Ukraine should immediately appeal to the EU to postpone CBAM – PAEW

The introduction of the EU’s Cross-Border Carbon Adjustment Mechanism (CBAM) could have irreversible consequences for Ukraine’s economy, exports and employment. Such a warning was expressed by Lyudmyla Tsyhanok, founder of ESG Liga, President of the Association of Environmental Professionals (PAEW) and CEO of the Office of Sustainable Solutions.

CBAM will be fully operational in 2026. The mechanism, she notes, covers the industries that form the basis of Ukrainian exports, are among the largest employers in the regions, and currently do not have the physical capacity to modernize.

CBAM is a challenge even for the EU countries themselves, noted Lyudmyla Tsyhanok, but the bloc is implementing the mechanism with strong internal support, including the long-term work of the EU ETS, financial assistance in the form of funds for the transformation of energy-intensive industries, subsidies for green modernization, etc.

Ukraine does not currently have any of these tools, and its domestic industry is depleted by the war. At the same time, the emissions monitoring system is still being formed.

“In fact, CBAM in the Ukrainian context is not a tool for climate transformation, but a financial punishment for a country that is fighting for its own and European security,” notes Lyudmyla Tsyhanok.

According to the Federation of Employers of Ukraine, the country’s GDP losses due to the CBAM will amount to up to 4.8% in 2026, and exports to the EU will fall by 7.8%. The country also expects a 13.1% drop in the manufacturing index. In addition, the loss of 73.1 thousand jobs in the first year alone, up to 120 thousand in the long term, and a reduction in tax revenues (by more than $3.5 billion) will significantly undermine Ukraine’s budget and defense capabilities.

PAEW notes that CBAM in wartime Ukraine will not help the environment due to a number of factors:

• lack of resources for decarbonization in Ukrainian business,
• reduction of resources for environmental policy – the economic downturn will make it impossible to create a system of monitoring, emission control, and implementation of national climate plans;
• deterioration of social conditions and the environment,
• risk for the EU to increase imports from countries with no climate commitments at all.

PAEW and the Office of Sustainable Solutions call on the Ukrainian government to immediately request the European Commission to postpone the implementation of the mechanism for Ukrainian goods and invoke Article 30(7) as a ground for force majeure. In addition, the government should demand that the EU postpone the mechanism for the duration of martial law and at least 5 years after its end, or until Ukraine’s full membership in the EU.

The EBA called on the government to form a negotiating group of experts, government officials and businesses for a systematic dialogue with the EU.

“If there is no action, the consequences of the CBAM will be the biggest economic blow since the beginning of the war in 2022,” the statement said.

As GMK Center reported earlier, Ukrcement, the association of cement producers in Ukraine, calls on the Cabinet of Ministers to appeal to the EU to postpone the CBAM for the country. Earlier, the National Association of Extractive Industries of Ukraine and leading subsoil use market players also issued a similar call to the Ukrainian government.

According to GMK Center’s updated estimates, Ukraine may lose $7.2 billion of GDP by 2030 as a result of the mechanism.