The Ministry of Economy, Environment, and Agriculture is preparing for the next round of negotiations with the EU regarding the implementation of a transition period for the Carbon Border Adjustment Mechanism (CBAM). The real financial pressure that the Ukrainian economy will face starting January 1, 2026, does not align with the EU’s idealistic forecasts. Therefore, government officials are gathering factual data, preparing arguments, and drafting legislative safeguards in case the European Union once again ignores Ukrainian realities.
Bogdan Semenko, Head of the Department of Environmental Protection and Industrial Pollution Prevention at the Ministry of Economy, outlined the ministry’s actions and the basis for its negotiating position during a discussion of the draft law on the national emissions trading system.
From the EU’s Rosy Forecasts to Ukrainian Realities
At the end of 2025, Ukraine was denied a postponement of the EU ETS implementation in accordance with Article 30 of the relevant regulation. However, the Ministry emphasizes that this refusal is not final but preliminary, so there is still a chance to influence the EU’s position.
The Europeans’ decision was officially based on studies claiming that in 2030, the EU ETS’s impact on the Ukrainian economy would amount to just 0.01%.
However, Ukrainian businesses and analysts have provided alternative, less optimistic data. The mechanism has been in effect since January 1, so Ukraine can also provide actual data on the real impact of CBAM on Ukraine’s industry.
According to Bohdan Semenko, next week Deputy Prime Minister Taras Kachka and Minister of Economy Oleksiy Soboliv will meet with European Commissioner for Climate Action Wopke Hoekstra. The key issue is further action regarding the CBAM, and it is precisely this real-world data that should serve as the basis for negotiations.
Basis for action
The Ministry recognizes that the real reason for Ukraine’s denial is the potential for setting a crisis precedent. For example, any country affected by the blocking of the Strait of Hormuz could then apply under force majeure circumstances. Therefore, the Ministry of Economy plans to appeal on other grounds.
- Demonstrate the unreality of the 0.01% impact. To do this, it is necessary to provide factual data based on the practical experience of Ukrainian business.
- Propose an alternative solution. The Ministry of Economy considers appealing to Ukraine’s EU candidate status as such an alternative. Officials are currently communicating with MEPs working on updating the regulation to implement special provisions for such cases. One of these is specifically the application of Article 30 establishing a transitional CBAM implementation period.
- Financing decarbonization from CBAM proceeds. Even if CBAM is postponed for several years, Ukraine’s economy and industry will not have time to recover. Therefore, it is necessary to develop a mechanism for supporting industrial eco-modernization funded by CBAM receipts. The Ministry of Economy’s argument again rests on Ukraine’s candidate status, considering that it will potentially become an EU economy and thus should be eligible for support.
- Accreditation of Ukrainian verifiers. This is required so that Ukrainian producers can submit reports based on actual emissions figures, which are significantly less uniform than standardized values.
A representative of the Ministry of Economy stated that a meeting has already taken place with the accreditation agency from Sweden, which is ready to sign a memorandum with the Ukrainian agency and recognize its decisions as its own.
A safeguard in case negotiations fail
The Ministry of Economy, within the framework of the law on the Emissions Trading System (ETS), is preparing an alternative mechanism that will enable Ukraine to protect itself if the European Union once again disregards the arguments of the Ukrainian side.
This concerns a voluntary payment that manufacturers will be able to make according to customs declarations for products exported to the European Union. The formula for this payment will fully correspond to the European CBAM accrual formula.
The funds are planned to be directed to the Modernization Fund. In case a manufacturer submits a specific decarbonization project, this fund will guarantee the return of the money to the business in the form of a grant.
The CBAM regulation allows the amount already paid by the manufacturer in the country of origin to be deducted from the payment. In particular, this refers to funds paid by businesses for decarbonizing the economy. Therefore, the Ukrainian instrument will not violate EU legislation and will simultaneously allow these funds to remain in the country for the eco-modernization of industry.
EcoPolitic previously reported on the provisions of the draft law on the national greenhouse gas emissions trading system (NGGETS).
