Exclusive CBAM could result in a loss of $2.7 billion in investment for Ukraine in 2026-2030

Potential losses for domestic exports over 5 years could amount to $4.7 billion

With the EU’s carbon tax (CBAM) coming into force, potential losses of investment in the Ukrainian economy in 2026-2030 could amount to $2.7 billion. This is an updated estimate based on data for 2024, according to a study by GMK Center.

At the same time, potential export losses during this period will amount to $4.7 billion.

The European Union is currently Ukraine’s main trading partner. The introduction of CBAM will create additional obstacles for domestic companies supplying goods to the bloc. In 2024, the value of Ukrainian exports to the EU amounted to $24.8 billion, of which 14.5% is subject to the carbon border adjustment mechanism.

The impact of CBAM on the Ukrainian economy will grow over the years. For example, in 2026, GDP losses could reach $1.4 billion, and in 2030 this figure is likely to reach $7.25 billion.

Ukraine needs a solution that will mitigate the negative impact of the carbon border adjustment mechanism on its economy. This can be achieved under Article 30.7 of the CBAM Regulation. It contains provisions on force majeure for countries affected by unforeseen, exceptional and unprovoked events that cause serious damage to their economic and industrial infrastructure.

It should be noted that the transition period for the EU’s carbon border adjustment mechanism began on October 1, 2023. It was supposed to last until January 1, 2026. Until then, companies were only required to report on carbon emissions.

In early February, European Climate Commissioner Wopke Gukstra said that the European Commission may consider excluding 80% of the companies covered by the CBAM from the border carbon levy. According to him, the EC’s analysis showed that almost all emissions covered by the mechanism (97%) are generated by only 20% of the companies subject to it.

At the end of February, the European Commission presented the so-called Omnibus Package to the Clean Industry Agreement to simplify CBAM. Among the changes proposed by the EC is the postponement of the mandatory acquisition of CBAM certificates from January 1, 2026 to February 1, 2027. It is also proposed to introduce a new threshold for the weight of exported goods (50 metric tons). This should exempt about 90% of importers (approximately 182 thousand companies) from obligations, but unfortunately, this simplification will not affect Ukrainian exports.

Given the negative impact of the CBAM on the economy, Ukrainian business speaks of the need for government involvement in solving this problem. One possible approach is for the government to play an active role in negotiating an updated trade agreement with the EU. This could help create an effective framework to support balanced and mutually beneficial foreign trade.