This year will see the end of the transitional period of quarterly reporting under the  Carbon Boarder Adjustment Mechanism (CBAM). From early next year, annual monitoring and reporting of greenhouse gas (GHG) emissions for goods imported into the EU and falling under the scope of the CBAM will begin.
Declarants will be required to pay for GHG emissions by purchasing and surrendering CBAM certificates at the end of each reporting period.

Consequently, from 2027 onwards, CBAM declarants must submit by 31 May an annual return of the previous year’s activity containing the following information:

• the quantity of each type of imported goods;
• the total embedded emissions contained in the goods;
• the number of CBAM certificates to be surrendered;
• copies of the relevant verification reports.

In the meantime, the  CBAM regime continues to evolve. The European Commission’s “Omnibus I” simplification package, which has already been adopted by the EU co-legislators and is expected to enter into force before the end of 2025, introduces a number of amendments.
One of the significant changes relating to financial obligations is that CABM declarants will be able to purchase certificates under the mechanism from February 2027, covering the associated emissions from their imports in 2026.

However, apart from some other horizontal provisions, the proposed changes have a limited impact on the rules governing imports of electricity from the Energy Community Contracting Parties (Contracting Parties) into the EU, which will generally continue to apply as foreseen in the original EU Regulation establishing the border carbon adjustment mechanism.
In particular, the amendments to the de minimis threshold under the CBAM – a central element of the simplification package – do not apply to electricity imports.

In August 2025, the Commission concluded a call for evidence, which will feed into a legislative proposal due by the end of the year. The consultation addressed the questions of extending CBAM to certain downstream products, introducing additional anti-circumvention measures, as well as addressing concerns with the existing rules on default values and the conditions for using actual emissions for electricity in CBAM. Those changes are all foreseen to be implemented through an amendment of the CBAM Regulation, which—due to the length of the corresponding legislative process—cannot realistically be expected to enter into force before 2027� The existing rules on electricity, currently enshrined in the CBAM Regulation, are to remain in force in their current form throughout the coming year.

The Energy Community CBAM Readiness Tracker continues—like previous editions—to monitor and record the developments and progress of the Contracting Parties in meeting the conditions for an exemption from CBAM for electricity

The landscape of electricity trade from the Contracting Parties differed markedly in 2024 from that of the previous year. Reduced generation due to unfavourable hydrological conditions, combined with a moderate increase in domestic demand, resulted in almost all Contracting Parties becoming net importers on an annual basis—with Bosnia and Herzegovina being a notable exception and Montenegro recording only marginally higher exports than imports. This demonstrated that the region did not have a structural surplus position to export electricity to the EU in 2024.

While the Contracting Parties have made some progress, the precondition for the potential exemption from CBAM for electricity, namely the coupling of their electricity markets with the single European electricity market, has yet to be met. This process requires significant effort so that the Contracting Parties can reach the “point of no return”, marking full transposition of the acquis relevant for coupling, including verification of its compliance. Serbia, Moldova, North Macedonia and Montenegro are close to achieving this milestone. Once reached, the pace of progress will chiefly depend on European counterparties—primarily the EU Agency for the Cooperation of Energy Regulators (ACER), EU nominated electricity market operators (NEMOs) and transmission system operators (TSOs), as well as on the efforts made by NEMOs and TSOs in the Contracting Parties to ensure readiness for market coupling. The current priority is to ensure that Contracting Parties advance in transposing the Electricity Integration Package, and to subsequently verify the compliance of the transposition.

Table: Current status of implementation of the necessary preconditions for market coupling (last update 9 Sept 2025)

	DAM Operational (YES/NO)	Intraday market (YES/NO)	Legal framework for transposition of the Electricity Integration Package has been adopted (YES/NO)	Compliance of transposition of the Electricity Integration Package has been verified (YES/NO)	NEMO(s) designated in compliance with the Electricity Integration Package ((YES/NO)/ Designated NEMO
Albania	YES	YES	NO	NO	NO/ALPEX, 17 July 2023
Bosnia and Herzegovina	NO	NO	NO	NO	NO
Georgia	YES	YES	NO	NO	NO
Kosovo	YES	YES	NO	NO	NO/ALPEX, 17 July 2023
Moldova	NO	NO	YES, partially	NO	NO/OPEM, 29 June 2025
Montenegro	YES	NO	YES, partially	NO	NO/MEPX, 30 May 2024
N. Macedonia	YES	NO	YES, partially	NO	NO/MEMO, 5 June 2025
Serbia	YES	YES	YES	NO	NO/SEEPEX, 16 June 2022
Ukraine	YES	YES	NO	NO	NO

Source: 2025 CBAM Readiness Tracker

In terms of progress in meeting renewable energy obligations, 2024 saw record levels of wind and solar generation. This underlines the slow but steady structural transformation of the energy mix, which until recently was dominated by hydropower.
At the same time, Energy Community countries need to continue to increase the share of renewables in gross final energy consumption to ensure that the 2030 target set in the Energy Community Renewable Energy Directive is met.

With regard to the commitment to climate neutrality by 2050 in the long-term low greenhouse gas development strategy, progress remains moderate. No new long-term strategies were presented during the reporting period, and only two Contracting Parties – Ukraine and Moldova – have adopted climate laws formalizing the 2050 climate neutrality target in national legislation.

Given that several Contracting Parties are still working on their draft climate laws, it is essential that the provisions of Article 2(7) of the CBAM Regulation are fully taken into account when finalising these drafts.

Following presentation of the European Commission’s impact assessment of various policy options for carbon pricing at the 2024 Energy Community Ministerial Council meeting, discussions in 2025 focused on the Contracting Parties’ plans for introducing such instruments. To date, only Montenegro has an emissions trading system (ETS) in place and only Ukraine—given its advanced position in establishing MRVA—is likely to launch a test phase in 2026. Other Contracting Parties are either planning to introduce a carbon tax around 2027, with subsequent transition to an ETS, or are not planning to implement any carbon pricing policies. The complexity and time required to design and establish an ETS raise questions about whether and how Contracting Parties will be able to comply with the exemption criterion of establishing an ETS for electricity, with a price equivalent to the EU ETS, by 1 January 2030.

Article 2(7c) of the CBAM Regulation also requires the submission of a roadmap, in which the third country must outline the main milestones and schedule for complying with the following obligations: a) developing a long-term strategy and, where applicable, communicating it to the United Nations Framework Convention on Climate Change (UNFCCC) b) including the 2050 climate neutrality objective in both the strategy and domestic legislation and c) aligning domestic legislation with the EU climate acquis, including carbon pricing at a level equivalent to that in the EU, in particular for electricity generation, and implementing an emissions trading system for electricity, with a price equivalent to the EU ETS, by 1 January 2030.

The final condition for an exemption is establishment—in the third country—of an effective system to prevent indirect import of electricity into the EU from other third countries or territories that do not meet the exemption criteria.

More information: 2025 CBAM Readiness Tracker