Based on reporting by Vladimir Spasić.
The second-quarter impact of the Carbon Border Adjustment Mechanism (CBAM) on electricity markets in the Western Balkans offers an important early indication of how carbon pricing can reshape regional electricity trade. The latest assessment points to a partial easing of the market frictions seen at the beginning of CBAM’s definitive period, but it also shows that the regional market has not returned to its previous trading patterns. Compared with the first half of 2025, price spreads remained wider and cross-border electricity exchanges lower.
The analysis covers Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia, alongside neighboring EU markets including Bulgaria, Croatia, Greece, Hungary, Italy and Romania. As hydrological conditions normalized during the second quarter, electricity prices partly reconverged and the region returned to its seasonal position as a net importer. However, the overall trading structure remained different from the previous year. Gross electricity exchanges between the Western Balkans and the EU remained lower, while trade increasingly consolidated around new routes.
One of the most notable developments is the growing importance of Hungary as a regional trading hub. Electricity flows from Serbia to Hungary more than doubled compared with Q2 2025, increasing by 111%, while flows from Romania to Hungary increased by 156%. The report suggests that this pattern is consistent with Ukraine’s electricity import needs being served through the Hungarian hub, raising the possibility that Ukraine could become a primary destination for surplus electricity generated in the Western Balkans.
What is particularly significant is the way CBAM is beginning to interact with infrastructure, geography and energy-market strategy. A carbon cost attached to electricity imports can influence where electricity is sold, which corridors become commercially attractive, and how power moves through interconnected markets. The result is a reminder that carbon markets do not operate in isolation. Their effects can reach into electricity pricing, transmission networks, cross-border trade and the strategic decisions of energy producers.
FACS Perspective
At FACS, we see this development as a particularly useful illustration of the expanding economic reach of carbon markets. CBAM is often discussed primarily as a mechanism for placing a carbon cost on imports, but its practical impact is considerably broader. In electricity markets, carbon costs can influence trading routes, price spreads, cross-border flows and ultimately the commercial value of power.
For businesses, this means carbon exposure should increasingly be considered alongside wider market and infrastructure risks. Companies operating in or trading with the Western Balkans cannot simply assess CBAM as an additional compliance expense; they need to understand how it may affect the economics of different markets and trading corridors. Uncertainty makes monitoring and scenario planning particularly important. Carbon-market developments can change commercial conditions well beyond the entities directly responsible for paying the carbon cost.
This article is based on publicly available reporting by Balkan Green Energy News. All rights, including copyright, remain with the original source.