Montenegro is increasing the effective carbon cost carried by state power utility EPCG to €75 per tonne of CO₂. EPCG’s carbon payment is expected to create an annual burden of about €70 million, according to the figures cited. The change is linked to coal-fired generation economics 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. He said this compares with a previous minimum level of around €24/t. The higher charge is described as tightening the cost profile for Pljevlja.
Impact on generation costs and regional price spreads
The increase is significant because Pljevlja remains one of Montenegro’s most important domestic generation assets. The plant is particularly relevant during periods of weak hydrology when hydroelectric production falls. With a substantially higher carbon charge, the marginal cost of coal-fired power rises.
The higher carbon cost also narrows the difference between producing domestically and importing electricity from neighbouring markets. The calculation is becoming more important as Southeast European wholesale prices swing between cheap renewable-heavy periods and expensive scarcity hours. Under those conditions, carbon costs can influence dispatch and commercial decisions.
CBAM implications for electricity exports
EPCG said the higher domestic carbon price also matters for electricity exports into the European Union under CBAM. Where domestic carbon costs meet relevant EU rules and can be demonstrated, they can reduce residual carbon liability attached to imported electricity. This can improve the position of Montenegrin electricity compared with exports from markets where carbon remains largely unpriced.
EPCG added that CBAM uncertainty already reduced first-quarter revenue by around €12-13 million. The new €75/t level therefore affects both generation economics and how exporters assess EU border-carbon exposure. For EPCG, replacing high-carbon generation increasingly depends on adding enough solar, wind, hydro flexibility and storage to protect supply without shifting costs into imports.