Montenegro is raising the effective carbon cost carried by state power utility EPCG to €75 per tonne of CO₂. The change is linked to the economics of coal-fired generation at the Pljevlja plant, where a higher charge could translate into an annual burden of about €70 million.
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.
Carbon charge impact on coal generation and dispatch economics
The increase is described as significant because Pljevlja remains one of Montenegro’s most important domestic generation assets. It is particularly relevant during periods of weak hydrology when hydroelectric production falls.
A substantially higher carbon charge raises the marginal cost of coal-fired power. It also narrows the difference between generating 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. In that context, carbon costs affect how dispatch decisions compare with cross-border supply.
Implications for EU-bound exports under CBAM
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.
EPCG has said CBAM uncertainty already reduced first-quarter revenue by around €12-13 million. The company said this reflects how directly carbon regulation is affecting commercial decisions.
The new €75/t level therefore affects both sides of EPCG’s position. It increases costs for Pljevlja while potentially making Montenegro’s domestic carbon regime more relevant when exporters calculate EU border-carbon exposure.
Replacing high-carbon generation with flexibility and storage
For EPCG, the operational challenge is increasingly to replace high-carbon generation with enough solar, wind, hydro flexibility and storage. The aim is to protect supply without simply shifting costs into imports.
A €70 million annual carbon burden is presented as making that transition less of a long-term policy choice and more of an immediate balance-sheet issue.
