Montenegro is facing significant challenges as the Carbon Border Adjustment Mechanism (CBAM) reshapes its economic landscape, particularly in the electricity export sector. The country’s reliance on the coal-fired TPP Pljevlja power plant and the implications of CBAM are becoming increasingly critical for both the national utility, EPCG, and the banking sector.
Electricity exports constitute a vital part of Montenegro’s economy, yet EPCG has projected that costs associated with CBAM could soar to approximately €191 million annually. This financial burden is exacerbated by Montenegro’s domestic carbon price of around €24/tCO₂, which is significantly lower than the EU Emissions Trading System (ETS) price of about €80/tCO₂. This disparity poses a competitiveness challenge for Montenegrin power exported to EU markets.
As a result, banks in Montenegro are advised to view CBAM through a credit-risk lens rather than merely as an environmental, social, and governance (ESG) issue. Companies involved in electricity exports, as well as sectors such as aluminium production, metals processing, and energy-intensive tourism infrastructure, may encounter heightened risks related to power costs and stricter requirements from EU buyers.
The financial repercussions of CBAM are already surfacing. In April 2026, reports indicated that EPCG faced a revenue decline of about €13 million in the first quarter due to CBAM-related pressures, illustrating the mechanism’s tangible impact.
This evolving scenario necessitates that banks adjust their credit assessments to incorporate carbon-adjusted electricity costs. Borrowers relying on coal-heavy electricity may appear financially stable currently but could face vulnerabilities as EU buyers factor in CBAM risks into their contracts.
Moreover, renewable energy projects are becoming more attractive for financing when they are associated with industrial offtake agreements, physical supply evidence, metering, power purchase agreements (PPAs), and traceable low-carbon electricity sources. Investments in solar, wind, and hydroelectric upgrades are increasingly seen as essential for maintaining export competitiveness rather than solely as components of an energy transition.
The urgency surrounding CBAM is further amplified by Montenegro’s aspirations for EU accession. Compliance with Chapter 27 regarding environmental standards will demand substantial capital investments. The Energy Community has emphasized the decarbonization efforts in the Western Balkans as both an accession requirement and a financing priority.
The implications for the banking sector are clear: CBAM will recalibrate risk assessments related to EPCG, TE Pljevlja, industrial electricity consumers, renewable project financing, and export-oriented borrowers. Companies that can demonstrate sourcing low-carbon electricity will likely emerge as winners in this new landscape, while those still dependent on coal without a decarbonization strategy may struggle to secure favorable financing conditions.
