Economics & Development

Montenegro is a small country in the Western Balkans that has significantly improved the living standards of its people in the past decade, but this has come with environmental and health impacts that are not altogether favorable. Among the six Western Balkan countries (WB6), Montenegro has the highest GDP per capita at purchasing power parity (PPP). With substantial investments in transport and tourism, the country’s recent investment growth is roughly on par with that of the fast-growing East Asian economies. But its growth has been resource-intensive. Montenegro’s carbon and energy intensities are both higher than the European Union (EU) average because of its reliance on the Pljevlja coal-fired power plant and inefficient practices in the industrial, building, and transport sectors. While its energy balance is mainly supported by hydroelectricity and wind power, the continued use of coal and firewood in heating has led to significant greenhouse gas (GHG) emissions and poor air quality, exacerbated by heavy vehicle traffic in populated areas. Although total GHG emissions have declined since 1990, with significant forested areas contributing to that decline, the country will need additional investments and policy measures to meet its climate targets. This report ends with a summary of recommendations for policy reform and investments, along with the complexities and timelines likely to be associated with implementation.