Losses of Ukrainian steelmakers due to CBAM may amount to $1.6 billion in 2030

The total potential losses due to the CBAМ for the Ukrainian steel industry’s exports in 2030 could amount to $1.6 billion. This is an updated estimate based on data for 2024, according to a study by GMK Center.

Losses for certain types of steel products are estimated as follows:

• pig iron – $96 million
• steel semi-finished products – $588 million
• rolled products – $899 million
• pipes – $39 million,
• other products – $25 million.

In 2024, the domestic steel sector exported $3.3 billion worth of products to the European Union.

In the first year of full implementation of the CBAM, Ukrainian iron and steel exports may face the need to make payments under the mechanism worth $311 million. Over time, the negative impact will increase due to rising CO2 prices and a gradual reduction in free allowances in the European Emissions Trading System (EU ETS).

By 2030, the CBAM could make Ukrainian exports of cement, fertilizers, pig iron, square billets and long products uncompetitive, given their carbon intensity and the need to pay the European carbon tax.

Once the CBAM enters into force, potential losses of investment in the Ukrainian economy in 2026-2030 could amount to $2.7 billion, with possible export losses of $4.7 billion. Against the backdrop of declining exports and GDP, budgets at all levels will lose tax revenues. In particular, in 2030, the amount of taxes not received could reach $1.3 billion.

Given the negative impact of the cross-border carbon adjustment mechanism on the economy, Ukrainian business emphasizes the need for government involvement in solving the problem. One option is for the government to take an active role in the negotiations to update the trade agreement with the EU.

As GMK Center reported earlier, Norway plans to introduce a carbon border adjustment mechanism (CBAM) in 2027. The country’s authorities seek to protect the national industry and stimulate the reduction of CO2 emissions in the world