Impact of CBAM on the BH Economy
B&H business leaders and exporters gathered at the roundtable "CBAM and Competitiveness: Challenges for BH Economy", alongside key stakeholders from the public and private sectors, regulatory bodies, and industry representatives. This event aimed to analyze the current status of CBAM implementation in BiH, assess its economic impact, and identify potential solutions to mitigate its negative effects.
CBAM (Carbon Border Adjustment Mechanism) is a regulatory measure introduced by the European Union to prevent "carbon leakage," i.e., the relocation of industrial production to countries with lower environmental standards. Regulation (EU) 2023/956, adopted on May 10, 2023, came into effect on May 17, 2023, requiring companies to report CO2 emissions for specific products during a transitional period until the end of 2025.
Starting January 1, 2026, CBAM will become mandatory for importers of cement, iron, steel, aluminum, fertilizers, electricity, and hydrogen, who will need to purchase CBAM certificates to cover CO2 emissions embedded in their products imported into the EU market.
CBAM operates alongside the EU Emissions Trading System (ETS), but while ETS regulates emissions within the EU, CBAM ensures that imported goods are subject to the same environmental standards. However, BiH has not yet established an ETS, putting local companies at a competitive disadvantage.
What Does CBAM Mean for the BH Economy?
BiH is among the most affected Western Balkan countries by CBAM, primarily due to its high reliance on coal in its energy mix (around 60%) and the significant export of products covered by the regulation. The industries most affected by CBAM include the metal sector (iron, steel, aluminum), the cement industry, and the energy sector, which together account for about 15% of BiH's total exports to the EU.
CBAM implementation is expected to significantly increase costs for BH exporters, as they will have to pay additional fees for CO2 emissions. For comparison, the current ETS carbon price ranges between €80–100 per ton of CO2, and CBAM fees are expected to reach similar levels, which could further erode the competitiveness of BH companies.
If BiH does not introduce an ETS, annual CBAM costs for BH industries could exceed hundreds of millions of euros, and companies failing to reduce emissions or optimize their supply chains may lose access to key markets.
ETS – A Solution Still Out of Reach
Since BiH has not yet established an ETS, local businesses cannot use domestic mechanisms to reduce emissions and will be required to pay CBAM levies from 2026. Although government institutions plan to meet the prerequisites for ETS by 2030, until then, businesses will bear the full financial burden of CBAM, further straining the economy.
Unlike CBAM, ETS would allow companies to gradually adapt, invest in emissions reductions, and utilize domestic compensation mechanisms instead of directly paying the EU for their emissions. However, without a clearly defined ETS implementation plan, BH exporters will remain at a disadvantage.
Key Conclusions from the Roundtable
1. BH exporters will begin paying CBAM fees on January 1, 2026, for products such as iron, steel, aluminum, cement, and electricity, as BiH has yet to establish an ETS system that would allow an alternative calculation of emissions.
2. Establishing an ETS system in BiH will not be possible before 2026, with authorities planning to develop it by 2030, meaning businesses will continue to bear high CBAM costs in the meantime.
3. Urgent subsidies are needed for businesses to remain competitive, as recent policy reforms have primarily harmed the private sector. Regulatory and financial support mechanisms are necessary.
4. Electricity trade between businesses must be regulated through legal frameworks to ensure market flexibility and lower costs for energy-intensive sectors.
Next Steps and Recommendations
The roundtable gathered representatives from key institutions, including the EU Delegation to BiH, the Directorate for European Integration, the Ministry of Foreign Trade and Economic Relations of BiH, entity ministries of energy and mining, the Ministry of Spatial Planning, Construction, and Ecology of Republika Srpska, the Employers' Association of FBiH, the Foreign Trade Chamber of BiH, as well as representatives from the private and financial sectors.
All participants agreed that urgent dialogue between authorities and businesses is necessary to find solutions for minimizing CBAM’s negative impact.
AmCham BiH will continue to support Bosnian businesses in navigating new regulatory challenges and advocate for the private sector's voice to be included in national and international decision-making processes.
