The impact of the carbon border adjustment mechanism (CBAM) on the metallurgical sector of Ukraine: pathways for adaptation

Abstract

This article analyzes the impact of the Carbon Border Adjustment Mechanism (CBAM) on Ukraine’s iron and steel industry. Beginning in 2026, CBAM significantly escalates regulatory pressure on Ukrainian iron and steel exports to the EU due to the high carbon intensity of traditional BF-BOF (blast furnace–basic oxygen furnace) technologies. The purpose of the study is to determine the adaptation pathways for the domestic steel sector, accounting for the time horizon and capital intensity of the proposed measures. Three key adaptation dimensions are identified: informational (improving MRV reporting quality and transitioning away from default carbon intensity values), commercial (diversifying export flows and optimizing carbon cost pass-through), and technological (transitioning to low-carbon technologies, specifically DRI-EAF). The findings demonstrate that effective adaptation requires pairing short-term organizational measures with long-term technological modernization. CBAM is examined not only as a threat risking the loss of export contracts, production cuts, and job losses, but also as a powerful institutional catalyst for industrial decarbonization and the integration of Ukrainian producers into European low-carbon value chains. The study reveals a significant divergence in the readiness levels of Ukrainian metallurgical enterprises. While certain companies (e.g., Interpipe) have al-ready deployed EAF technologies, others remain in the planning or early implementation stages of large-scale electric arc furnace projects. The success of this transition will heavily depend on timely access to investment capital, the development of a national MRV system fully aligned with EU standards, and effective state support. The author concludes that a comprehensive adaptation strategy—integrating data transparency, commercial flexibility, and deep technological transformation—will enable Ukrainian metallurgy to not only minimize current losses but also secure long-term competitiveness in the EU market during the post-war reconstruction period.