West Balkan energy producers should adopt carbon price as EU tax is looming, say campaigners

In a report published on Thursday, an environmental agency recommended that Western Balkans countries work to introduce their own carbon pricing for electricity generation in order to reduce the impact of EU new taxes on fossil fuel generated energy which will be implemented next year.

Carbon Border Adjustment will be implemented on January 1, 2026. Importers of goods, including electricity, from outside the EU will be required to pay the carbon dioxide emissions that are associated with the production of their products in their country.

It will be much more expensive to import electricity from countries that heavily rely on coal, such as Bosnia and Herzegovina (BH), Montenegro (MN), North Macedonia and Serbia, for EU importers like Italy, Croatia and Hungary.

CEE Bankwatch Network stated that the power exports of these countries under CBAM will likely plummet over night, cutting revenues for Balkan utilities. CEE Bankwatch Network said that up to 60% of the electricity imported by the four Balkan nations to the EU is coal-based.

The EU tax does have conditions that allow exemptions for countries who "substantially" progress in applying EU climate and energy law. This could include carbon pricing.

It said that "by introducing domestic carbon prices, the countries can mitigate the impact of CBAM as well as generate significant revenues to spend on an equitable and sustainable energy transformation."

The CEE Bankwatch Report said that carbon pricing could also help them raise up to 4,90 billion euros per year for a sustainable energy transformation and to support a coal-dependent area.

Pippa Galllop, of the CEE Bankwatch Network, added that "CBAM can finally force Western Balkan countries to address the elephant in the living room and begin closing their highly polluting and increasingly uneconomical coal power plants."

(source: Reuters)