In recent years, the European Union has launched the most comprehensive set of regulations in its history, aiming to make Europe the first carbon-neutral continent by 2050. The goal is to minimize CO\u2082 emissions in industry, energy, and transport while compensating for the remaining ones through renewable sources, recycling, and new technologies. Although these regulations are formally binding only for EU member states, they in practice affect industries beyond the Union \u2014 particularly in the Western Balkans, where steel and cement producers represent a major part of industrial output and exports. That is why it is crucial to understand how the key European mechanisms for reducing emissions \u2014 the Emissions Trading System (ETS) and the Carbon Border Adjustment Mechanism (CBAM) \u2014 function and how they will impact the markets where our partners and clients operate.<\/p>\n\n\n\n
At the core of European climate policy lies the EU ETS, which regulates greenhouse gas emissions through the \u201ccap-and-trade\u201d principle. Each year, the European Commission sets a total limit (cap) on emissions the industrial sector can release. Every plant receives a certain number of allowances, each granting the right to emit one tonne of CO\u2082. Facilities that emit less than their allocation can sell their surplus, while those that exceed it must purchase extra allowances. In this way, the market determines the emission price, encouraging investment in cleaner technologies.<\/p>\n\n\n\n
Currently, the price of one EU allowance (EUA) is around \u20ac79 per tonne of CO\u2082, and it is expected to rise as the total cap tightens each year. For energy-intensive industries such as steel and cement, emission costs are becoming a significant component of total production costs.<\/p>\n\n\n\n
To protect EU producers who pay for their emissions, the EU introduced the CBAM \u2014 the Carbon Border Adjustment Mechanism \u2014 often called the \u201ccarbon tariff.\u201d Its purpose is to prevent carbon leakage<\/em>, the relocation of production to countries with weaker environmental rules. The principle is straightforward: if a product originates from a country where CO\u2082 emissions are not priced, an additional charge is applied at the EU border to level the playing field.<\/p>\n\n\n\n CBAM currently covers cement, iron and steel, aluminium, fertilizers, electricity, and hydrogen. The transition phase runs from October 2023 to December 2025, during which importers must report the embedded emissions in imported goods on a quarterly basis. From January 1, 2026, CBAM becomes fully operational: importers will need to purchase and surrender CBAM certificates reflecting the CO\u2082 content of their goods, adjusted for any carbon price already paid in the country of origin. In countries such as Serbia, where no national emissions-trading system exists yet, that deduction does not apply \u2014 meaning the full CBAM cost will be imposed on exports to the EU.<\/p>\n\n\n\n The Western Balkans are tightly integrated with the EU market. A substantial share of regional steel and cement output ends up in EU exports, either directly or through intermediaries. CBAM\u2019s introduction therefore means higher prices for Balkan products on the European market unless manufacturers implement monitoring and emission-reduction systems compliant with EU standards.<\/p>\n\n\n\n For example, average emissions from blast-furnace steelmaking are around 1.8 t CO\u2082 per tonne of steel. At \u20ac79 per tonne CO\u2082, this adds roughly \u20ac140 per tonne of finished product. In cement, emissions average 0.85 t CO\u2082 per tonne of clinker \u2014 an additional \u20ac65\u201370 per tonne. These costs directly impact exporters\u2019 competitiveness and profit margins, especially under long-term supply contracts with EU customers.<\/p>\n\n\n\n A further challenge for non-EU producers is that if they cannot provide verified data on their emissions, the EU automatically applies standardized \u201cdefault\u201d values \u2014 typically much higher than actual ones. In practice, this means even greater costs per tonne and reduced competitiveness. That is why establishing MRV systems \u2014 Measurement, Reporting and Verification<\/em> \u2014 has become essential for any company seeking stable access to the EU market.<\/p>\n\n\n\n In this regard, Serbia has already taken the first steps toward building a national framework enabling greenhouse-gas trading. The legal foundation and MRV system are in place, providing the groundwork for a future domestic ETS. The government is also evaluating different carbon-pricing models, either via a market-based trading scheme or through taxation. As an EU candidate country, Serbia is increasingly aligning its regulations with European climate policies, including those targeting greenhouse-gas control and reduction.<\/p>\n\n\n\n Steel and cement producers across the Balkans must prepare for this new reality. The first step is detailed mapping of emissions by product, plant, and process stage, supported by an internal MRV system aligned with EU standards. Next comes technological modernization \u2014 greater use of recycled steel in electric-arc furnaces (EAF technology), adoption of alternative fuels, partial substitution of clinker with lower-emission materials such as fly ash or slag, and optimization of combustion processes.<\/p>\n\n\n\n It is equally important to partner with suppliers who themselves invest in decarbonization, since a lower carbon footprint of input materials reduces total emissions of the final product. Companies must also clearly define in their contracts with EU buyers who bears the CBAM cost and on what data it is based.<\/p>\n\n\n\n CBAM and ETS are not merely technical regulations \u2014 they represent a shift in the entire business model of high-emission industries. For the Western Balkans, access to the EU market will increasingly depend on the ability to measure, verify, and reduce emissions. At the same time, this opens an opportunity: through partnerships with companies such as RHI Magnesita<\/strong> and Estanda<\/strong>, both leaders in their respective fields, regional producers can take a technological leap toward sustainable production and secure long-term competitiveness.<\/p>\n\n\n\n RHI Magnesita<\/strong>, the global leader in refractory materials, has placed sustainability and innovation at the core of its strategy. The company actively develops and applies technologies that reduce CO\u2082 emissions across the entire value chain \u2014 from recycling and reusing refractories to modernizing magnesite-calcination processes and using renewable energy. As a result, the average carbon footprint of its products has been steadily decreasing, with a clear target to cut emission intensity by 15 % by 2025 compared to 2018. In parallel, RHI Magnesita invests in carbon-capture and utilization (CCU) technologies, positioning itself among the pioneers of decarbonization in the \u201chard-to-abate\u201d sectors such as steel and cement. The outcome is a portfolio of refractory products with significantly lower carbon footprints, enabling steelworks and cement plants worldwide to reduce their own emissions and strengthen competitiveness under tightening EU climate standards. Thus, RHI Magnesita acts not only as a material supplier but as a strategic partner in the transition toward more sustainable, energy-efficient, and responsible industry.<\/p>\n\n\n\n Estanda<\/strong>, specializing in foundry and milling components, operates entirely on renewable electricity and uses a high share of recycled metal. Its Green Steel<\/em> program focuses on minimizing the environmental impact of production and developing components that enhance energy efficiency and reduce consumption in customer plants. In practice, this means that manufacturers collaborating with technologically advanced suppliers achieve tangible benefits: lower emissions, stronger documentation, and a more competitive position in the EU market.<\/p>\n\n\n\n Between 2026 and 2030, CO\u2082 emission prices are expected to keep rising, further increasing pressure on non-EU producers. Those failing to invest in emission-reduction measures will face declining competitiveness, while those who implement robust MRV and decarbonization systems will gain a clear market advantage. With EU buyers placing ever greater emphasis on ESG and sustainability, suppliers able to demonstrate a lower carbon footprint will naturally become preferred partners.<\/p>\n\n\n\n CBAM and ETS thus mark not just a regulatory shift, but the dawn of a new industrial era \u2014 one in which innovation, transparency, and environmental responsibility define access to the European market and long-term success.<\/p>\n\n\n\n Risto Ristovski <\/p>\n","protected":false},"excerpt":{"rendered":" In recent years, the European Union has launched the most comprehensive set of regulations in its history, aiming to make Europe the first carbon-neutral continent by 2050. The goal is to minimize CO\u2082 emissions in industry, energy, and transport while compensating for the remaining ones through renewable sources, recycling, and new technologies. Although these regulations […]<\/p>\n","protected":false},"author":2,"featured_media":3112,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"_uag_custom_page_level_css":"","site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"set","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[9],"tags":[],"class_list":["post-3110","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"acf":[],"uagb_featured_image_src":{"full":["https:\/\/new-site.htr.rs\/wp-content\/uploads\/2025\/10\/iStock-1337835471.jpg",1119,747,false],"thumbnail":["https:\/\/new-site.htr.rs\/wp-content\/uploads\/2025\/10\/iStock-1337835471-150x150.jpg",150,150,true],"medium":["https:\/\/new-site.htr.rs\/wp-content\/uploads\/2025\/10\/iStock-1337835471-300x200.jpg",300,200,true],"medium_large":["https:\/\/new-site.htr.rs\/wp-content\/uploads\/2025\/10\/iStock-1337835471-768x513.jpg",768,513,true],"large":["https:\/\/new-site.htr.rs\/wp-content\/uploads\/2025\/10\/iStock-1337835471-1024x684.jpg",1024,684,true],"1536x1536":["https:\/\/new-site.htr.rs\/wp-content\/uploads\/2025\/10\/iStock-1337835471.jpg",1119,747,false],"2048x2048":["https:\/\/new-site.htr.rs\/wp-content\/uploads\/2025\/10\/iStock-1337835471.jpg",1119,747,false]},"uagb_author_info":{"display_name":"Risto Ristovski","author_link":"https:\/\/new-site.htr.rs\/en\/author\/risto\/"},"uagb_comment_info":0,"uagb_excerpt":"In recent years, the European Union has launched the most comprehensive set of regulations in its history, aiming to make Europe the first carbon-neutral continent by 2050. The goal is to minimize CO\u2082 emissions in industry, energy, and transport while compensating for the remaining ones through renewable sources, recycling, and new technologies. Although these regulations…","_links":{"self":[{"href":"https:\/\/new-site.htr.rs\/en\/wp-json\/wp\/v2\/posts\/3110","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/new-site.htr.rs\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/new-site.htr.rs\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/new-site.htr.rs\/en\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/new-site.htr.rs\/en\/wp-json\/wp\/v2\/comments?post=3110"}],"version-history":[{"count":2,"href":"https:\/\/new-site.htr.rs\/en\/wp-json\/wp\/v2\/posts\/3110\/revisions"}],"predecessor-version":[{"id":3664,"href":"https:\/\/new-site.htr.rs\/en\/wp-json\/wp\/v2\/posts\/3110\/revisions\/3664"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/new-site.htr.rs\/en\/wp-json\/wp\/v2\/media\/3112"}],"wp:attachment":[{"href":"https:\/\/new-site.htr.rs\/en\/wp-json\/wp\/v2\/media?parent=3110"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/new-site.htr.rs\/en\/wp-json\/wp\/v2\/categories?post=3110"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/new-site.htr.rs\/en\/wp-json\/wp\/v2\/tags?post=3110"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Implications for Balkan Producers<\/h3>\n\n\n\n
How Industry Can Adapt<\/h3>\n\n\n\n
RHI Magnesita and Estanda \u2013 Partners in Decarbonization<\/h3>\n\n\n\n
Looking Ahead \u2013 A New Market Reality<\/h3>\n\n\n\n
Photo: iStock<\/p>\n\n\n\n