Ukrainian Government Urged to Act on Carbon Border Tax
The CEO of ArcelorMittal Kryvyi Rih, Mauro Longobardo, has called on the Ukrainian government to intensify efforts to secure a postponement of the EU's Carbon Border Adjustment Mechanism (CBAM). This urgent action is needed to prevent billions in export losses during wartime. The CBAM, which will transition from a reporting mechanism to a full-fledged carbon tax on January 1, 2026, poses a severe economic threat to Ukraine. This policy is part of the EU's broader 'Fit for 55' climate package, designed to reduce carbon emissions.
In December 2025, the European Commission denied Ukrainian steel producers any exemptions or a transitional period, a decision that risks significant financial damage. Estimates suggest CBAM could cost Ukraine up to $5 billion in export losses over the next five years. Given that Ukraine's metallurgical and mining sectors account for roughly 7% of GDP, 15% of exports, and 30% of rail and port cargo traffic, the impact could be substantial.
Direct Impact on ArcelorMittal Kryvyi Rih
For ArcelorMittal Kryvyi Rih, the implementation of CBAM would mean an additional market access cost of $60–90 per ton of product. The 1.25 million tons of steel it planned to export in 2026 may not be viable. Faced with a potential loss of EU orders, the company has decided to reduce blast furnace operations to a technological minimum.
According to the Federation of Employers of Ukraine (FEU), the introduction of CBAM could lead to a GDP reduction of $8.7 billion by 2026 and $11.3 billion by 2034. The resulting decline in business activity may also cause a drop in tax and social security contributions—$2.8 billion in 2026 and $3.6 billion in 2034.
“The Ukrainian government must intensify its efforts to obtain a deferral or transitional period for the application of the Carbon Border Adjustment Mechanism.”
Mauro Longobardo
This situation underscores the acute and complex challenges facing the Ukrainian economy amid war and shifting global climate policy. With the steel industry being a cornerstone of the national economy, the government's negotiation efforts with the European Commission will be critical for preserving export capacity and GDP stability.