CBAM (Carbon Border Adjustment Mechanism) is a European Union carbon border regulation mechanism aimed at introducing carbon emission taxes on imports of goods into the EU from countries that do not take similar measures to reduce emission.
Why does the EU introduce this mechanism? Formally, to encourage the reduction of global carbon emissions, as well as to create a level playing field for European manufacturers subject to strict environmental laws. In fact, EU governments realize that their industry is losing its competitiveness every year compared to the industry of China, India, South Africa, Vietnam, and other countries due to the costly green transition, high wages and social standards. While the US openly raises import tariffs to support its economy, which violates world trade rules and leads to a mirror reaction, the EU does the same, but wiser — by combating greenhouse emissions using СВАМ.
CBAM poses the greatest threat of loss of competitiveness for iron and steel producers, which account for 93% of Ukraine's exports, falling under this mechanism from January 1, 2026. For the domestic energy sector, its share seems to be low at the first stage — just two percent, but with the restoration of the energy infrastructure after the war, this figure may increase significantly. In this context, it should be noted that electricity exports play not only a commercial role, but are also important for balancing the entire energy system in the conditions of acute shortage of balancing capacities and the absence of energy storage systems.
If the introduction of the СВАМ is not postponed, Ukraine's GDP will decrease by 4.8%. Exports of goods to the EU will fall by 7.8%, the index of manufacturing industry — by 13.1%. Tax revenues will decrease by 2.8 billion USD. As a result of the reduction in business activity, about 73.1 thousand jobs and up to 3 billion USD of tax revenues will be lost. First of all, this will affect the ability of the post-war economy to finance defence and the pace of recovery.
Unfortunately, the government still underestimates the threat of СВАМ for the Ukrainian economy, and there is no negotiating strategy with the EU on this issue. Yes, there are separate talks at the level of individual representatives of the Government with Brussels, but this is clearly not enough. The opinion that СВАМ is mainly a matter for the Ministry of Environment is clearly shortsighted. It is also important to realize that negotiations on European integration and agreement on the postponement of the СВАМ are somewhat different processes, the latter being more related to the Ukraine-EU trade relations.
What shall we do? At the highest government level, organize systematic work based on Article 30.7 of the European Parliament and Council Regulation (EU) 2023/956 of 10 May 2023, introducing CBAM. In my opinion, the Ministry of Economy should lead this process. The Russian invasion, staying beyond Ukraine's reasonable control, has caused significant destructive consequences for the economic and industrial infrastructure, which fully meets the conditions for the application of this Article.
