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Products that Bosnia and Herzegovina exports to the EU could become up to 20 percent more expensive

30. 09. 2025. admin

Products that Bosnia and Herzegovina exports to the European Union could become up to 20 percent more expensive starting in 2026, because the country produces most of its electricity from fossil fuels that generate large amounts of carbon dioxide (CO2), which the EU will begin taxing in early 2026.

Source: n1info.ba

The aim of the tax, known as the Carbon Border Adjustment Mechanism (CBAM), is to reduce pollution and carbon dioxide emissions and to increase the competitiveness of environmentally friendly industries.

The Director of the Economy Department of the Foreign Trade Chamber of BiH, Ognjenka Lalović, warned that the new rules will significantly affect the prices of products from Bosnia and Herzegovina, which are mainly exported to the EU.

According to the same source, price increases will range from two to six percent, and in some cases even up to 20 percent, depending on the type of product.

Lalović also warned that as of January 1, 2026, reporting and calculation of CO2 emissions will be mandatory, which will place an additional burden on industry.

Currently, CBAM payments apply to the cement, iron, steel, aluminum, fertilizer, and electricity industries.

Bosnia and Herzegovina generates the majority of its electricity by burning coal in thermal power plants. Out of 17 terawatt hours of electricity, ten come from production in thermal power plants operated by two power companies headquartered in Sarajevo and Trebinje. The power utility of the Croatian Community of Herzeg-Bosnia, based in Mostar, claims that it produces all of its energy from renewable sources, namely water and wind.

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The implementation of CBAM will begin in 2026, which is likely to result in a drastic increase in the price of electricity, goods and services.

27. 06. 2025. admin

In less than six months, a major economic change will take place in Bosnia and Herzegovina, and the citizens will pay the price for that change. How much that price will be will depend solely on the BiH authorities.

Source: klix.ba

Namely, it is now definitive that domestic companies will pay a tax on carbon dioxide (CO2) emissions to the European Union from January 1st next year, called the Carbon Boundary Adjustment Mechanism (CBAM).

The reason for this is that the BiH government has not yet met the key conditions for us to be exempt from paying CBAM, and these conditions are the formation of an electricity exchange, the interconnection of electricity markets, the establishment of an internal CO2 emission quota trading system (EU ETS) or so-called pollution rights, and a climate neutrality strategy by 2050.

If Bosnia and Herzegovina had established the EU ETS, the money from the purchase of quotas would flow into the budgets of domestic institutions, and the CBAM would flow into the EU budget.

What is CBAM

The Union applies CBAM to all trading partners outside the EU. If this were not the case, then it would treat its economic entities that already pay taxes on harmful gas emissions unequally.

One of the main goals is to force companies in and outside the EU to switch to renewable energy sources and thereby reduce environmental pollution. If there were no CBAM and EU ETS, then it would not make much sense for the EU alone to tax its companies. The introduction of CBAM will most affect the electricity companies in Bosnia and Herzegovina as significant exporters of electricity mainly produced from fossil fuels, primarily coal. Accordingly, they will be forced to change their production practices, i.e. use more renewable energy sources in their production. The EU has been pointing out CBAM to domestic authorities for four years, but despite this, they have done very little to avoid it.

How CBAM works

Exporters from Bosnia and Herzegovina to the EU will have to submit reports on their annual CO2 emissions to their buyers in the Union starting next year. The buyer in the EU will buy certificates based on the amount of CO2 emitted (e.g. 100 certificates for 100 tons of CO2). The certificates are purchased from the competent national body. The Union will check whether the data in the reports of BiH exporters is accurate, and if it is inaccurate or falsified, sanctions are foreseen.

Companies emitting up to 50 tons of CO2 will be exempted from CBAM, which will help small and medium-sized enterprises. The obligations of domestic companies towards their partners in the EU will be to communicate with these partners, collect data for the preparation of CBAM reports (the biggest challenge will be the calculation of CO2 emissions), prepare quarterly CBAM reports, and constantly monitor changes within CBAM and their production process.

How much does CBAM cost

The price of CBAM per ton of CO2 is variable, and this change depends on the market. For example, at one point the price was 180 euros per ton of CO2.

The EU is continuously putting pressure on the BiH authorities to intensify the transition to renewable energy sources, so that ultimately the environment is less polluted and the cost of environmental pollution is lower. However, according to sources from the Union, Bosnia and Herzegovina is the worst-performing country in Europe in terms of regulations on this issue. The fact that a large Danish company rejected an invitation to invest in the production of electricity from renewable sources, despite the fact that Herzegovina has enormous potential in this field, also shows how alarming the situation is.

In addition to poor regulations, an additional problem is the outdated infrastructure (transmission lines) for the transmission of electricity.

Given that the calculation of CBAM is very complex, no one knows exactly how much CBAM will affect the BiH economy. What is known is that it will be dramatic and that citizens will ultimately pay for it through more expensive energy, and therefore more expensive goods and services. The implementation of CBAM will begin in 2026, with charges starting in 2027 for 2026.

News

Bosnia and Herzegovina on track to lose up to 300 million BAM in a few years: Money that could stay in the country

05. 05. 2025. admin

It is becoming increasingly likely that the European Union will impose additional taxes on imports from Bosnia and Herzegovina, which would be a significant economic blow. This blow can be avoided, but whether it will be avoided depends entirely on Bosnia and Herzegovina itself.

Source: klix.ba

The EU plans to impose additional financial burdens not only on imports from Bosnia and Herzegovina but also on all non-member states. The proposed levy is called the Carbon Border Adjustment Mechanism (CBAM), and it will tax the import of goods whose production emits carbon.

There are two reasons for introducing this tax. One is environmental protection—CBAM is one of the measures to help the EU achieve its goal of becoming climate neutral by 2050. The second reason is to protect the Union’s economy from unfair competition, i.e., from the economies of countries that are not EU members and where carbon is either not taxed or inadequately taxed. CBAM is scheduled to begin collection on January 1, 2026.

Bosnia and Herzegovina, like all other non-EU countries, has the option to avoid CBAM, which suggests that the Union does not intend to simply fill its budget. Namely, CBAM can be avoided by introducing an Emissions Trading System (EU ETS), which has existed in the EU since 2005. The EU ETS allows companies to buy and sell quotas or “rights to pollute.”

These quotas are traded on the stock exchange or directly between companies, and the price of quotas depends on supply and demand. Some businesses may receive quotas for free. Those who do not use their quota can sell the surplus. Lower carbon emissions mean lower costs, which makes it clear that the EU ETS is also one of the EU’s environmental protection measures.

While EU ETS would fill the budgets of Bosnia and Herzegovina, CBAM would fill the budget of the Union. Bosnia and Herzegovina committed to establishing an EU ETS through the Sofia Declaration, and Chairwoman of the Council of Ministers Borjana Krišto (HDZ) promised that this trading system would be implemented.

However, the director of the Energy Community, Artur Lorkowski, recently stated that he doubts Bosnia and Herzegovina will meet all the conditions needed to avoid CBAM. These conditions include adopting a national electricity law and establishing a national electricity exchange.

The danger of a major economic blow

President of the Foreign Trade Chamber of Bosnia and Herzegovina (VTK BiH), Vjekoslav Vuković, explained in an interview with Klix.ba what impact CBAM could have on trade with the EU, to which Bosnia and Herzegovina exports 70 percent of its products. He primarily pointed out the potential financial losses for the Bosnian economy.

“Full implementation of CBAM would apply to over 40 percent of Bosnia and Herzegovina’s exports to the EU, including aluminum, steel, iron, fertilizers, electricity, and cement. Without the EU ETS, Bosnia and Herzegovina would lose 300 million KM by 2030, which would go to European countries,” Vuković emphasized.

He specifically noted the consequences of additional taxation on electricity, stating that this sector is the most sensitive to any form of carbon tax. Bosnia and Herzegovina is a major exporter of electricity, which is predominantly produced from coal.

“Considering the spillover effect that electricity can have on other industries and households through increased local market prices—which has yet to be evaluated—economic stability will be a key concern in the coming years,” he stated.

Discussing the possibility that CBAM may cause job losses, wage cuts, and/or company closures, Vuković concluded that small and medium enterprises would not be able to operate without profit or absorb losses to mitigate or eliminate negative impacts.

“We hope that companies will remain competitive, improve their operations, and retain existing jobs while creating opportunities in new markets, expanding production capacities, and enabling new employment,” he added.

We asked which industries would be most affected by the introduction of CBAM.

“This regulation initially applies to six sectors: the production of steel and iron, aluminum, electricity, hydrogen, cement, and fertilizers. According to VTK’s analyses, the most affected product groups will be aluminum, iron and steel, and electricity,” he responded.

He reminded that Bosnia and Herzegovina does not export hydrogen and that fertilizer exports are significantly smaller compared to the other sectors. He continued to discuss other Bosnian goods that the EU may additionally tax.

“Although cement exports are not large compared to the first three mentioned sectors, along with aluminum, they show the highest dependency on EU partners, making this industry especially vulnerable to the new conditions. Of the total Bosnian aluminum exports globally, 89.88% go to the EU, and 83.72% of cement exports,” he stated.

The president of VTK BiH highlighted data suggesting that domestic companies are partially aware of what EU ETS and CBAM mean. He pointed out that this data was gathered through a survey conducted in December last year.

“An analysis of responses from 76 companies showed that 58.7% do not know what direct and indirect CO2 emissions of their products are, but they want to learn more about it, while 38.7% do know what direct and indirect CO2 emissions of their product are. Furthermore, 42.1% of companies don’t know whether they must report emissions in precursors (chemical compounds) of their products, while 36.8% do know whether they must report emissions in their products’ precursors, i.e., their suppliers’ emissions,” he explained.

According to Vuković, the analysis showed that large companies are primarily prepared to enter CBAM and that some companies are already saving money to pay this tax.

“It is true that many processes in companies are implemented ad hoc or under pressure from foreign buyers, but a significant number already apply different practices (LED lighting, thermal insulation, solar power generation for internal use, use of biomass or biogas, etc.). Some are investing in innovation and sustainability,” he added.

He claims that most businesses have expressed readiness to invest in green technologies, having recognized a business opportunity in them.

What are the authorities doing?

While VTK BiH and business representatives call on the government to meet the conditions to avoid CBAM, there is silence from the ministry most responsible for fulfilling these requirements. The Ministry of Foreign Trade and Economic Relations of Bosnia and Herzegovina did not respond to our inquiry. Federal Ministry of Energy, Mining, and Industry (FMERI) also calls for a faster response from the state government.

“The Federation of Bosnia and Herzegovina advocates for the urgent adoption of a national electricity law. FMERI has submitted its position on the draft law to the Ministry of Foreign Trade and Economic Relations, thereby fulfilling its obligation,” they pointed out.

FMERI emphasized that it will be very difficult to undertake any measures if CBAM is implemented.

News

BiH on track to lose as much as 300 million KM in a few years

16. 12. 2024. admin

The European Union is increasingly likely to impose additional taxes on imports from Bosnia and Herzegovina, a move that would deal a significant economic blow to the country. However, this blow can be avoided, depending solely on the actions of Bosnia and Herzegovina itself, reports Klix.

The EU plans to impose additional financial burdens not only on imports from Bosnia and Herzegovina but also on imports from all non-EU countries. The proposed levy is known as the Carbon Border Adjustment Mechanism (CBAM), which will tax imports of goods whose production involves carbon emissions.

There are two reasons for introducing this tax. The first is environmental protection—CBAM is one of the measures aimed at achieving the EU’s goal of being climate-neutral by 2050. The second reason is to protect the EU economy from unfair competition from non-EU countries where carbon is either untaxed or inadequately taxed. CBAM is set to come into effect on January 1, 2026.

Bosnia and Herzegovina, like other non-EU countries, has the option to avoid CBAM, signaling that the EU does not intend to simply boost its budget. CBAM can be avoided by implementing an emissions trading system (EU ETS), which has existed in the EU since 2005. The EU ETS allows companies to buy and sell emission quotas or “the right to pollute.”

Quotas are traded on exchanges or directly between companies, and their price depends on supply and demand. Some companies may receive free quotas. Companies that do not use their quotas can sell the surplus. Lower carbon emissions mean lower costs, making the EU ETS another measure aimed at environmental protection.

Through the EU ETS, Bosnia and Herzegovina could generate revenues for its own budget, while CBAM revenues would go to the EU budget. Bosnia and Herzegovina committed to implementing the EU ETS under the Sofia Declaration, and Chairwoman of the Council of Ministers Borjana Krišto (HDZ) promised that the trading system would be established.

However, the Director of the Energy Community, Artur Lorkowski, recently expressed doubt that Bosnia and Herzegovina will meet all the conditions required to avoid CBAM. These conditions include passing a national electricity law and establishing an electricity market at the state level.

Risk of Economic Shock

Vjekoslav Vuković, President of the Foreign Trade Chamber of Bosnia and Herzegovina (VTK BiH), explained to Klix.ba the potential impact of CBAM on trade with the EU, where Bosnia and Herzegovina exports 70% of its products. He highlighted the potential financial loss to the country’s economy.

“Full application of CBAM would affect more than 40% of Bosnia and Herzegovina’s exports to the EU, including aluminum, steel, iron, fertilizers, electricity, and cement. Without the EU ETS, Bosnia and Herzegovina would lose BAM 300 million by 2030, money that would end up in EU countries,” Vuković emphasized.

vjekoslav vukovic — Vjekoslav Vuković, predsjednik VTK BiH (Foto: VTK BiH)

He particularly pointed out the consequences of additional taxation on electricity, which is highly sensitive to any form of carbon tax. Bosnia and Herzegovina is a major exporter of electricity, predominantly generated from coal.

“Considering the spillover effect that electricity could have on other industries and households through increased market prices, which has not yet been fully assessed, economic stability will be a primary concern in the coming years,” he added.

Speaking about the potential for CBAM to cause job losses, wage reductions, or company closures, Vuković stated that small and medium-sized enterprises would not be able to operate without profits or absorb losses to mitigate the negative impacts.

“We hope companies will remain competitive, improve their operations, create opportunities in new markets, expand production capacities, and enable new jobs,” he added.

The introduction of CBAM (Carbon Border Adjustment Mechanism) by the European Union could have serious economic consequences for Bosnia and Herzegovina. Based on the analysis of the Foreign Trade Chamber of Bosnia and Herzegovina (VTK BiH), industries such as aluminum, iron and steel, electricity, and cement are particularly vulnerable, as a significant portion of their exports depend on the EU market.

Most Affected Sectors

Iron and Steel, Aluminum: A large share of exports from these sectors is directed toward the EU, making them highly sensitive to additional costs due to CBAM.
Electricity: As a significant exporter of carbon-intensive electricity, Bosnia and Herzegovina faces potential increases in production costs, with this impact likely to spill over into the prices of local industries and households.
Cement: Although smaller in scale, cement exports are highly dependent on EU partners, rendering this sector particularly vulnerable to changes.

Understanding and Preparation Among Businesses

Research among domestic companies shows that most are not sufficiently familiar with CBAM or the EU ETS, although there is growing interest in green technologies. Some companies are already investing in sustainable practices such as renewable energy and energy efficiency, while larger companies are better prepared to adapt and bear the costs of CBAM.

Recommendations for Avoiding CBAM

To avoid CBAM, Bosnia and Herzegovina needs to:

Implement the EU ETS: A carbon trading system allows for local management of carbon emissions, avoiding direct EU taxes.
Adopt an Electricity Law: This state-level law would regulate and enable the implementation of the EU ETS.
Strengthen Green Technologies: Investing in emissions-reducing technologies not only lowers costs but also opens new markets.

Government Responsibility

The lack of response from the relevant ministries and their inadequate action hinder preparations for CBAM. VTK BiH and business leaders are urging state authorities to urgently adopt the necessary laws and measures to protect the country’s economy.

If Bosnia and Herzegovina fails to take the necessary steps, the application of CBAM starting in 2026 could result in significant export losses, increased costs for domestic industries, and a threat to economic stability.