Twenty Days Until CBAM Implementation: Is Bosnia & Herzegovina Ready?

Only twenty days remain until the full implementation of the Carbon Border Adjustment Mechanism (CBAM) in Bosnia and Herzegovina. Although the domestic industry is not yet fully prepared, this will not exempt it from full compliance with regulations, including the financial obligation to purchase CBAM certificates to cover actual CO₂ emissions.

Who Spoke?

On the "Novi dan" show on N1 television, Alija Damadžić, an energy sector consultant, and Mirsad Jašarspahić, Vice President of the Federation of Bosnia and Herzegovina Chamber of Commerce, discussed BiH's readiness for CBAM and its potential consequences for the domestic energy and industrial sectors.

What is CBAM and Why Does it Matter?

As Jašarspahić explained, the European Union adopted a mechanism in 2005 to tax products from production facilities that pollute the environment. These funds are collected and invested in energy efficiency and renewable energy sources in EU countries.

"To protect its production and prevent decisions to relocate production facilities from Germany, France and Italy to Bosnia and Herzegovina, Montenegro, Serbia, or North Macedonia, the European Union introduced CBAM. CBAM is essentially a tax on CO₂ emissions, and this tax increases the price of products placed on the EU market."

Which Sectors Are Most Affected?

The first phase covers energy-intensive industries: electricity production, steel, aluminum, fertilizers, and hydrogen. However, experts warn that greater concern lies with the second cycle, which will expand coverage to include other metal industries, furniture manufacturing, textile industry, and other sectors that are pillars of BiH's export-oriented economy.

These industries form the backbone of BiH exports and employ a significant number of workers. When they lose competitiveness in the European market, the consequences are felt throughout the entire chain, from raw material suppliers to transport companies.

"When these companies cease to be competitive in global supply chains because of this, a problem arises that spreads to others through a domino effect."

Are We Too Late?

Alija Damadžić clarified a key distinction: CBAM is charged to companies in the EU that import carbon-intensive goods. BiH could not have been late for CBAM as such, because it is a regulation that concerns the EU.

"What we are late for is the introduction of the EU ETS, i.e., a national emissions taxation system. By introducing an internal taxation system, all taxes and levies paid on carbon-intensive industry remain within the country and can be spent through a fund to support decarbonization of these sectors."

Political Blockade

Jašarspahić revealed that through the "EU for Energy" project, a roadmap for establishing a harmonized emissions trading system was prepared. A working group drafted the proposal, however:

"The Federation Government and Brčko District quickly responded and gave positive opinions. The RS Government put this material on the agenda at its February session this year and refused to send the proposal to the Council of Ministers, arguing that it represents a transfer of competencies and is not in accordance with the Constitution."

Particularly concerning is that, according to Jašarspahić, businesses in Republika Srpska are not aware of this decision by their government, which directly affects their competitiveness.

Financial Consequences

Experts presented concrete estimates of the financial impact. For electricity, an increase of about 70 euros per MWh is expected, meaning that electricity exports from BiH will no longer be competitive in the European market. The total estimated damage for all of BiH amounts to approximately 300 million KM annually, representing a significant macroeconomic impact.

Particularly concerning is the fact that every lost contract in global supply chains directly results in job losses. Companies that have built their position in the European market for years now face a reality where their products become too expensive for EU buyers.

"We citizens have subsidized electricity prices. What compensated for that price was exports. If we lose exports because the price will be double, only citizens will feel it."

Chain Reaction Through Industry

Damadžić explained how CBAM also indirectly affects the entire industry:

"I can take the PVC industry as an example. If an iron profile that is installed in a PVC window was taxed somewhere within the EU or was imported from some country and returned to BiH, it raises the price of the entire product. In that chain, there will always be some carbon tax included in the final product."

What Are the Opportunities?

Despite the challenges, experts see opportunities for BiH. The country is naturally rich in water and other renewable energy sources, and forests and biomass (wood, wood chips, pellets) represent significant potential for decarbonizing production processes.

If BiH establishes its own ETS system harmonized with the EU, domestic companies could even become more competitive than EU companies. For comparison, over 170 billion euros have been collected through the emissions trading system in the EU over the past ten years, and these funds have been reinvested in industry through energy efficiency and renewable energy projects. BiH can follow the same path, but only if political blockades are removed.

What Can Businesses Do?

The FBiH Chamber of Commerce has already taken steps to help companies. Training sessions have been organized for fulfilling CBAM reporting obligations, and the Chamber continuously brings together members and puts pressure on relevant institutions to establish an EU ETS system. This system is included in the national energy and climate plan, although that document has not yet been adopted at the state level.

"Businesses are ready. The initiative came from the business community itself. Four years ago, we started conducting workshops to train companies on how to prepare their reports. The state is the one that's late."

What Can You Do Today?

Regardless of political blockades at the state level, companies don't have to wait. A proactive approach to CBAM compliance brings concrete advantages:

• Emissions mapping: Identify all CO₂ sources in your production process and establish measurement systems
• Team training: Ensure your employees understand CBAM requirements and reporting procedures
• Documentation: Prepare the necessary documentation for your EU customers and partners
• Energy efficiency: Invest in measures that reduce your carbon footprint and lower costs in the long term
• Expert support: Engage certified CBAM consultants who understand the specifics of BiH industry

Companies that prepare early will not only avoid penalties and market losses but will position themselves as reliable partners in global supply chains. And for that, you need a partner who understands both the local context and European requirements.