As an EU candidate country, Serbia has committed to aligning its climate policies with the European Green Deal and the Green Agenda for the Western Balkans. Since the launch of the Berlin Process in 2014, Serbia has made tangible progress, including the adoption of the Law on Climate Change in 2021 as the legal foundation for its transition toward climate neutrality by 2050.
Monitoring, Reporting, and Verification (MRV) System
Serbia’s national MRV system, introduced under the Law on Climate Change and supplemented by secondary legislation, represents its framework for tracking and reducing greenhouse gas (GHG) emissions. The MRV framework is built on three pillars: monitoring GHG emissions, mandatory reporting, and independent third-party verification. All facilities that engage in GHG emissions are required to obtain emission permits and comply with reporting obligations. To date, approximately 85 permits have been issued, and many identified plant operators have applied for their initial permits. Emissions reports for the 2025 calendar year are expected by March 31, 2026.
Serbia’s MRV system shares several features with the EU’s Carbon Border Adjustment Mechanism (CBAM): both require detailed, quantitative emissions data, third-party verification, and target high-emission sectors such as cement, aluminum, metallurgy, and electricity. Neither system sets limits on emissions volumes. However, the two frameworks differ in purpose and scope. Serbia’s MRV system serves as a domestic tool targeting direct emissions from national operators. CBAM, in contrast, is an EU trade policy designed to prevent carbon leakage by imposing carbon costs on imported goods, including both direct and indirect emissions.
Importantly, Serbia’s MRV system can serve as a technical foundation for CBAM compliance. Serbian exporters can rely on MRV data when preparing CBAM declarations, offering both cost and time efficiencies. As such, MRV is a prerequisite for the introduction of a carbon pricing mechanism and can facilitate the implementation of CBAM.
CBAM’s Market Implications for Serbia
CBAM, which fully enters into force in 2026, is expected to have significant impacts on Serbia. According to some estimates of the impacts of CBAM on EU trade partners, Serbia could experience a reduction of more than 0.5% in employment and wage levels in the affected sectors due to increased compliance costs and reduced competitiveness in the EU market.
Serbia’s exports of carbon-intensive goods (e.g., steel, aluminum, cement, fertilizers, and electricity) will be subject to CBAM levies. Sectors downstream of CBAM-covered industries – such as automotive or construction, which rely on steel and aluminum inputs – could face rising costs unless a comparable domestic carbon pricing mechanism is introduced.Namely, to mitigate these risks, the CBAM framework offers partial exemptions for non-EU countries that introduce a domestic carbon dioxide pricing mechanism. For instance, if Serbia were to adopt a carbon dioxide price of EUR 30 per ton, the EU would charge only the difference up to the EU emissions trading system (ETS) price. Even broader exemptions apply to electricity exports, but only for countries that meet a strict set of conditions (e.g., the introduction of an ETS system, market coupling with the EU). As of now, no Western Balkan country, including Serbia, meets all these criteria.
One of Serbia’s main concerns is the EU’s inconsistent methodology for calculating carbon dioxide emissions from electricity. While indirect emissions embedded in goods are based on a five-year grid average, imported electricity is assessed using a fossil-fuel-only factor. This discrepancy risks overstating Serbia’s carbon intensity, discouraging renewables, and disrupting regional electricity market integration.
Conclusion
To reduce the financial and competitive burden of CBAM, Serbia must urgently adopt a domestic carbon pricing system. The Serbian government presently favors the introduction of a fixed national carbon dioxide tax over the creation of an ETS system. While a tax offers simplicity and price predictability, it may raise electricity prices and provoke resistance if not accompanied by transitional measures. An ETS, although more complex to implement, would allow future linkage with the EU ETS. With the MRV system already operational, Serbia is technically prepared to move forward. The political decision now lies in choosing the optimal model for domestic carbon pricing – one that retains a portion of CBAM-related revenues within Serbia and reinvests them in the country’s green transition.
By Ana Calic Turudija, Partner, and Milica Bundalo, Junior Associate, Prica & Partners
This article was originally published in Issue 12.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
