Starting next year, Serbia will be subject to the European Union’s Carbon Border Adjustment Mechanism (CBAM), which will impose additional costs on certain Serbian industries, particularly those that are energy-intensive. The first sector affected will be Elektroprivreda Srbije (EPS), the country’s main electricity supplier, which powers most Serbian companies. According to the Fiscal Council, this will create a chain reaction, significantly increasing costs for the broader economy.
From 2026, a portion of Serbia’s exports—nearly two-thirds of which go to EU member states—will face additional charges for CO₂ emissions during production. Key affected industries include aluminum, iron and steel, cement, fertilizers, hydrogen, and electricity. Companies will need to provide proof of emissions and pay fees aligned with EU carbon pricing. For EPS, the additional cost for exporting electricity could reach €60 per MWh, which would heavily undermine its competitiveness, given the current average export price of just over €100 per MWh.
Serbia’s industries emit considerably more carbon per unit of output than EU countries, partly due to decades of limited environmental and energy policy. EPS continues to rely largely on lignite, producing high CO₂ emissions and other pollutants, affecting both the company and the broader industrial sector that depends on its electricity. Historical analysis by the Fiscal Council shows that from 2010 to 2023, Central and Eastern European countries reduced emissions by about 20%, whereas Serbia only achieved a 3–4% reduction.
Depending on the government’s approach, CBAM-related costs for EPS could range from €200–300 million annually under current EU rules to €3 billion annually under stricter conditions that cover the entire sector.
In addition to financial challenges, Serbia faces systemic obstacles in executing major energy projects, including delays in permits, unresolved property issues, and insufficient pre-investment planning. Recent analyses of ten major energy projects, totaling over €7.5 billion, revealed frequent schedule overruns and rising costs—for example:
- Đerdap 3 hydroelectric plant: €1.4 → €2.6 billion (+85%)
- Self-balancing solar plants: €1.4 → €1.7 billion (+21%)
- Bistrica hydroelectric plant: €835 → €962 million (+15%)
These cost increases are largely due to incomplete project documentation and subsequent design changes.
The Fiscal Council warns that even with timely funding, limited institutional and staffing capacity will remain a bottleneck, slowing Serbia’s energy transition. The ultimate success will depend on the government’s prioritization of these projects relative to other expenditures, such as sports infrastructure or defense procurement.
