The EU’s Carbon Border Adjustment Mechanism (CBAM) is due to come into effect in 2026. The CBAM ensures that the carbon price of imports to the EU is equivalent to the carbon price of domestically produced products, thereby maintaining fair competition as EU companies transition to low carbon production. By placing a tax on the carbon content of imports the CBAM is expected to reduce carbon leakage and support EU decarbonisation while incentivising producers outside of the EU to decarbonise to improve the competitiveness of their products on the EU market, contributing to a reduction in global emissions in line with the Paris Agreement.

Carbon-intensive goods covered by CBAM include electricity, cement, fertilisers, aluminium, iron, steel, and hydrogen. For exporters to avoid CBAM costs, they will need to reduce the carbon intensity of the sectors covered by the regulation.

While all countries exporting to the EU are subject to CBAM, it is particularly relevant to candidate countries for EU accession, who are to align their domestic legislation with the EU’s acquis communautaire before joining the bloc.

As exporters of many industrial products covered by CBAM, Albania, Bosnia and Herzegovina, and Serbia all stand to gain from taking a proactive approach to supporting the decarbonisation of these industries. Not only will it afford them competitive economic advantage, but also help these countries meet their own commitments to reducing emissions in line with the Paris Agreement.

In a four-part series, we look at risk and resilience to the CBAM in the electricity, iron and steel, cement, and chemical sectors in Albania, Bosnia and Herzegovina, and Serbia. This work is produced through desk research, interviews and workshops with industry stakeholders across the three countries.

Electricity will be pivotal to aligning with CBAM on two fronts:

The first relates to direct electricity exports. Coal-fired power represents a high share of Serbia and BiH’s electricity exports, making them highly exposed to CBAM. Maintaining the profitability of electricity exports will involve reducing their emissions.
The second is in relation to industrial exports. As electricity powers industrial production, the higher the carbon intensity of electricity, then the higher the carbon intensity of the final product. Low-carbon electricity is therefore the foundation of low-carbon industry. As decarbonising electricity has the knock-on effect of decarbonising the sectors that rely on electricity, it is central to aligning every industrial sector with CBAM.

Decarbonisation targets and 1.5℃ pathways

Publications

AEMO's gas projections for Western Australia: analysis

The Australian Energy Market Operator (AEMO) has just released its gas projections for Western Australia, the results of which highlight the absence of climate policies in the state.

Troubled waters: risks and realities of blue carbon in climate action

Carbon stored in coastal and marine ecosystems, such as mangroves, salt marshes, and seagrass meadows (blue carbon) is viewed as a potential bridge between mitigation, adaptation, and climate finance. However, as this brief explores, the viability of blue carbon as a mitigation option is questionable due to the fragility of these systems and the use of blue carbon as offsets counterproductive.

Catalysing LT-LEDS implementation in Africa: Insights, bottlenecks, and solutions from country experiences

This report examines how African countries are advancing from the design to the implementation of their Long-Term Low-Emission Development Strategies (LT-LEDS), drawing on case studies from Burkina Faso, Ethiopia, Kenya, Nigeria, Rwanda South Africa, Rwanda, Uganda, Zambia, and Zimbabwe, as well as extensive desk research and comparative analysis.

Three key near-term actions could bend the warming curve; bringing projected warming below 2°C

Tripling renewables, doubling energy efficiency and cutting methane by 2030 and beyond would cut warming rate by a third in ten years, and halve it by 2040. This would cut projected warming this century about 0.9˚C from 2.6˚C to 1.7˚C.

Climate Action Tracker: 2025 warming projection update

Little change in warming outlook for four years; new 2035 climate targets make no difference

Real zero is within reach

This analysis explores the technical feasibility and economic benefits of real zero. Our analysis demonstrates that reaching real zero is achievable in many sectors and identifies the economic benefits of eliminating fossil fuels.

Rescuing 1.5°C: new evidence on the highest possible ambition to deliver the Paris Agreement

This study shows that, even after years of insufficient action, the world can still return to well below 1.5°C of warming this century if countries pursue the “highest possible ambition” in climate action.

Preliminary comments on “Assessing the decarbonisation role of Western Australia’s LNG exports to Asia”

A preliminary analysis of a Deloitte report for the Western Australian government about fossil gas exports to Asia.

Clearing the air on methane: a global review of emissions, ambition and the policy landscape

This report assesses emissions, targets, and policies for 72 countries that collectively account for over 90% of global methane emissions, providing a robust foundation for understanding progress and gaps in global methane mitigation efforts.

The responsibility of investor-owned carbon majors to contribute to direct air carbon capture and storage investment

New study finds world’s largest fossil fuel and cement companies should shoulder a major share of the investment needed to develop carbon removal technologies.

State of Climate Action 2025

This report card on climate action shows that global efforts fall far short of what’s needed to limit warming to 1.5°C. While most indicators are heading in the right direction, not a single one of the 45 indicators is on track for 2030.

Hard to abate: a justification for delay?

Claims from both the iron and steel - and cement - sectors that their emissions are "hard to abate" is slowing down real progress these sectors could be making on cutting emissions. This report unpacks the reality.

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Decarbonisation targets and 1.5℃ pathways

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Decarbonising electricity, cement, iron and steel, and chemicals in Albania, Bosnia and Herzegovina and Serbia

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Iron and steel

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