CBAM could cost Montenegro €191 million per year – EPCG

Electricity accounts for over 35% of the country's total exports

Montenegro’s annual expenditure on the European Carbon Border Adjustment Mechanism (CBAM) could amount to €191 million, according to a warning from state-owned electricity producer EPCG.

The carbon tax applies to energy-intensive and carbon-intensive industrial goods such as steel, cement, and aluminum, as well as to cross-border electricity trade, which is the main export item in Montenegro’s foreign trade balance (over 35% of total exports). At the same time, EPCG generates about 45% of its electricity at the country’s only coal-fired power plant, TE Pljevlja.

Although, as the company explains, calculations may vary depending on carbon emission prices and export volumes, it is clear that tariff payments will have a significant macroeconomic impact on national revenues.

The fact that the final CBAM calculation methodology for 2026 has not yet been fully determined puts even more pressure on the economy, according to EPCG.

According to the non-governmental organization Eko tim, Montenegro does not yet have a functioning emissions trading system that would reduce costs or allow for exemption from CBAM. The price of carbon on the domestic market (€24/t) and in the EU (€70–80/t) means that additional costs will be borne by electricity exporters, affecting the purchase price. Eko tim calls for accelerating the energy transition and gradually increasing the domestic carbon price to the EU ETS level by 2030 at the latest.

In December, Montenegro announced that it was negotiating with the European Commission to find a more flexible model for implementing CBAM. In recent months, the country has adopted a new Energy Law and a package of subordinate legislation, as well as taking steps to develop renewable energy. In particular, the first auction of solar projects took place, consultations with Italy on strengthening the underwater energy connection are ongoing, and the legislative framework for cross-border electricity trade has been prepared.