Bosnia and Herzegovina has not fulfilled its European obligations, so starting next year electricity production in Bosnia and Herzegovina will be more expensive.
Namely, BH. from January 1 next year, manufacturers will have to buy certificates for exporting certain products to the EU whose production emits carbon into the atmosphere, such as electricity and cement, if they do not adopt a whole series of laws and establish a practice for the country to manage these processes itself.
According to everything we have been told, this is almost impossible to achieve, because the deadline is less than two months away, and therefore everything exported to the EU, which contains intensive carbon emissions into the atmosphere, will be significantly more expensive.
As a reminder, due to the achievement of climate goals, the EU started a gradual process of reducing emissions of harmful gases into the atmosphere, and in order to ensure that European producers, who must meet all standards, are not faced with unfair competition, in 2023, the EU began applying this process to all non-EU producers who export electricity, steel, cement, fertilizer, aluminum and several other products to the EU, with a postponement of the collection of certificates until 2026.
BiH has the option to collect these certificates itself and keep the money in the country, or, if it does not meet the conditions, which is the case now, the certificates will be collected by the EU.
Luigi Soreka, EU Ambassador to Bosnia and Herzegovina, in an interview for “Nezavisne novine” last year he emphasized that there is a possibility that the application of the mechanism for the electricity production sector will be postponed until 2030 if the necessary reforms are undertaken. One of the measures, he said, is the adoption of the emission trading system. If there is no system, apart from the fact that Bosnia and Herzegovina will suffer. economy, the money will be collected by the EU, and Bosnia and Herzegovina will be left with nothing.
“Other prerequisites for BiH to receive an exemption for electricity until 2030 are the adoption of the Law on Electricity and Natural Gas, reaching an agreement with the EU on the application of EU law in the field of electricity and implementing the basic provisions of EU regulations for electricity markets,” Soreka told us.
Last week, we sent a question to the Communications Department of the EU Delegation in Sarajevo asking whether BiH is ready for its electricity exported to the EU to be exempt from these taxes. According to the answers we received, it is first necessary to establish a clear legal framework that obliges carbon-emitting industries to purchase permits for the emission of greenhouse gases. But that is nowhere near enough, because it is still necessary to have an operational domestic carbon trading system, as well as a monitoring system for implementation. In addition, BiH must, as we were told, integrate its electricity market with neighboring systems, but also ensure transparent cross-border trade in electricity.
“The key prerequisite for this is for BiH to adopt the Law on the Regulator, Transmission and Market of Electricity at the state level, the proposal of which was recently determined by the Council of Ministers of BiH”, it was explained to us.
Only if BiH fulfills all these conditions, or if BiH proposes other measures that will be recognized by the European Commission as adequate, is it possible to be exempted from paying penalties on exported electricity.
“Without the fulfillment of these elements, exporters of electricity from BiH, as well as exporters of other products covered by CBAM, will have to purchase CBAM certificates from 2026. The adoption of the Law on Electricity is an important step in the right direction, but that step must be accompanied by significant additional legislative, technical and institutional progress in order to meet all EU requirements,” it was warned.
Although the collection of certificates cannot be avoided, as we said, Bosnia and Herzegovina could establish a system that would collect them.
“However, the development of the national ETS requires the prior establishment of a functional system for monitoring, reporting and verification of emissions (MRV), which implies the adoption of an appropriate legal framework and full operational capability – a process that usually lasts at least two years”, warned the Delegation. In other words, if we had started with it in 2023, when the system was launched, BiH would have been ready by now. In this way, the price will be paid by the citizens, as always, through higher bills for electricity and other products.
The Delegation emphasized that the EU’s time frame for CBAM remains unchanged. “BiH must prepare immediately in order to comply with all obligations from January 2026,” they pointed out.
