Renewable Energy in the Western Balkans Faces Unlikely Threat from CBAM

At the ETCSEE conference, Peter Pozsgai, head of the CBAM initiative at the Energy Community Secretariat, delivered a striking message: a policy designed to protect the EU’s green ambitions may paradoxically undermine renewables in neighbouring Western Balkan states. Under the current rules of the Carbon Border Adjustment Mechanism, all electricity exports are taxed based on a country’s average carbon intensity. What’s more, renewable power producers cannot use domestic emissions allowances to offset these charges - effectively making clean energy more expensive than coal-sourced electricity.

“This is a classic case of a perverse incentive,” Pozsgai remarked, emphasizing the urgent need for a regulatory fix before the CBAM framework takes full effect. If unresolved, the issue risks stalling hydropower projects and causing a surprising tilt back towards lignite across the region.