The Regulation on the Conditions, Criteria and Method of Allocating Incentive Funds for Decarbonization was published in the Official Gazette of the Republic of Serbia No. 51 of 5 June 2026, thereby establishing, for the first time, a comprehensive framework governing the allocation of budgetary funds collected through greenhouse gas emissions taxation.
The Regulation provides for non-refundable financial support for industrial projects contributing to CO₂ emission reductions and improvements in energy efficiency.
The most significant innovation introduced by the Regulation lies not only in the level of incentives—which may in certain cases reach up to 60% of eligible costs—but also in the introduction of a competitive allocation procedure. This means that the state may allocate funds through a form of auction-based mechanism, under which project proposals compete against one another based on their decarbonization effects and economic viability. Such an approach is aligned with contemporary EU State aid rules and represents a substantial departure from traditional subsidy schemes.
Particularly noteworthy is the provision allowing incentives to be granted to projects based on natural gas, albeit only as a transitional fuel and subject to the obligation to completely phase out the use of gas by 2040.
Nevertheless, the Regulation leaves exceptionally broad discretion for the subsequent regulation of key issues through public calls, including the determination of eligible costs, the reference scenario, minimum emission reduction thresholds, and numerous technical criteria is delegated to the public calls themselves. As a result, a significant portion of the substantive conditions for obtaining incentives is effectively shifted from the secondary legislation to administrative acts, raising concerns regarding legal certainty and predictability for potential beneficiaries.
Furthermore, the decision on the award of incentives is adopted by the Minister on the basis of the final ranking list, while legal protection is limited to an objection lodged within the same procedure. The Regulation does not establish a specific mechanism for external review of discretionary decisions, which may prove controversial given the significance and value of the funds being allocated.