How Ukrainian businesses can adapt to EU carbon pricing and what could help them

18.06.2026, 02:22 eurointegration.com.ua

Already now, a portion of Ukrainian exporters are being exposed to Europe’s climate regime, with the EU’s Carbon Border Adjustment Mechanism entering its paid phase this year.

But unlike in the EU, Ukrainian companies have so far had to face these challenges alone, with no sustainable domestic financial mechanism for public support. Without enabling frameworks for decarbonisation investments, companies have a hard time preparing their businesses for steeply rising carbon prices.

Read more about how Ukrainian industry can adapt to these new realities in the article by Georg Zachmann, Alexander Sicheneder, Oleh Savytskyi of Razom We Stand: Polluting will become more expensive: How Ukraine can cope with EU carbon emissions pricing.

This principle, known as carbon-price recycling, was also introduced in Ukraine through the creation of a small decarbonisation fund that earmarks carbon-pricing revenues for decarbonisation investments.

The central problem, however, stayed unchanged: a low carbon price generates only limited revenues and therefore only limited support.

At the same time, if Ukraine ultimately wants to join the European Union, it will have to integrate into the EU’s Emissions Trading System, which currently produces a carbon price of around €70–90 per tonne of CO2. In a country whose carbon price is still below €1 per tonne, a sudden, unmitigated increase of more than 60-fold would overwhelm businesses.

The best way forward is a predictable, gradual increase in carbon pricing.

Ukraine, therefore, should begin preparing for its transformation as early as possible. Yet, wartime conditions shape policymaking towards short-termism, even when the strategic goal remains European integration.

That is why Kyiv and Brussels need a new political agreement.

This agreement should be centred around a simple principle: every euro raised domestically through Ukrainian carbon pricing and/or national ETS should trigger additional European co-financing.

This mechanism has the potential to fundamentally change the political economy of carbon pricing in Ukraine.

With it, higher carbon pricing would immediately generate additional investment capital for Ukrainian businesses needed to modernise.

With such a mechanism, Ukrainian industry would not need to fear paying EU-level carbon prices, which could in turn incentivise Ukraine to gradually increase the level and expand the scope of its domestic carbon pricing.

Both revenue streams could flow into a jointly governed European-Ukrainian instrument focused on industrial modernisation, clean energy infrastructure and long-term reconstruction investment.

Over time, such a mechanism could mobilise billions of euros annually.

and allow Ukraine to build a strong institution similar to the climate and industrial funds that already support the EU’s own green transition.

If Ukraine is serious about EU integration, it needs to increase its carbon price.

But if Europe is serious about Ukraine’s accession, it cannot treat Ukrainian industrial modernisation as Kyiv’s problem alone.

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