Exclusive Why Ukraine needs a CBAM delay – and why the EU got it wrong
Of course, a deferral of a few years won’t fix everything
GMK Center has been tracking the CBAM file since 2020, when the mechanism was still just a proposal. Today it’s law. And our early read on it has held up: CBAM is a hard trade barrier. For Ukrainian producers of long steel and semi‑finished products, competitiveness in the EU market has already taken a visible hit. This isn’t just a sectoral issue – steel accounts for 7.2% of Ukraine’s GDP.
The comprehensive study by GMK Center can be downloaded via the link.
But to understand the full impact, you have to zoom out. CBAM isn’t just about trade today. It’s about Ukraine’s post‑war recovery, the future of its industrial base, and its integration into EU supply chains.
Yes, CBAM is part of EU climate policy. If Ukraine is serious about EU accession, its industry would have faced decarbonization pressure anyway. But the how matters. Other Eastern European countries, like Poland, being the obvious example, – received massive investment inflows during their integration. Ukraine is being handed the same regulatory demands, but without the financial tailwind.
That tailwind never came. Russian aggression wiped out the window for investment. Before the war, every major Ukrainian steelmaker had a decarbonization roadmap. Those projects are now frozen – not just because of the war, but because rising energy costs have made them financially unviable.
Catching up will be brutally hard. A CBAM postponement isn’t a cure, but it would buy time.
The EU had the legal option to grant one. But it said no.
GMK Center ran the numbers on what that decision actually means. Our conclusion: Ukraine could lose 2.1% of its GDP by 2030 from CBAM’s effect on steel alone. That is two orders of magnitude higher than the European Commission’s estimate of -0.01% – the very figure used to justify rejecting Ukraine’s request.
A decision based on numbers that far off the mark isn’t just questionable. It’s unsound. The Commission’s impact assessment needs a second look. The stakes are too high to rely on faulty arithmetic.
Of course, a deferral of a few years won’t fix everything. Between 2026 and 2028, the effects of CBAM will be painful but survivable. By 2029–2030, we risk losing half of Ukraine’s five remaining steel plants.
At its core, this is an investment deficit problem. CBAM magnifies it and accelerates the damage. The EU has enjoyed near‑zero cost of capital for 15 years. Ukraine hasn’t. Asking both to decarbonize at the same pace, with the same rules, ignores that asymmetry.
That’s why CBAM and decarbonization financing must be addressed together.
The Ukraine Investment Framework, part of the Ukraine Facility, allocates just €9.3 billion in direct grants and €7.8 billion in loan guarantees. That covers all industry and energy. It’s nowhere near enough. Energy sector recovery alone requires around €70 billion. Without affordable low‑carbon power, green steel is a non‑starter. And our estimates show that decarbonizing existing iron and steel capacity would take an additional €12 billion.
So the question is simple: where is that money supposed to come from?
Until there’s an answer, Ukraine needs a CBAM postponement. The legal basis exists. The data supports it. What’s missing is the political will to admit the first assessment was wrong.
