter of 2026, despite the disadvantage created by the default CBAM cost. The broader northbound trend also included a 156% increase in Romanian exports to Hungary. Ukrainian demand appears to be supporting Hungary’s role as a regional hub and increasing Serbia’s importance as both a generation and transit market.
The higher flows do not necessarily mean CBAM costs have become commercially manageable. Individual transactions may involve transit, existing contracts, security-of-supply requirements or expectations of changes to EU electricity rules. Serbia’s position is further complicated by the difference between commercial schedules and physical power flows. Electricity entering from the southern Balkans can physically move through Serbia towards Hungary regardless of how individual commercial contracts identify its origin. For CBAM purposes, the authorised declarant still needs a controlled commercial and documentary chain. Renewable electricity elsewhere within the interconnected system does not by itself allow an exported volume to receive a lower actual-emissions value.
This creates additional risks for traders operating multi-border portfolios. Contracts need to establish responsibility for interconnector nominations, hourly evidence, allocation to individual declarants and costs arising if a verifier rejects an actual-emissions claim.
Proposed changes to the default emissions factor
A proposed EU reform could improve Serbia’s position by calculating national electricity defaults using the country’s entire generation mix instead of focusing primarily on fossil-fuel generation. Under such an approach, hydropower, wind and solar generation would reduce Serbia’s national emissions factor. Under the current methodology, the country’s large lignite fleet has a dominant effect on the default calculation even when electricity is commercially linked to a renewable installation.
The proposed changes could also eliminate the requirement to demonstrate that physical network congestion was absent during export. That condition presents difficulties for Serbian generators because they do not control congestion across several transmission systems. If adopted without major changes, the revised provisions could apply retroactively from January 1, 2026. Renewable producers, however, cannot base long-term financing decisions on an unadopted reform and would still need systems capable of meeting the remaining verification requirements.
Guarantees of Origin create another market route
The European Commission has also proposed mutual recognition of Guarantees of Origin (GoOs) between the EU and qualifying Energy Community countries. Serbia already operates a GoO registry. Mutual recognition could give Serbian renewable generators access to the wider EU certificate market, strengthen corporate PPA economics and provide an additional source of revenue.
A GoO, however, does not establish CBAM-compliant physical delivery. It verifies renewable electricity origin for disclosure purposes, while CBAM actual-emissions treatment requires a documented connection between the producer, PPA, hourly generation, cross-border nominations, importer and verification conclusion. The combination of physical electricity, a recognised GoO and a controlled CBAM evidence package would therefore provide the most complete export documentation.
Domestic industrial demand provides another route
Serbian renewable generators could also supply verified electricity to domestic steel, aluminium, fertiliser and other manufacturers that export products to the EU. This route could avoid some complications associated with treating electricity itself as a CBAM-covered import while allowing industrial customers to document production emissions and meet requirements from EU buyers.
The electricity would still need to be properly metered and allocated. A certificate-only supply agreement may support a renewable electricity claim but would not automatically meet the evidence requirements for product-level CBAM treatment or emissions verification. Undifferentiated Serbian electricity therefore remains exposed to a default charge that can exceed available export margins, while electricity from a named renewable installation can qualify for different treatment only when its identity remains traceable from the Serbian generating meter through to the authorised EU declarant.
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