11.08.2026
On August 11, Energy Club held an expert online discussion in the Energy Freedom format on “CBAM and Electricity Trade Between Ukraine and the EU: Risks, Practical Challenges, and Market Position.”
Participants discussed how the CBAM mechanism could impact Ukrainian electricity exports to the European Union, trading margins, the utilization of cross-border capacity, contractual relationships between Ukrainian sellers and European importers, as well as the prospects for market coupling and Ukraine’s further integration into the European electricity market.
The discussion was moderated by Andrii Kulikov, journalist, TV and radio presenter, and media expert.
The discussion was joined by Maksym Nemchynov, Vice President of Energy Club and Deputy Minister of Energy of Ukraine (2020–2021); Andrii Makhmurov-Dyshlyuk, Head of the Expert Group on Sustainable Development at the Directorate for Strategic Planning and European Integration of the Ministry of Energy of Ukraine; Oleksii Lastovets, Head of Trading Ukraine at Axpo Ukraine LLC; Artem Kompan, Energy Markets Expert; Oleksandr Grechko, Head of the Regulatory Policy Department at PJSC “UkrHydroEnergo”; Serhiy Shemliy, Manager of the Regulatory Affairs Department at Market Operator JSC, as well as representatives of energy companies.
Opening the discussion, the participants emphasized that CBAM for the electricity sector is no longer just a matter of future regulation or general EU climate policy. For the Ukrainian market, it represents a practical challenge that could affect export prices, the competitiveness of Ukrainian electricity, contract terms, reporting, emissions verification, and the allocation of responsibility between the parties of a trade transaction.
Particular attention was paid to the actual carbon intensity of Ukrainian electricity. Panelists highlighted that Ukraine has a significant share of nuclear, hydro, and renewable generation; however, in the absence of a proper mechanism to confirm the origin of electricity and its real carbon profile, Ukrainian exports could face an additional financial burden.
Maksym Nemchynov noted that for Ukraine, the CBAM issue appears complex yet inevitable in the context of European integration.
“We want to be in Europe, we want to be an EU member, so we have to comply with the rules, standards, and legislation already in force in the EU,” Maksym Nemchynov emphasized.
According to him, Ukraine has recently moved from discussing whether an exemption for the country is possible to a more practical set of solutions. This includes a special approach for a candidate country, accelerated verification of actual emissions, the launch of a national emissions trading system, changes to electricity rules, and negotiations to mitigate the impact on exports.
He also stressed that Ukraine is unlikely to completely avoid the application of CBAM, but it can work towards deferring or softening its impact, particularly taking into account the ongoing military conflict and the need to restore energy infrastructure.
“We must do everything possible to defer the application of CBAM for Ukraine through amendments to EU regulations and legislation, as well as ensure the calculation of actual emissions. This could significantly improve our positions during market coupling,” Maksym Nemchynov noted.
Andrii Makhmurov-Dyshlyuk stressed that for the Ministry of Energy, the CBAM issue is of particular importance as it is directly linked to the further integration of the Ukrainian electricity market into the European Union market.
According to him, the Ministry of Energy considers Ukraine’s electricity sector to be potentially the most vulnerable to the application of CBAM. Among the key risks, he cited the potential double carbon load, the destruction of energy infrastructure due to the war, and the limited resources that Ukraine is forced to direct primarily toward restoring energy systems and ensuring energy security.
“For the Ukrainian side, it is fundamentally important that the assessment of CBAM’s impact relies on objective data and accounts for the actual structure of Ukrainian generation, in particular the significant role of nuclear, hydro, and renewable energy,” Andrii Makhmurov-Dyshlyuk stated.
He also reported that the Ministry of Energy appealed to the European Commission and the Energy Community Secretariat regarding an exemption for Ukraine’s electricity sector from CBAM for the period of martial law and for five years following its termination or cancellation. According to him, the European Commission did not find grounds to grant Ukraine an exemption based on force majeure, but confirmed its readiness to continue the dialogue.
A practical perspective from traders was presented by Oleksii Lastovets. He stressed that CBAM is not a new topic for companies operating on the border with the EU, as relevant reporting had already been submitted in previous periods. At the same time, according to him, without a deferral or a special decision for Ukraine, electricity exports to the EU could become economically challenging.
“Without a CBAM deferral for Ukraine right now, unfortunately, it will be very difficult to talk about full-scale electricity exports,” Oleksii Lastovets noted.
He pointed out that a factor is currently applied to Ukrainian electricity that does not properly reflect Ukraine’s actual energy mix. In his view, this creates an additional financial burden on export operations.
Among the priority steps, Oleksii Lastovets highlighted a political decision regarding a deferral of CBAM for Ukraine, conveying the real Ukrainian energy mix to European partners, agreeing on verifiers and verification procedures, as well as the subsequent launch of the Ukrainian emissions trading system.
“The simplest solution right now is to politically secure a deferral for Ukraine through all possible avenues. This would help export at least certain volumes of electricity from Ukraine,” Oleksii Lastovets emphasized.
Artem Kompan called for not limiting actions to waiting for a deferral from the EU, but to simultaneously carry out internal “home assignment.” In his opinion, Ukraine needs to separate two tracks: negotiations with the European Commission regarding deferral or softening of rules, and internal preparation of legislation, verification, and the certificates market.
“I would not rely solely on the expectation that this problem will pass us by due to martial law. We have clearly defined our path toward the EU, so we must prepare for a full CBAM model for Ukraine,” Artem Kompan noted.
He emphasized the need to determine what legislative changes must be adopted, how verification should work, who should perform it, and how to engage businesses in understanding the impact of CBAM.
“We need to clearly separate the two tracks: communication with the EU and internal home assignments. Such discussions must culminate in a consolidated document with proposals,” Artem Kompan stressed.
Oleksandr Grechko focused on the fact that for Ukrainian low-carbon generation, CBAM creates both risks and potential opportunities. According to him, the key task is to find a balance between decarbonization, European integration, and preserving opportunities for market integration.
He noted that Ukrainian nuclear, hydro, and renewable generation forms a significant portion of the energy mix; however, without a proper mechanism to confirm the origin of electricity, it risks being in a situation where low-carbon electricity is effectively valued as carbon-intensive.
“The greatest contradiction lies in the fact that our green and nuclear generation risks being taxed as coal generation. This is a current problem,” Oleksandr Grechko stated.
He also drew attention to the fact that PJSC “UkrHydroEnergo” already receives guarantees of origin for electricity, confirming production from renewable sources. At the same time, the current CBAM approach does not automatically allow such guarantees to be treated as an instrument to confirm a low-carbon profile for CBAM purposes.
“If guarantees of origin could be used as confirmation of green electricity, it could assist in trade. But no such criterion currently exists,” Oleksandr Grechko said.
A separate section of the discussion was dedicated to the impact of CBAM on market coupling. Serhiy Shemliy noted that CBAM could create a systemic problem specifically at the stage of coupling the markets of Ukraine and the EU.
According to him, in the market coupling mechanism, trading is anonymized and aggregated, and capacity allocation occurs implicitly. In the case of electricity exports from Ukraine to the EU, a trading agent on the EU side automatically becomes the CBAM declarant, but CBAM certificate costs would be difficult to allocate among specific market participants.
“We find ourselves in a situation that has not arisen before: the drive to couple the markets of Ukraine and the EU is taking place without Ukraine’s integration into a single customs territory. The customs border remains, meaning the trading agent on the EU side effectively becomes the CBAM declarant,” Serhiy Shemliy explained.
He emphasized that due to the anonymized and aggregated nature of trading, the costs of CBAM certificates cannot be correctly distributed among market participants. That is why, in his view, the key solution for market coupling is the exclusion of electricity from CBAM scope.
“Because trading is anonymized and aggregated, certificate costs cannot be allocated among market participants. The only way out is excluding electricity from CBAM,” Serhiy Shemliy stressed.
He also drew attention to a regulatory “vicious circle”: to launch market coupling, Ukraine needs an exemption from CBAM for electricity, but for such an exemption, under current regulatory logic, market coupling must already exist. According to him, the European Commission proposed changing the approach through a memorandum of understanding, which could outline a plan and timeline for fulfilling the necessary conditions, opening the possibility for a temporary exemption.
Among the immediate steps, Serhiy Shemliy highlighted accelerating the launch of the national emissions trading system and transposing legislation in the electricity sector.
During the general discussion, participants also emphasized that the CBAM issue extends beyond electricity alone. It affects a broader range of exporters, including metallurgy, the chemical industry, the agricultural sector, and other industries where proving the carbon footprint of products is becoming a factor of competitiveness in the EU market.
Following the discussion, the participants agreed that Ukraine needs to work in several directions simultaneously: maintain a political and technical dialogue with the EU on deferral or a special approach for Ukraine, ensure the actual energy mix is taken into account, launch a national emissions trading system, establish a verification mechanism, develop the guarantees of origin market, and prepare practical solutions for traders and electricity producers.
Energy Club will continue its work on CBAM and electricity trade between Ukraine and the EU. Based on the discussion outcomes, the Club plans to prepare specialized expert materials, engage Ukrainian and European experts, hold further consultations with market participants, and work toward shaping a consolidated position for the Ukrainian energy business.
