Core Points - Bosnia and Herzegovina has passed the "Electricity Regulatory Agency, Transmission and Market Law," marking a significant step towards integrating into the EU's unified energy market [1][2] - The law aims to develop a competitive electricity market, enhance energy system security and reliability, and facilitate market liberalization, competition, and investment [1] - Establishing an electricity exchange is a key aspect of this law, which is expected to be operational and integrated into the European internal electricity market within a year [1] - The law has received support from the Energy Community Secretariat and has been unanimously approved by the governments of the Federation of Bosnia and Herzegovina, the Republic of Srpska, and the Brčko District [2] Regulatory Framework - The law fulfills part of Bosnia's international obligations and is essential for the establishment of a competitive electricity market [1] - It includes provisions for the establishment of an organized market operator that will act as a counterparty between buyers and sellers of electricity [1] - The process of market interconnection will require signing numerous coordination contracts and agreements with neighboring countries and regional exchanges, which may take two to three years [1] Strategic Implications - The establishment of the electricity exchange is crucial for Bosnia to obtain an exemption from the EU's Carbon Border Adjustment Mechanism (CBAM) [2] - The law is noted to have shortcomings, particularly the exclusion of the natural gas sector [2] - The law was passed by the Council of Ministers on July 24 and is set to be reviewed by the Bosnian Parliament under an expedited procedure [2]