The total potential losses for Ukraine's metallurgical exports due to CBAM (Carbon Border Adjustment Mechanism) could amount to $1.6 billion by 2030, according to a 2024 study by GMK Center.
The losses for specific types of metal products are estimated as follows:
- Pig iron – $96 million
- Steel semi-finished products – $588 million
- Rolled products – $899 million
- Pipes – $39 million
- Other products – $25 million
In 2024, the domestic metallurgical sector exported products worth $3.3 billion to the European Union.
In the first year of full CBAM implementation, Ukrainian exports of pig iron and steel could face a payment requirement under the mechanism totaling $311 million. Over time, the negative impact will increase due to rising CO2 emission prices and the gradual reduction of free allowances in the European Union Emissions Trading System (EU ETS).
By 2030, CBAM could render Ukrainian exports of cement, fertilizers, pig iron, square billets, and rebar uncompetitive due to their carbon intensity and the need to pay the European carbon tax.
It is worth noting that with the full implementation of CBAM, potential investment losses in Ukraine’s economy between 2026-2030 could total $2.7 billion, with export losses reaching $4.7 billion. This reduction in exports and GDP will lead to a decrease in tax revenues at all levels. Specifically, in 2030, the amount of tax revenue lost could reach $1.3 billion.
Given the negative impact of the carbon border adjustment mechanism on the economy, Ukrainian businesses emphasize the need for government involvement in addressing this issue. One possible approach could be a proactive stance by the government during negotiations in the process of updating the trade agreement with the EU.
