Serbia’s companies are ready to tackle decarbonization and the European Union’s Carbon Border Adjustment Mechanism (CBAM), but they face challenges from the lack of supportive national policies and regulations. At the Belgrade Energy Forum (BEF) 2024, representatives from key industries—cement, steel, aluminum, and mineral fertilizers—voiced their concerns and needs to align with EU standards and regulations to protect jobs and maintain competitiveness.
CBAM and its impact
The CBAM, which levies tariffs on goods imported into the EU based on their carbon footprint, aims to prevent carbon leakage and promote fair competition. From October 1, 2023, industries in Serbia must measure CO2 emissions for goods exported to the EU, and by January 1, 2026, they will be required to pay carbon border taxes. This policy will directly affect over 15,000 employees in Serbia’s key industries and indirectly impact more than 50,000 workers.
Industry concerns and recommendations
Cement Industry: Cement producers in Serbia, like Lafarge Serbia, emphasize the need for regulatory support rather than financial aid. The industry’s CO2 emissions primarily come from calcium carbonate in raw materials, the use of fossil fuels for thermal energy, and logistics. Dimitrije Knjeginjić, CEO of Lafarge Serbia, stressed that existing solutions should be adopted from EU practices, and regulatory barriers hindering decarbonization and alternative fuel usage need to be removed. The industry’s integration into a circular economy and approval for cogeneration at cement plants would significantly aid in reducing emissions.
Steel Industry: The steel sector, represented by Branko Zečević of Metalfer Group, warns that without a national carbon pricing scheme, Serbian markets could be overwhelmed with products from countries without such duties, undermining local industry. Metalfer Group has invested in reducing its carbon footprint and advocates for the adoption of EU regulations to prevent market dumping and ensure fair competition.
Mineral Fertilizer Industry: Elixir Group’s Vice President, Matthias Predojević, highlighted their ongoing decarbonization efforts and the need for better integration of waste products into the production cycle. The company plans to invest in renewable energy projects and waste management facilities to support sustainable practices.
Technical Gases Industry: Messer Tehnogas, heavily dependent on electricity, faces challenges in securing green energy due to slow permitting processes. Mirjana Jukić, Head of Procurement, calls for streamlined regulations to facilitate investments in renewable energy sources, ensuring compliance with future carbon taxes and maintaining competitiveness.
Regulatory and structural reforms needed
Harmonization with EU Standards: Panelists urged the Serbian government to align national regulations with EU standards, particularly the full implementation of the Law on Climate Change. This includes establishing a system similar to the EU Emissions Trading System (EU ETS) to levy CO2 taxes domestically, protecting the Serbian market from unfair competition and supporting the transition to a green economy.
Facilitating Investments in Green Energy: Industries need faster and more efficient permitting processes for renewable energy projects. Companies like Lafarge Serbia and Messer Tehnogas are ready to invest in solar power and other green energy sources, but bureaucratic delays hinder progress. Simplified procedures for self-consumption energy projects and incentives for green energy investments are crucial.
Developing a Circular Economy: Encouraging the use of recycled materials and waste products within Serbia is essential. Current regulations often allow the export of valuable waste materials, which could be utilized domestically to support circular economy practices. Strengthening local waste management infrastructure and ensuring waste products are used in-country will reduce CO2 emissions and enhance resource efficiency.
Conclusion
Serbia’s path to decarbonization and compliance with the EU’s CBAM demands proactive regulatory alignment and support from the government. By adopting EU standards, facilitating investments in renewable energy, and promoting a circular economy, Serbia can protect its industries, maintain competitiveness, and ensure a sustainable future. The collaborative efforts of the government and industry stakeholders are crucial in navigating the challenges and opportunities presented by the green transition.
