The policy paper “Introducing a CO₂ Pricing System in Serbia: An Options Analysis” was developed as part of the “Serbia in the EU ETS” initiative, implemented by the BFPE Foundation for a Responsible Society, within the SDGs for All Platform. The initiative aims to support Serbia in its process of aligning with the European carbon market and EU climate policies.
The analysis provides a comprehensive overview of options for introducing a carbon price on CO₂ emissions in Serbia, in light of accelerating regulatory and climate changes. It highlights that Serbia’s current model, based on cheap domestic lignite and subsidized electricity, has become unsustainable, while the introduction of the CBAM mechanism is already imposing significant costs on the domestic economy.
Without a timely national response, Serbia risks losing potential revenues from emissions, missing incentives for decarbonization, and limiting its access to European funding. Conversely, establishing a CO₂ pricing system — either through an ETS or a fixed carbon tax — could create opportunities for modernizing the energy sector, strengthening industrial resilience, and supporting a just transition.
The analysis demonstrates that introducing an ETS is a more sustainable and flexible long-term solution, aligned with the recommendations of the Energy Community. An ETS would enable emissions trading and the integration of Serbia into the European carbon market, with the potential for additional revenue and more efficient emissions reduction.
Key recommendations from the analysis include a gradual introduction of an ETS, starting with the energy and heavy industry sectors. At the same time, it is necessary to further strengthen the country’s capacity for monitoring, reporting, and verification of emissions (MRVA system), which is already in the implementation phase. Another crucial step is aligning Serbia’s legal framework with EU ETS regulations, which would enable future integration and potential exemptions for domestic industry from CBAM-related costs.
It is recommended that revenues from emissions allowances be directed towards supporting the green transition — through investments in renewable energy, energy efficiency, and social programs to protect the most vulnerable citizens. Equally important is ensuring transparent and clear communication with the business community and the broader public, in order to build support and understanding for this important reform.
The introduction of an ETS represents an opportunity for Serbia to achieve its climate goals, enhance energy security, and improve the competitiveness of domestic industry — while making an important step forward in the process of European integration.
This post is also available in SRP.
