It is not yet clear what such a decision will include, but it will certainly not be a complete non-application of CBAM for Ukraine

Given the war, Ukrainian business needs relief from the CBAM (Carbon Border Adjustment Mechanism), which will be fully launched in 2026. This is the subject of ongoing negotiations with the European Union. Here are the key points from the speech of Taras Kachka, Deputy Minister of Economy and Trade Representative of Ukraine, at the roundtable discussion “How CBAM will weaken Ukraine’s economy” held by GMK Center.

We are currently facing a critical internal political situation. Obviously, today, the price for carbon emissions in Ukraine is developing more in the form of a tax. In particular, the National Revenue Strategy considers the emissions tax as a source of tax revenues. Switching to another system should be a subject of discussion in Ukraine. Personally, I absolutely agree that this should be an element of industrial and climate policy rather than revenue policy.

Unfortunately, the creation of an emissions trading system has always been one of the problematic elements for us. It has been a “long-term construction project” both in peacetime and now, in the context of war, it also looks difficult to build. But this work will not go away from us, and the introduction of an emissions trading system is only a matter of time, as we have already entered the negotiation process for joining the EU.

We have recently adopted the National Energy and Climate Plan of Ukraine 2025-2030, which systematizes all environmental measures. This will help us in our dialogue with the European Union, so we will continue to conduct our domestic policy in the context of ensuring that the interests of Ukraine’s industrial development are properly taken into account, taking into account the EU’s experience.

The second important element for Ukraine is the issue of climate finance. It is an integral element of reconstruction financing because it is directly related to the damage caused by the war. The EU is already providing us with financial assistance under the Ukraine Facility. I think that the number of such financing instruments will increase, as we now also have additional access to “pre-accession” financing in the EU.

We have talked to the future EU budget commissioner, and we understand how Ukraine will be financed for the next 7 years. And the EU’s role will be key for us, as without EU guarantees we will hardly be able to access financing for modernization of production of goods covered by CBAM.

Our negotiations with the EU will not be as belligerent as those with India, as we will seek a balanced integration into the EU. In a constructive dialog, we can make decisions that take into account the situation of Ukrainian producers. In addition, we also realize how shaky the CBAM is in terms of trade law, and this gives us an additional opportunity to negotiate with the EU.

In the summer, we had a conversation about granting Ukraine a waiver (exemption from the CBAM). Now, we understand that this should be a decision initiated by the European Commission. We hope that the new European Commission will launch this decision. The question of the content of the exclusion decision remains open. Here it should be clearly stated that neither Ukraine will request nor the EU will propose a complete postponement of the application of CBAM elements for Ukraine. Most likely, the waiver will be focused on our plans to introduce an emissions trading system, to introduce the CBAM system at external borders, i.e. to imports from third countries. This is what we will discuss in November.