Banks financing manufacturers in Serbia, Montenegro, Bosnia and Herzegovina, North Macedonia and Albania increasingly need to evaluate whether EU export margins can be maintained when electricity costs, embedded emissions and supplier-data requirements are included. The assessment depends not only on renewable electricity procurement but also on production routes, precursor treatment and the evidence EU importers can use. CBAM applies to covered goods entering the EU, while procurement contracts can add additional environmental requirements.
Electricity forms part of operating costs, and domestic carbon pricing can affect direct emissions and energy supply. CBAM coverage is determined by the goods and their classification rather than a company’s industry label. The current scope covers specified goods in iron and steel, aluminium, cement, fertilisers, electricity and hydrogen, including selected precursors.
For credit assessment, a bank should identify which products the borrower exports, the EU destinations involved, their tariff classifications and the share of revenue tied to customers importing covered goods. Exposure can vary materially across product families within the same factory. Applying a single estimated carbon charge across turnover can distort both risk assessment and investment decisions.
Electricity procurement versus CBAM calculation rules
The treatment of electricity-related emissions is a key distinction in how CBAM liabilities are calculated. Current definitive-period rules generally exclude purchased-electricity indirect emissions from the calculation for steel and aluminium goods listed in Annex II. Cement, fertilisers and agglomerated iron ore have relevant indirect-emissions coverage, with detailed rules governing precursor contributions.
A renewable power purchase agreement can stabilise electricity costs and improve broader product carbon footprint while still leaving some current CBAM liabilities unchanged. Its direct effect on CBAM depends on which goods and emissions are actually covered by the applicable rules. Investment priorities therefore require separating energy savings from carbon savings when assessing changes to EU selling position.
For steel production routes in the region, HBIS Serbia’s Smederevo configuration includes blast furnaces and a converter shop. Makstil in North Macedonia describes an electric-arc-furnace steel shop producing slabs for its plate mill. Different routes shift priorities for energy procurement, raw materials and direct-emissions reduction, but these descriptions do not establish either company’s current verified emissions intensity.
In blast-furnace operations, purchasing renewable electricity cannot eliminate emissions arising from coke-based ironmaking. The main investment questions concern fuel and reductant use, process efficiency, input mix and feasibility of changing the production route. Efficiency retrofits can still create value by lowering fuel consumption, reducing operating costs and potentially reducing relevant emissions.
For electric-arc-furnace producers, electricity procurement plays a larger role in operating economics. Scrap quality, metallic yield, electrode consumption, fuel use and any purchased iron-bearing inputs remain relevant to overall assessment. A low direct-emissions profile does not remove exposure to power-price shocks when electricity prices rise or scrap becomes more expensive.
An illustrative calculation assumes 0.50 MWh of electricity per tonne of steel. A €30/MWh increase in delivered electricity price adds €15 per tonne to production cost. At 300,000 tonnes of annual output, that equals €4.5 million before any offsetting changes in production, efficiency or selling prices.
PPA contract structure and upstream input documentation
Procurement measures can address some risks, but contract structure matters for delivered cost. A fixed-price PPA should be evaluated alongside profile charges, balancing arrangements, network costs and replacement electricity. The article notes that industrial demand differs from renewable generation because continuous production may require power when solar output is low or absent.
A wind PPA can improve diversification while leaving substantial hourly shortfalls. The value depends on who covers those gaps and at what price. For aluminium supply chains, Impol Seval describes Serbian production through casting, hot rolling and cold rolling.
In this manufacturing context, electricity and heat efficiency matter alongside purchased aluminium inputs and relevant upstream production history. A processor buying primary metal faces a different upstream profile than a business using qualifying scrap inputs. Changing feedstock mix may improve competitiveness but must meet product specifications while maintaining yield.
The investment case for aluminium therefore needs to include metallurgy considerations and customer acceptance. A cheaper or lower-emission input can be commercially unsuitable if it increases rejects, requires additional processing or fails to meet buyer requirements. Renewable electricity can be important for wider product footprint and customer procurement.
Banks are cautioned not to count an assumed reduction in current CBAM certificates unless supported by applicable emissions rules. Direct emissions attributed to a processor’s own operations remain separate from precursor-related emissions attributed under CBAM accounting boundaries.
Cement and fertilisers: capital allocation across process emissions
Cement and fertilisers require different allocation of capital because their applicable electricity-related emissions mean renewable procurement can have a more direct role in reducing relevant embedded-emissions calculations if accounting conditions are met. However, the largest operational emissions may lie elsewhere in each process chain.
A cement investment needs to consider clinker content, kiln fuel, thermal efficiency and process emissions. A fertiliser investment needs to assess feedstock characteristics alongside production chemistry together with electricity consumption. Electrification may reduce direct emissions while increasing exposure to power costs depending on electricity price and the way emissions are treated under CBAM rules.
Precursor chains: verification reports and monitoring systems
The precursor chain adds commercial risk for manufacturers exporting into the EU after processing inputs sourced from Türkiye or other third markets such as pig iron, DRI, slabs or billets for steel-related supply chains or aluminium inputs for aluminium-related supply chains. Regional processing does not automatically remove embedded emissions of those inputs because accounting follows prescribed production boundaries and precursor rules while customs origin is assessed separately.
For steel precursors, Commission guidance states that actual data for externally produced precursors require an appropriate verification report covering the relevant production period and accredited scope; otherwise default values apply. Relevant precursor indirect emissions can also enter the final calculation where required by the rules.
This makes procurement documentation part of material value because two suppliers offering similar grades at comparable prices may create different downstream risks depending on whether usable emissions evidence is provided. The manufacturer needs to compare purchase price against effects on the importer’s carbon calculation, verification costs and confidence in supply-chain documentation.
Long-term supply contracts should address these issues before production begins by identifying producing installations, relevant production periods, evidence required, update obligations and how missing or corrected information is treated. Similar discipline is needed inside factories because reliable emissions calculations require reconciled production quantities, fuel use, material inputs and allocation methods tied to operational records.
A spreadsheet prepared at year-end cannot necessarily reconstruct missing measurements or distinguish products that shared equipment. Manufacturers need monitoring systems designed around actual production processes with responsibility for data quality assigned across operations, procurement, finance and management functions.
Certificate price sensitivity and loan review priorities
The certificate price is another variable used in sensitivity analysis rather than as a final CBAM invoice figure. At €82.32/tCO₂e, a difference of 0.50 tCO₂e per tonne corresponds to €41.16 per tonne in gross carbon-price exposure before adjustments; for 100,000 tonnes this equals €4.116 million.
The calculation requires free-allocation adjustments and any eligible carbon-price deduction under Commission guidance that sets out product- and precursor-related calculations; applying a universal phase-in percentage to total emissions can misstate exposure. Even so, sensitivity analysis is described as useful for financing decisions because it shows how an emissions-data problem can affect customer negotiations and cash flow even when certificates are not purchased by the manufacturer itself.
Banks should assess borrowers’ EU sales agreements since customers bearing formal liability may seek compensation through lower prices, revised contract terms or reduced orders depending on bargaining power and contract wording. Existing loans approved before financial CBAM obligations may rely on export volumes and margins that are no longer secure.
Loan reviews should examine customer concentration, contract renewal dates, availability of emissions evidence and capital needed to preserve competitiveness under evolving compliance requirements related to CBAM coverage expansion discussions affecting additional steel- and aluminium-intensive downstream goods as well as anti-circumvention measures and changes to electricity attribution.