The introduction of the CBAM import carbon adjustment mechanism could cost Ukraine up to 5% of gross domestic product in 2026. This was stated by the Ukrainian League of Industrialists and Entrepreneurs (ULIE), highlighting the risks to exports and industrial production.
What is CBAM and how it works
The CBAM (Carbon Border Adjustment Mechanism) is a European Union instrument that provides for the introduction of additional payments on imports of products with high carbon emissions.
Its main goal:
- prevent carbon leakage;
- stimulate the greening of production;
- to level the playing field for European manufacturers.
Which industries will be affected the most
According to the UUIE, export-oriented industries will be hit hardest:
- metallurgy;
- energy;
- chemical industry;
- cement production.
These are the sectors that have high CO₂ emissions and are heavily dependent on EU markets.
Why the loss of up to 5% of GDP is predicted
Experts explain that there may be additional costs for paying the carbon duty:
- reduce the competitiveness of Ukrainian goods;
- reduce exports to the EU;
- lead to a decrease in production.
As a result, this may affect the country's overall economic performance, including GDP.
Are there any mitigation options?
Business representatives are calling for:
- negotiations with the EU on special conditions for Ukraine;
- accelerating industrial modernisation;
- investments in green technologies.
They believe that without adapting to new environmental requirements, the Ukrainian economy could suffer significant losses in the coming years.
What's next
The full implementation of the CBAM is expected in the coming years, and Ukraine is already having to find a balance between its environmental obligations and maintaining economic stability. The final impact will depend on the pace of reforms and the outcome of negotiations with European partners.
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