Ukraine and CBAM: Experts Discuss Risks to Electricity Exports and Conditions for Competitiveness in the EU Market
On 29 September, the Ukraine Energy Initiative of the UN Global Compact Network Ukraine held the Dialogue Hub “Ukraine and CBAM: Implications for the Energy Sector, Electricity Exports and EU Market Integration.” Representatives of public institutions, energy companies, the Energy Community Secretariat and industry associations discussed the practical implications of the EU Carbon Border Adjustment Mechanism (CBAM) for Ukraine and the measures needed to maintain the competitiveness of Ukrainian electricity.
Ukraine’s power system has a significant share of low-carbon generation, primarily nuclear and renewable energy. However, the ability to turn this advantage into a competitive asset in the European market depends on the methodology used to calculate the carbon intensity of electricity, access to verification and the ability to demonstrate the actual origin of exported electricity.
These issues were at the centre of the Dialogue Hub, which brought together perspectives from public authorities, energy market operators, producers, traders and investors.
CBAM and Ukrainian Business: Regulatory Challenges
One of the key issues discussed was the need to adapt CBAM to the conditions in which Ukrainian industry operates during the full-scale war.
Yevhenii Moroz, Deputy Head of the Climate Change Department – Head of the Climate Policy Formulation Division at the Ministry of Economy and Environment of Ukraine, spoke about efforts to improve the national system for monitoring, reporting and verification of greenhouse gas emissions, strengthen cooperation with European verifiers and provide Ukrainian companies with the tools needed to comply with CBAM requirements.
“Our key priority today is to create the conditions for Ukrainian businesses to provide accurate, actual emissions data and, where necessary, have it independently verified.
This is what the Ministry of Economy and Environment of Ukraine is currently working towards. We regularly raise the practical implications of CBAM for Ukrainian exports with our European counterparts, highlighting the challenges Ukrainian businesses face while operating under wartime conditions,” said Yevhenii Moroz.
Igor Retivov, Partner, Head of GR and Business Development Practice at Altelaw&Sempra, also addressed the need for European regulation to take wartime risks into account. He emphasised the importance of a consolidated position of Ukrainian businesses and the government in negotiations with the EU on a possible deferral or easing of CBAM requirements for Ukraine.
Does CBAM Reflect Ukraine’s Actual Generation Mix?
Participants paid particular attention to the methodology used to determine the carbon intensity of electricity.
Oleksii Orzhel, Head of the Kyiv Office of the Energy Community Secretariat, highlighted the issue of applying default emission values that do not reflect the actual share of low-carbon generation in Ukraine’s power system.
According to data presented during the discussion, the default emission factor for Ukrainian electricity is 0.9 tonnes of CO₂/MWh, creating an additional financial burden on electricity exports to the EU.
The situation is further complicated by the highly dynamic nature of Ukraine’s power system. As a result of Russian attacks, the generation mix, electricity consumption and available capacity can change significantly within a short period.
Ivan Yuryk, Member of the Management Board of NPC Ukrenergo, focused on the impact of CBAM on cross-border electricity flows and the need to distinguish between commercial and operational flows.
“We are currently working to establish a clear distinction between commercial and operational electricity flows. For transmission system operators, CBAM creates a disproportionately high administrative burden compared with the low risk of carbon leakage associated with operational flows. Amendments to the relevant legislation are therefore being considered at the level of the European Parliament and the European Commission.
At the same time, it is critical for Ukraine to increase commercial electricity exports to the EU during periods of surplus. This helps us balance the Ukrainian power system more effectively and reduce curtailment of renewable generation. To protect Ukraine’s interests, we need to speak with one voice in our dialogue with European partners,” said Ivan Yuryk.
What Economic Solutions Are Available to Ukraine?
Oleksandr Gavva, Acting General Director of JSC Market Operator, presented several possible scenarios for adapting Ukraine’s carbon payment system to CBAM requirements. These include introducing carbon payments aligned with prices under the EU Emissions Trading System (EU ETS), maintaining the current level of carbon taxation, or applying a differentiated approach.
The latter could involve introducing separate carbon payments for exporters of CBAM-covered goods to the EU. Under such a model, the corresponding revenues would be directed to Ukraine’s national budget, while producers supplying the domestic market or exporting to other destinations would remain subject to national climate regulation. This scenario requires further consideration in light of EU legislation.
Dmytro Malyar, Commercial Director at D.TRADING Ukraine, presented the perspective of the energy trading business. He highlighted risks to cross-border trade, including additional costs, carbon price volatility and the difficulty of concluding long-term contracts during the war.
“Decarbonisation should strengthen energy integration, not create new barriers. CBAM must take into account the realities of Ukraine’s power system and ensure that cross-border electricity trade remains economically viable,” said Dmytro Malyar.
Low-Carbon Generation as a Competitive Advantage
Representatives of the nuclear and renewable energy sectors focused on how the low carbon intensity of Ukraine’s electricity generation could support exporters and attract new investment.
Danylo Lavrenov, Head of the CEO Office at JSC NNEGC Energoatom, highlighted the role of nuclear generation in maintaining Ukraine’s low-carbon electricity mix.
Realising its export potential, however, requires appropriate legislative and market mechanisms, including opportunities to conclude long-term Power Purchase Agreements (PPAs).
Vladyslav Sokolovskyi, Chairman of the Board of the Solar Energy Association of Ukraine, discussed how solar generation could help reduce the carbon intensity of Ukrainian products. Practical issues include demonstrating the origin of electricity, hourly metering and the verification of solar power plants operating together with energy storage systems.
Nataliia Korobenko, Regulatory Affairs Manager at Elementum Energy, emphasised the need for the coordinated development of CBAM, market coupling, the Emissions Trading System and Guarantees of Origin. Investors need clarity on future market rules today, as new energy projects have long operating lifetimes.
Nataliia Hutarevych, Board Member of the Ukrainian Wind Energy Association and Counsel at Sayenko Kharenko, stressed the need for a common industry position on amendments to CBAM rules currently being considered by European institutions.
“For the development of wind energy, and of the renewable energy sector as a whole, it is now essential that all stakeholders join forces. The European institutions are already considering amendments to the CBAM rules, and we need to support them together. Two things matter most. First, the default emission values for electricity should fairly reflect the actual generation mix. Second, the procedure for proving actual emissions should become simpler. It is equally important that the negotiations between the Ukrainian authorities and their European counterparts are public and transparent, so that businesses can follow them and help shape the position,” said Nataliia Hutarevych.
Next Steps: Data, Verification and Coordinated Rules
Following the Dialogue Hub, participants identified several interconnected priorities for further work: ensuring Ukrainian producers have access to independent verification, improving the methodology for calculating the carbon intensity of electricity, developing national climate regulation and continuing dialogue with European institutions on the application of CBAM under wartime conditions.
Another priority is to align climate and market instruments with the integration of Ukraine’s electricity market into the EU.
For Ukraine, it is essential to create conditions in which the actual low carbon intensity of its electricity generation can be properly verified and recognised in international trade. This will directly affect the competitiveness of Ukrainian exporters, the investment attractiveness of the energy sector and prospects for further European integration.
The Ukraine Energy Initiative continues to work systematically on CBAM through dialogue between the government, businesses and the expert community. At the same time, the UN Global Compact Network Ukraine helps companies prepare for new climate requirements through international learning programmes.
“CBAM is one of the issues we are actively working on. Through the UN Global Compact Network Ukraine, we also run the Climate Ambition Accelerator, an international programme open to employees of our participating companies.
We work with businesses to help them measure their emissions, set climate targets, plan their decarbonisation efforts and prepare for EU climate regulations,” said Nataliia Khmelovska, Head of the Ukraine Energy Initiative at the UN Global Compact Network Ukraine.
Dialogue Hub Speaker Presentations
For more detailed data, analysis of CBAM’s impact and proposals for Ukraine’s energy sector presented during the discussion, see the speakers’ presentations:
Nataliia Hutarevych, Board Member of the Ukrainian Wind Energy Association, Counsel at Sayenko Kharenko — Download the presentation.
Ivan Yuryk, Member of the Management Board, NPC Ukrenergo — Download the presentation.
Oleksandr Gavva, Acting General Director, JSC Market Operator — Download the presentation.
Danylo Lavrenov, Head of the CEO Office, JSC NNEGC Energoatom — Download the presentation.
The Dialogue Hub of the Ukraine Energy Initiative of the UN Global Compact Network Ukraine is a platform for professional dialogue between government, business and industry experts on current challenges and opportunities for the development of Ukraine’s energy sector.
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