None of this is guaranteed, though. There’s a force majeure — or act of God — clause in the law for exceptional circumstances, and war would intuitively seem to qualify. But Brussels hasn’t given any concrete signals it will offer Kyiv an exemption. And Ukrainian officials argue they can get producers up to EU standards in time.
“Instead of wasting time negotiating a delay,” Ukraine’s Environment Minister Ruslan Strilets told POLITICO, “we need to take effective steps by 2026.”
Trade during wartime
The EU approved its carbon tax, dubbed the Carbon Border Adjustment Mechanism, two years ago. The bloc argued it would play an essential role in keeping local industry alive as companies grapple with rising climate standards, high energy bills and cheap foreign competition.
Yet the policy ran into immediate backlash from some of the EU’s largest trading parties. China filed a complaint at the largely moribund World Trade Organization. India threatened to retaliate with a tax on historical pollution that would target European firms. The U.S. initially grumbled but has since quieted down.
Ukraine, however, remained silent, even though its iron and steel industries stood to bear the brunt of the new tax regime.
Those sectors are also increasingly in need of Europe’s business. As the invasion unfolded, Ukrainian plants faced shutdowns, power shortages and plummeting demand. Iron and steel production in turn dropped by a third.