In Montenegro, the implementation of the Carbon Border Adjustment Mechanism (CBAM) is significantly affecting the electricity export sector, particularly focusing on the role of Elektroprivreda Crne Gore (EPCG) and the banking landscape. The country’s reliance on thermal power from TPP Pljevlja positions electricity as a vital export commodity, raising concerns about competitiveness in the European market.
EPCG has indicated that the annual costs associated with CBAM could approximate €191 million. This figure highlights a stark contrast with Montenegro’s domestic carbon pricing, which stands at about €24 per ton of CO₂, compared to the European Union Emissions Trading System (EU ETS) level of roughly €80 per ton. Such a disparity poses direct challenges for Montenegrin electricity exports to the EU.
Financial institutions in Montenegro are urged to view CBAM through the lens of credit risk rather than merely as an environmental, social, and governance (ESG) issue. Borrowers engaged in sectors such as electricity exports, aluminum production, metals processing, cement manufacturing, construction materials, logistics, industrial real estate, and energy-intensive tourism may face increased risks related to power costs and reduced profit margins due to stricter EU buyer requirements.
The initial effects of CBAM are evident in EPCG’s financial performance. Reports from April 2026 indicated that the mechanism contributed to approximately €13 million in revenue pressure or losses for the utility in the first quarter, signaling that the impact is tangible rather than theoretical.
For banks operating in this environment, three key considerations emerge. First, credit assessments must incorporate carbon-adjusted electricity costs. A borrower reliant on coal-dominated grid power may appear financially stable currently but could experience a decline in profitability as EU buyers adjust contracts to account for CBAM exposure.
Second, renewable energy initiatives gain attractiveness when they are connected to industrial off-take agreements, physical supply verification, metering practices, power purchase agreements (PPAs), and traceable low-carbon electricity sources. Investments in solar, wind, hydro upgrades, battery energy storage systems (BESS), and grid enhancements are increasingly seen as essential for maintaining export competitiveness rather than just as part of an energy transition.
Lastly, Montenegro’s path toward EU accession amplifies the urgency surrounding CBAM considerations. Compliance with Chapter 27 regarding environmental standards necessitates significant capital investment. The Energy Community has identified decarbonization in the Western Balkans as both an accession requirement and a financing priority.
As a result, banks must recalibrate their risk assessments concerning EPCG, TPP Pljevlja, industrial electricity consumers, renewable project financing, and borrowers linked to exports. Companies demonstrating effective low-carbon electricity sourcing will likely emerge as winners in this evolving landscape, while those reliant on coal-linked power without a clear decarbonization strategy may face heightened vulnerabilities.
