Montenegro is raising the effective carbon cost carried by state power utility EPCG to €75 per tonne of CO₂, potentially creating an annual burden of about €70 million and materially worsening the economics of coal-fired generation at the Pljevlja plant.
EPCG board president Milutin Đukanović said the utility will pay the full €75/t market price into the Eco-Fund under Montenegro’s emissions-trading framework, compared with a previous minimum level of around €24/t.
The increase is significant because Pljevlja remains one of Montenegro’s most important domestic generation assets, particularly during periods of weak hydrology when hydroelectric production falls.
A substantially higher carbon charge raises the marginal cost of coal-fired power and narrows the difference between producing domestically and importing electricity from neighbouring markets.
That calculation is becoming more important as Southeast European wholesale prices swing sharply between cheap renewable-heavy periods and expensive scarcity hours.
The higher domestic carbon price also matters for electricity exports into the European Union under CBAM.
Where domestic carbon costs meet the relevant EU rules and can be demonstrated, they can reduce the residual carbon liability attached to imported electricity.
That potentially improves the position of Montenegrin electricity compared with exports from markets where carbon remains largely unpriced.
EPCG has said CBAM uncertainty already reduced first-quarter revenue by around €12-13 million, underlining how directly carbon regulation is now affecting commercial decisions.
The new €75/t level therefore cuts both ways.
It creates a much heavier cost for Pljevlja, but it could also make Montenegro’s domestic carbon regime more relevant when exporters calculate EU border-carbon exposure.
For EPCG, the challenge is increasingly to replace high-carbon generation with enough solar, wind, hydro flexibility and storage to protect supply without simply shifting the cost into imports.
A €70 million annual carbon burden makes that transition less of a long-term policy choice and more of an immediate balance-sheet issue.
