Ukraine is facing a serious economic challenge in 2026 since the implementation of the Carbon Border Adjustment Mechanism (CBAM). Metallurgical enterprises of Ukraine now more than ever need European buyers.
According to a Politico article titled "The EU's carbon tax may devastate a country it is trying to keep alive: Ukraine" by Federica Di Sario, the European CBAM in 2026 could cost Ukrainian companies millions if urgent measures are not taken.
European policy is currently in a contradiction with regard to Ukraine. On the one hand, the EU is promising to finance Ukraine's military efforts, but on the other hand, it is promoting a new law that could seriously damage its economy.
This law provides for the introduction of a carbon tax on imported products, in particular iron and steel. This means that European companies will be forced to pay an additional premium for goods originating from countries with less stringent environmental standards.
This measure is intended to protect the competitiveness of European producers, who already bear high costs for compliance with climate standards. However, this could be a serious blow for Ukraine, as it is highly dependent on the export of metallurgical products to the EU.
Taking into account the limitation of Black Sea trade routes due to military danger, Ukraine has become even more dependent on the European market. Now, with the introduction of CBAM, the Ukrainian economy faces a serious challenge.
According to experts, Ukraine may suffer billions of dollars in losses due to this tax. Although there is a possibility of an exception for exceptional circumstances, such as war, Brussels has not yet decided whether to grant Ukraine such an exception.
Ukrainian officials have already declared their readiness to meet European environmental standards, but time for negotiations is limited and action must be taken quickly.
Thus, the introduction of CBAM could lead to serious economic difficulties for Ukraine, which could significantly affect its steel industry and economy as a whole.
In 2026, the Ukrainian economy will experience serious losses due to the start of the Carbon Emissions Adjustment System (CBAM), which will lead to a reduction in steel and iron exports to the European Union.
Ukrainian metallurgical companies lost access to the Black Sea due to the Russian naval blockade, so they were forced to redirect their products overland to European countries. As a result, the EU has become the main consumer of Ukrainian steel and iron, even though the total volume of exports to the bloc has decreased.
Director of GMK Center, Stanislav Zinchenko, emphasized that the dependence of Ukrainian companies on the European market has almost doubled compared to the previous period.
Ukrainian steel exports to the EU decreased with the start of the war, but Ukrainian enterprises became even more dependent on buyers from Europe. According to Zinchenko's estimates, currently about 85% of iron and steel exports from Ukraine go to the EU, which is a significant increase compared to the previous 45%.
The introduction of CBAM in the EU will lead to a significant decrease in the export of Ukrainian metallurgical goods. If the carbon tax were to take effect now, it would result in billions of dollars in losses for Ukrainian companies.
The EU is considering the possibility of an exception for Ukraine in connection with force majeure circumstances, but this issue remains open. Ukraine is trying to adapt to EU carbon emission standards by 2026, but this process may take a long time.
Ukrainian manufacturers see the need for reforms in their own industry to meet EU standards, but they also hope for support and understanding from the European Union.
