Europe’s climate future calls for smart enlargement
As it prepares for another wave of enlargement, bringing in candidate countries from the Western Balkans and Eastern Europe, Brussels faces a critical challenge: how to expand while maintaining its climate ambitions. The answer lies not in delaying integration, but in crafting a smart, gradual approach that turns potential climate liabilities into assets.
EU candidate countries—including Albania, Bosnia and Herzegovina, Moldova, Montenegro, North Macedonia, Serbia, and Ukraine—represent economies that are significantly more carbon-intensive than current EU members. Their combined emissions from sectors covered by the EU Emissions Trading System (ETS) total 215 million tonnes of CO2 equivalent, equivalent to 15 per cent of the current EU's emissions cap. Most rely heavily on coal for electricity generation, with Bosnia and Herzegovina, Montenegro, North Macedonia, and Serbia deriving 50-70 per cent of their power from coal plants.
But candidate countries possess ample renewable energy potential—solar capacity potential in these regions exceeds the EU average. By investing in clean energy infrastructure in neighbouring countries and improving grid connections, the EU can expand its pool of affordable clean electricity while helping candidate countries leapfrog to modern and decarbonised energy systems. A larger, more integrated energy union serves everyone's interests. When properly interconnected, European electricity markets can draw upon the cheapest generation sources continent-wide, lowering average prices for consumers and enhancing energy security.
The carbon-intensive energy mix in EU neighbours also presents a challenge for the EU's flagship climate policy tool, the ETS. Simply integrating these economies overnight could disrupt carbon markets and undermine the price signals needed to drive decarbonization. But the conventional wisdom—that climate action must wait for full EU membership—gets it backwards. Early integration into EU climate and energy policies is precisely what's needed to accelerate the green transition across the continent.
Gradual integration into the carbon market can help. Rather than subjecting candidate countries to the EU's current carbon price of around €70 per tonne immediately upon accession, the EU should support gradually rising national carbon prices as stepping stones toward ETS membership. Serbia has already announced plans for a carbon tax starting at €4 per tonne in 2027, rising to €40 by 2030. Ukraine implemented carbon pricing in 2011, though at very low levels. Montenegro operates a small emissions trading system, though its limited scope—currently covering just one remaining installation after plant closures—highlights the challenges facing small national schemes.
The looming Carbon Border Adjustment Mechanism (CBAM) adds urgency to this equation. Starting January 2026, the EU will charge fees on carbon-intensive imports—including cement, steel, aluminium, fertilizers, electricity, and hydrogen—from countries without equivalent carbon pricing. For candidate countries whose economies depend on exporting these goods to EU markets, the choice is clear: implement national carbon pricing and keep revenues at home, or pay those fees to Brussels.
This gradual approach requires robust safeguards and support mechanisms. The EU's Market Stability Reserve, designed to prevent carbon price shocks, may need strengthening to handle the integration of more carbon-intensive economies. More importantly, EU funds supporting the green transition—the Modernisation Fund, Social Climate Fund, and Just Transition Fund—must be scaled up proportionally to support new members with lower GDP levels.
The social dimension cannot be ignored. Many candidate countries have heavily subsidized energy prices, and market liberalization typically leads to price increases for consumers. The 2004 enlargement demonstrated both successful and failed approaches: some new members smoothly managed this transition by gradually reducing subsidies before accession, while others delayed reforms only to impose sudden price shocks later. Learning from these experiences, the EU should help candidate governments monitor price impacts and support vulnerable consumers to prevent energy poverty spikes.
Regional co-ordination offers another path forward. Members of the Energy Community—which includes most EU candidate countries alongside current members—are already exploring joint carbon pricing initiatives. Such regional approaches can share administrative costs, increase market liquidity, and build collective momentum toward EU standards.
The timeline is compressed but manageable. Most candidate countries are making progress on the technical requirements for ETS participation, including monitoring, reporting, and verification systems for greenhouse gas emissions. Albania and Moldova lead in institutional development, while Serbia and Montenegro have operational monitoring systems. With focused support, several countries could be ready for carbon market participation well before full EU membership.
Critics might argue that imposing carbon costs on struggling economies is counterproductive. But without price signals to drive clean investment, these countries will remain locked into obsolete, polluting infrastructure that becomes increasingly uneconomical. Early but gradual integration provides both the incentives and the financial support—through EU funds and carbon revenue recycling—to modernize energy systems and industrial processes.
The EU's climate leadership depends on proving that decarbonization and economic development can go hand in hand, even for emerging economies. By supporting candidate countries' gradual integration into EU climate and energy policies, Brussels can demonstrate that decarbonisation is not a luxury for wealthy nations, but a pathway to prosperity for all Europeans. The choice is not whether to enlarge or to decarbonize—it's whether to do both smartly or not. With careful design, EU enlargement can become a climate success story rather than a setback.