Trade unions concerned about the devastating impact of CBAM on the Ukrainian economy

Trade unions have expressed concern about the extremely negative impact of the European Carbon Border Adjustment Mechanism (CBAM) on the country’s economy. This is stated in a statement released by the Trade Union of Metallurgists and Miners of Ukraine (PMGU).

«For Ukraine, which has been resisting Russian invaders for four years, the introduction of CBAM on a general basis could be a devastating blow. Operating in conditions of active military action, disrupted supply chains, and a total shortage of personnel, Ukrainian industry does not have the reserves to cope with its implementation. For industries that have lost assets due to the war, in particular for the iron and steel complex, where about 40% of capacity has been destroyed, this is an impossible task,» the appeal states.

According to the forecast of the National Mining Association of Ukraine, the losses to the national economy in the first year of full implementation of the CBAM could reach more than $200 million. The Federation of Steelmakers points to the prospect of a total decline in the domestic iron and steel complex. The trade union emphasizes the threat of job losses and increased tension in the frontline regions, including cities that are strategic for holding the front line.

The statement cites examples of the first consequences of CBAM for the country. For example, ArcelorMittal Kryvyi Rih recently announced a forced shutdown of the rolling mill department in the second quarter.

As noted by Natalia Marynyuk, chair of the primary organization of the PMGU enterprise, the key factor behind this step was the European Commission’s decision to introduce CBAM from January 1, 2026, without considering the objective economic and market conditions in which Ukrainian producers operate during the war.

The introduction of the mechanism during the period of martial law in Ukraine poses serious threats to the Ukrainian steel industry, which is export-oriented and has high carbon intensity – loss of competitiveness due to additional costs for CBAM certificates and an increase in production costs, potential reduction in exports, shutdown of capacities, job losses, and for the state – a decline in GDP and taxes.

For ArcelorMittal Kryvyi Rih, the additional costs of accessing the EU market will amount to $60-90/t, which will make its products uncompetitive compared to European or less carbon-intensive producers. As a result, the company’s European customers have already suspended all orders, leading to a loss of 1.25 million tons of exports planned for 2026.

The European Commission did not consider the arguments of the Ukrainian government regarding the application of Article 30. 7 of CBAM Regulation (EU) 2023/956, which provides for the possibility of postponing or adjusting the application of the mechanism for countries affected by unforeseeable, exceptional, and unprovoked events that cause serious damage to economic and industrial infrastructure.

If the EC does not decide on a preferential or transitional period for Ukrainian producers, then, in particular, for ArcelorMittal Kryvyi Rih, in addition to the shutdown of the blooming shop, this could lead to the shutdown of the blast furnace and part of the finishing production facilities, the loss of jobs, and the layoff of part of the staff.

The PMGU has proposed appealing to the European side to soften the process of implementing CBAM for Ukraine. Measures could include extending the transition period, introducing specific instruments to support Ukrainian producers, creating special funds for financial assistance and re-equipping production facilities, as well as involving trade union representatives in the dialogue on the practical implementation of the mechanism.

The initiative was supported by the Federation of Trade Unions of Ukraine, trade unions in the coal, chemical, energy, construction materials, and agro-industrial sectors. A letter to this effect was sent to EU Ambassador to Ukraine Katarina Maternova.

Earlier, Mauro Longobardo, CEO of ArcelorMittal Kryvyi Rih, noted that without a transition period for CBAM, Ukraine would lose the core of its steel industry.