Commercial electricity trade between the EU and the six Western Balkan contracting parties fell 15 percent year-on-year in the second quarter of 2026, according to the Energy Community Secretariat's second quarterly CBAM electricity monitoring report, presented on July 29, 2026. The decline happened despite narrowing price spreads between the two markets, a combination the Secretariat attributes to higher costs and regulatory uncertainty created by CBAM.
The finding matters for three groups: electricity traders active on Southeast European borders, transmission system operators absorbing rising system costs, and EU importers who owe certificates on every megawatt-hour of Balkan power. The report is the second in a quarterly series, and it documents an easing versus the first quarter's 25 percent drop without any return to 2025 trading levels.
What the second CBAM electricity monitoring report found
The Q2 2026 CBAM electricity monitoring report finds that EU-Western Balkans commercial power trade fell 15 percent year-on-year despite narrowing price spreads, with the Energy Community Secretariat blaming CBAM-driven costs and regulatory uncertainty. Montel News reported the headline figure on July 29 in coverage by Maja Žuvela, and Carbon Pulse's coverage ran under the conclusion that the Energy Community flags a lasting CBAM impact on EU-Western Balkans power trade.
The report covers the six Western Balkan contracting parties, known as the WB6: Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia, and Serbia, together with their neighbouring EU member states. Electricity is one of the six sectors covered by Regulation (EU) 2023/956, and Balkan power entering the EU grid has been directly liable since the definitive phase started on January 1, 2026. The CBAM electricity rules price the direct generation emissions embedded in every imported megawatt-hour under CN code 2716 00 00.
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Physical flows are splitting from commercial schedules
Physical electricity flows across the region increasingly diverge from commercially scheduled trades, and the Secretariat warns that the divergence raises system costs and operational-security risk for Southeast European transmission system operators. Traders adjust their cross-border nominations to minimize CBAM exposure, but the electricity itself follows grid physics rather than contracts. Power keeps moving along corridors where the commercial schedules that once matched it have thinned out.
Corridor evidence from the monitoring series shows how the gap opens. The first quarterly report documented sharply increased scheduled exports from Albania to Greece that were not matched by a proportional rise in physical flows on that border. The electricity instead followed the physical characteristics of the transmission network, moving from Albania through Montenegro and Bosnia and Herzegovina and onward to EU border countries such as Croatia, Hungary, and Romania.
The divergence creates four operational problems for grid operators, listed below.
- Congestion forecasting degrades, because scheduled positions no longer predict the physical loading on CBAM electricity interconnectors
- Unscheduled loop flows stress network elements carrying power that nobody nominated
- Cross-border capacity sits commercially underused while the wires run loaded
- Balancing and redispatch actions increase, and those system costs ultimately reach consumers
Q2 versus Q1: friction is easing, not disappearing
The 15 percent Q2 decline improves on the 25 percent drop recorded in Q1 2026, but trade has not returned to 2025 levels, which the report series reads as persistent disruption rather than a launch effect. Two quarters of data now point in the same direction.
| Report | Period covered | Presented | Headline finding |
|---|---|---|---|
| First quarterly report | Q1 2026 | April 2026 | Commercial EU-WB6 trade down 25% |
| Second quarterly report | Q2 2026 | July 29, 2026 | Commercial EU-WB6 trade down 15% year-on-year |
| Third quarterly report | Q3 2026 | Expected autumn 2026 | Pending |
A pure launch effect would fade as traders learned the rules and the price spread pulled volumes back. That has only partly happened. The Secretariat warns instead of emerging market distortions that hurt both sides: higher-price EU markets lose access to lower-cost electricity, exports from the contracting parties are constrained, and the market integration agenda that the Energy Community exists to advance is undermined.
The default factor problem for renewable exporters
The report series argues that CBAM's electricity treatment penalizes exporters of renewable power, because imports are charged at country-wide default emission factors and no zero-rated factor exists for verified renewable supply. This is the Secretariat's ongoing case for fixing the electricity methodology, and the quarterly reports are the evidence base feeding that debate in Brussels.
The mechanics sit in the regulation itself. Electricity is the one sector where CBAM electricity default values are the standard method rather than the fallback: actual emissions may only be used when five cumulative criteria in Annex IV, point 5 of Regulation (EU) 2023/956 are all met, and in practice almost no cross-border trades satisfy them. A megawatt-hour of wind or hydro exported from a lignite-heavy grid therefore pays the same CBAM cost as the country's average generation mix.
The complaint slots into the broader argument about CBAM and developing countries, where trade partners contend the mechanism charges them for decarbonisation they cannot yet verify. Calls to adjust CBAM for Energy Community members are multiplying: the day the report was presented also brought wide reporting of Pascal Lamy's call for a Ukraine CBAM exemption tied to decarbonisation milestones, and Ukraine is itself an Energy Community contracting party.
What happens next
The third quarterly report, covering July to September 2026, is expected in the autumn, and the Secretariat has committed to keep monitoring market trends under CBAM in its upcoming reports. Whether the Q3 figure moves toward zero or stalls near the Q2 level will show whether the region is adapting or the trade loss is structural.
The cost side is moving in the meantime: the Q3 CBAM certificate price is tracking well above Q2 as EUAs hold the EUR 79 to 86 band, which raises the per-megawatt-hour cost of every default-valued import. The policy side is moving too, with the European Parliament's ENVI committee position on the CBAM review heading to the September plenary.
For the full compliance chain from authorization to certificate surrender, read the EU CBAM guide.