UUIE calls on the government to seek a postponement of CBAM for Ukraine

The Ukrainian Union of Industrialists and Entrepreneurs (UUIE) states that the introduction of the Carbon Border Adjustment Mechanism (CBAM) without a transition period for Ukraine creates systemic risks for the country’s economic stability in the context of a full-scale war.

The UUIE emphasizes that even though the mechanism has already come into force, the government must significantly intensify negotiations with the EU on its postponement for Ukrainian exporters.

Several years ago, the UUIE and the Anti-Crisis Headquarters for Economic Stability warned that the introduction of a new environmental tariff during the war would deal a disproportionate blow to Ukrainian industry. Today, these risks are beginning to materialize. According to business estimates, the additional fiscal burden from the EU of €86-100 per ton of emissions worsens the competitive position of Ukrainian producers operating in conditions of destroyed energy, production capacities, and logistics.

According to forecasts by specialized research centers, in particular the GMK Center, Ukraine could lose up to $5 billion in export revenues over five years due to the CBAM. The risks are particularly significant given that about 80% of Ukrainian metal is supplied to the EU market, and the iron and steel complex accounts for up to 7% of GDP, 15% of exports, and about 30% of transport freight turnover. In addition to steel industry, the cement and chemical industries, aluminum production, and electricity generation are also subject to the mechanism.

The USPP emphasizes that, in the context of the war, Ukrainian enterprises objectively do not have the opportunity to quickly invest billions of euros in decarbonization. Therefore, the organization considers the postponement or special CBAM regime for Ukraine to be one of the key tasks of economic diplomacy and calls on the government to:

• significantly intensify political negotiations with the EU;
• seek a transitional or special regime for Ukraine for the application of CBAM;
• create a joint Ukraine-EU technical group to assess the real impact of CBAM;
• actively involve EU business associations in building support;
• at the same time, create a package of state support for exporters.

It should be noted that Ukrainian trade unions have expressed concern about the extremely negative impact of the European CBAM mechanism on the country’s economy. According to the forecast of the National Mining Association of Ukraine, the losses to the national economy in the first year of full CBAM implementation could exceed $200 million.