On 21 February 2020, Montenegro’s regulation on emissions trading entered into force, launching preparations for a national ETS that would cover the industry and power sectors.

The regulation was adopted on 6 February 2020 and follows the earlier passage of a climate change law in December 2019, which provides the legislative framework for Montenegro’s low-carbon strategy and introduced, among other measures, emissions reporting obligations

The launch date of the ETS to be implemented under the regulation has not been announced, but the regulation establishes sectoral coverage and inclusion thresholds, rules governing trade of permits, a market stabilization reserve and the use of auction proceeds. Revenue will go to the Environmental Protection Fund to finance climate innovation, renewable energy, and environmental protection.

Montenegro has been an EU candidate country since 2010 and is required to bring its environmental policy in line with the EU 2030 climate & energy framework as part of Chapter 27 accession talks, which opened late 2018.