EU’s carbon tax may devastate a country it is trying to keep alive: Ukraine

By Federica Di Sario | 02/29/2024 12:27 PM EST

Ukrainian steel and iron firms need EU buyers more than ever. But a looming EU tax in 2026 will cost them millions if rapid changes aren’t made.

Technicians work at the main blast furnace in a steel plant.

Technicians work at the main blast furnace at the Zaporizhstal Iron and Steel Works on Feb. 12 in Zaporizhzhia, Ukraine. Diego Fedele/Getty Images

BRUSSELS — There’s a Ukrainian contradiction brewing in European politics.

As the European Union pledges to fund Ukraine’s war effort, no matter how long it takes, it is also barreling ahead with a new trade law that will drain Kyiv’s war-battered economy if fully enacted.

The measure in question is a pending tax the EU has long had in the works for certain carbon-heavy imports like iron and steel. In a nutshell, the tax will force EU companies to pay a premium if those goods come from countries with lax environmental rules.


The hope is the tax will keep European manufacturers competitive, given the costs they already incur complying with bloc’s relatively stringent climate rules. The measure presents the EU’s polluting trading partners with a choice: Find new buyers, lower your carbon footprint or accept lost revenue.