CBAM for Electricity from Ukraine

From 1 January 2026, commercial imports of electricity from Ukraine into the EU are generally subject to the Carbon Border Adjustment Mechanism (CBAM), with the main compliance obligations resting on the authorised CBAM declarant in the EU. The default value for Ukrainian electricity is 0.907 t CO₂/MWh; at the published CBAM certificate prices, this corresponds to an indicative carbon component of about EUR 68/MWh in Q1–Q2 2026 and approximately EUR 74.67/MWh in Q3. No Ukraine-specific exemption is currently in force.

This article is intended for Ukrainian electricity generators, traders, EU importers and investors assessing how CBAM affects exports, contractual structures and the further integration of Ukraine’s electricity market with the EU market.

In practice, a Ukrainian supplier should establish early whether the importer will use the default value or substantiate the actual emissions of a specific generating installation. That choice affects the required generation data, contractual arrangements, verification documentation and the economics of the supply.

1. How CBAM applies to electricity from Ukraine

2. Ukraine's default value and the indicative CBAM cost

3. When an electricity exemption may apply

4. Synchronisation, trading and market coupling

5. Actual emissions instead of the default value

6. Ukraine's CO₂ tax and its treatment under CBAM

7. MRV and the development of an ETS in Ukraine

8. CBAM amendments that are not yet in force

9. Business compliance checklist

Frequently Asked Questions

How DLF Can Help

1. How CBAM applies to electricity from Ukraine

Regulation (EU) 2023/956 of the European Parliament and of the Council establishing a carbon border adjustment mechanism has applied in its definitive regime since 1 January 2026. Its scope includes, among other goods, electricity, cement, fertilisers, aluminium, hydrogen, iron and steel.

The obligations to submit declarations and surrender certificates rest on the authorised CBAM declarant. For electricity under explicit cross-border capacity allocation, a special rule applies: the person allocated capacity for import who nominates that capacity for import is regarded as the authorised CBAM declarant in the EU Member State where that person declared the electricity import in the customs declaration. Being a Ukrainian generator alone does not determine who fulfils these obligations. For imports made in 2026, the first annual CBAM declaration must be submitted by 30 September 2027; the corresponding number of CBAM certificates must be surrendered by the same date. Certificate sales start on 1 February 2027.

An important point for electricity is that the single mass-based de minimis threshold of 50 tonnes does not apply to imports of electricity or hydrogen. It therefore cannot be relied on as an exemption for electricity imports.

The quantity of imported electricity is declared in MWh and its specific embedded emissions in t CO₂/MWh. Total emissions are calculated by multiplying that factor by the relevant import quantity; only direct CO₂ emissions are taken into account for electricity. Imports are measured separately per border for periods no longer than one hour, without deducting exports or transit in the same hour. If the conditions for using actual emissions are not met, the applicable default value is used.

2. Ukraine’s default value and the indicative CBAM cost

Commission Implementing Regulation (EU) 2025/2621 establishing default values for the application of CBAM sets the default value for electricity from Ukraine at 0.907 t CO₂/MWh. Commission Implementing Regulation (EU) 2026/1740 of 20 July 2026 corrects Annexes I and IV and does not amend Annex III, which contains the default values for electricity; the 0.907 t CO₂/MWh value therefore remains unchanged. This default value is based on the CO₂ emission factor for electricity and does not represent the actual average emissions of Ukraine’s electricity mix or any individual installation.

In 2026, CBAM certificate prices are determined as quarterly averages of EU ETS allowance auction prices; weekly calculation applies from 2027. The European Commission has published quarterly prices of EUR 75.36 for Q1, EUR 75.28 for Q2 and EUR 82.32 for Q3 2026. Applied to the default value of 0.907 t CO₂/MWh, this gives an indicative carbon component of EUR 68.35/MWh for Q1, EUR 68.28/MWh for Q2 and EUR 74.67/MWh for Q3, before other elements of the specific calculation are taken into account.

For a supplier, this calculation is only indicative. The declarant’s actual obligation depends on the applicable methodology, the import period, the emissions value used and any eligible reduction reflecting a carbon price effectively paid in the country of origin.

3. When an electricity exemption may apply

The CBAM Regulation provides a specific exemption for electricity. It can apply only where the electricity market of a third country is integrated with the EU internal electricity market through market coupling and no technical solution exists for applying CBAM to those imports.

In addition to those preconditions, the European Commission must determine that six cumulative conditions are met:

1. The third country or territory has concluded an agreement with the EU requiring it to apply EU electricity law, including rules on the development of renewable energy sources, as well as other energy, environmental and competition rules.
2. Its domestic legislation implements the main provisions of EU electricity-market law, including those on renewable energy development and market coupling.
3. It has submitted a roadmap to the European Commission with deadlines for meeting the climate-related conditions.
4. It has committed to climate neutrality by 2050, implemented that commitment in domestic law and, where applicable, formally communicated an aligned long-term strategy to the UNFCCC.
5. It complies with the roadmap deadlines and has made substantial progress in aligning with EU climate law, including carbon pricing at an equivalent level; an emissions trading system for electricity with a price equivalent to the EU ETS must be fully implemented by 1 January 2030.
6. It has an effective system to prevent indirect electricity imports into the EU from other third countries or territories that do not meet the preceding five conditions.

Even if the conditions are met, the country must be listed by the Commission in point 2 of Annex III to the Regulation through a delegated act. Ukraine is not currently listed there, and full market coupling with the EU has not yet been completed. Accordingly, the specific country-level electricity exemption does not currently apply to Ukraine.

4. Synchronisation, trading and market coupling

For CBAM purposes, technical synchronisation, commercial trading and full market coupling must be distinguished. They are separate stages with different legal consequences.

Law of Ukraine “On Amendments to Certain Laws of Ukraine Regarding the Implementation of European Law on Energy Market Integration, Enhancement of Security of Supply and Competitiveness in the Energy Sector” No. 4834-IX creates the legal framework for further integration of the Ukrainian electricity market, including participation in Single Day-Ahead Coupling (SDAC) and Single Intraday Coupling (SIDC). Some new provisions take effect from the start of market coupling; its launch requires a separate decision by the regulator.

On 18 August 2026, the National Energy and Utilities Regulatory Commission Resolution No. 1390 designated JSC Market Operator as Ukraine’s Nominated Electricity Market Operator (NEMO) for four years to support SDAC and SIDC in Ukraine’s unified power system. This completes one institutional step, but market coupling is not yet complete: further operational arrangements, technical procedures and integration with the relevant EU mechanisms are still required.

5. Actual emissions instead of the default value

Actual embedded emissions may be used for imported electricity only if all five conditions in Annex IV to the CBAM Regulation are met. The evidence requirements are further detailed in Commission Implementing Regulation (EU) 2025/2547 on methods for calculating embedded emissions:

1. The electricity is covered by a PPA for physical delivery between the authorised CBAM declarant and a specific producer in a third country. The contract must apply at the time of the relevant import and cover at least the quantity for which actual emissions are claimed. If an intermediary is involved, there must be a single contract between all three parties.
2. The generating installation is either directly connected to the EU transmission system or it is demonstrated that there was no physical congestion at any point in the network between the installation and the EU transmission system at the time of export. Evidence consists of a single-line diagram of the direct connection or written confirmation of the absence of congestion on an hourly basis.
3. The installation emits no more than 550 g of fossil-fuel CO₂ per kWh.
4. The corresponding electricity quantity has been firmly nominated to the allocated interconnection capacity by all responsible transmission system operators in the country of origin, the destination country and, where relevant, each transit country. Nomination and production must relate to the same period, no longer than one hour; written evidence of nomination and smart-metering data on the corresponding production are required.
5. Compliance with the preceding conditions is certified by a verifier accredited under the CBAM rules, who receives at least monthly interim reports containing evidence of compliance.

These conditions explain why low-carbon electricity alone does not automatically result in a lower CBAM burden. Contractual traceability, network and nomination evidence, and the required verification are necessary. The operator prepares an emissions report, a summary of that report and a separate addendum for each declarant, identifying its EORI number, compliance with the relevant criteria and the quantity of electricity meeting them. The monitoring plan and the operator’s emissions report must be submitted in English.

For large Ukrainian generators, including state-owned generators, the current rules governing electricity sales, public service obligations and auction mechanisms should be reviewed case by case to determine whether a contract satisfying the CBAM PPA criterion can be structured. A general statement that direct PPAs are always available or always prohibited would be inaccurate without analysing the specific market model.

Guarantees of Origin do not replace this test. They certify the renewable origin of electricity, but by themselves do not establish all Annex IV conditions and do not substitute for CBAM-compliant verification.

6. Ukraine’s CO₂ tax and its treatment under CBAM

The CBAM Regulation provides two routes for taking into account a carbon price paid in a third country. For actual embedded emissions, the declarant may claim a reduction using evidence of the carbon price effectively paid or use a yearly default carbon price subject to the prescribed conditions. For emissions determined using default values, only the second route is available. It requires carbon pricing rules in the relevant third country and the ability to determine a yearly default carbon price for that country, including on a conservative basis. From 2027, the Commission may determine and make such prices available in the CBAM registry and publish the calculation methodology.

The Tax Code of Ukraine sets the ecological tax rate for CO₂ emissions from stationary sources at UAH 30 (approximately USD 0.70) per tonne. Entities whose annual CO₂ emissions do not exceed 500 tonnes are not taxpayers for this component; where the threshold is exceeded, the annual taxable amount is reduced by 500 tonnes.

The Ukrainian tax does not create an automatic CBAM reduction. For a reduction based on the effectively paid carbon price, the declarant must substantiate payment for the relevant emissions and account for available rebates or compensation. Information in the documentation must be certified by a person independent of both the declarant and the third-country authorities; the records must be kept until the end of the fourth year after the year in which the declaration was or should have been submitted. For default emissions, only the yearly-default-carbon-price route is available, subject to the prescribed conditions. The Regulation provides for Commission implementing acts detailing conversion and evidence requirements, including conversion from foreign currency into euros at the yearly average exchange rate.

7. MRV and the development of an ETS in Ukraine

The Law of Ukraine “On Amendments to Certain Laws of Ukraine Regarding the Restoration of Monitoring, Reporting and Verification of Greenhouse Gas Emissions” No. 4187-IX excluded monitoring, reporting and verification (MRV) from the general wartime extension of deadlines for submitting reports and other documents. The core framework is established by the Law of Ukraine “On the Principles of Monitoring, Reporting and Verification of Greenhouse Gas Emissions” No. 377-IX. Restoration concerns installations whose activities fall within the MRV framework; Law No. 4187-IX also provides special transitional rules for war-affected installations and reporting for earlier years.

Ukraine’s MRV framework is an important basis for a future emissions trading system, but its data do not by themselves replace the verification required to use actual emissions under CBAM. The CBAM route is governed by separate EU rules and requires an accredited verifier.

The Law of Ukraine “On the Basic Principles of State Climate Policy” No. 3991-IX sets a climate-neutrality target for 2050 and provides for a greenhouse-gas emissions trading system as one of the market instruments of climate policy. The action plan approved by Cabinet of Ministers Order No. 146-r of 21 February 2025 provides for the first operational ETS stage to begin in 2028, and the second no earlier than three years after martial law is terminated or cancelled. The year 2028 should therefore not be presented as an unconditional deadline for full implementation or a guarantee of exemption from CBAM.

8. CBAM amendments that are not yet in force

In December 2025, the European Commission proposed further expansion and strengthening of CBAM, including changes to the electricity methodology. On 12 June 2026, the Council of the EU agreed its negotiating position and, among other points, refined a mechanism for possible temporary exemptions in serious and unforeseen circumstances causing severe harm to the EU internal market.

On 15 September 2026, the European Parliament adopted its amendments and referred the matter back to the responsible committee for interinstitutional negotiations. Among the amendments is a proposal not to apply CBAM to electricity flows from third countries used by grid operators to maintain system stability.

These provisions are not yet EU law. Contracts and financial models should therefore be based on the current CBAM Regulation, while the negotiating texts should be monitored separately.

9. Business compliance checklist

• CBAM declarant. Identify who fulfils the obligations of the authorised CBAM declarant. Under explicit cross-border capacity allocation, check who has been allocated capacity for import and who nominates that capacity.
• Calculation method. Assess whether all five conditions for using actual emissions in section 5 are met. If they are not, use Ukraine’s default value of 0.907 t CO₂/MWh and the applicable certificate price in the financial model.
• PPA. For actual emissions, check the physical-delivery agreement between the specific producer and the declarant: validity at the time of import and sufficient volume. Where an intermediary is involved, a single contract between all three parties is required.
• Network and hourly evidence. For actual emissions, demonstrate a direct connection to the EU transmission system or the absence of physical network congestion, compliance with the limit of 550 g of fossil-origin CO₂/kWh and firm nomination by all responsible transmission system operators. Match nominations and generation for the same periods of no more than one hour.
• Operator documentation. For actual emissions, prepare the monitoring plan, the emissions report, its summary and a separate addendum for each declarant. Submit the monitoring plan and the operator’s emissions report in English.
• Verification. For actual emissions, engage a verifier accredited under CBAM rules and provide at least monthly interim reports with evidence that the conditions are met. Guarantees of origin and Ukrainian MRV reporting do not replace this verification.
• Carbon price. Check the basis for a CBAM reduction: for actual emissions, evidence of the price paid or a yearly default carbon price subject to the prescribed conditions; for default emissions, only the second route. Do not assume automatic credit for the Ukrainian tax.
• Contract terms. Agree who provides data and documents, pays for verification and bears CBAM costs, and address missing evidence or changes in certificate prices. Contractual cost allocation does not alter the declarant’s obligations towards EU authorities.
• Declarant’s timetable. Organise records of imports in 2026 and preparation of the annual CBAM declaration. The declaration must be submitted and the corresponding number of certificates surrendered by 30 September 2027; certificate sales begin on 1 February 2027.
• Regulatory changes. Monitor amendments to CBAM in force, lists of exempt countries and decisions on market coupling. Synchronisation, NEMO designation or a proposed new exception do not, in themselves, create an exemption for Ukrainian electricity.

Frequently Asked Questions

Does CBAM apply to electricity from Ukraine in 2026?

Yes. Commercial electricity imports from Ukraine into the EU are generally covered by CBAM from 1 January 2026. The declaration for 2026 imports and the corresponding certificates must be submitted and surrendered by 30 September 2027.

What emissions value applies to Ukrainian electricity?

If the conditions for actual emissions are not met, the applicable default value is used; Ukraine’s value is 0.907 t CO₂/MWh. At the published certificate prices, this gives an indicative EUR 68.35/MWh for Q1 and EUR 68.28/MWh for Q2 2026, before other adjustments.

Does synchronisation with ENTSO-E create a CBAM exemption?

No. Synchronisation is a technical step. The specific exemption requires market coupling, the absence of a technical solution for applying CBAM to those imports, compliance with six cumulative conditions and the country’s inclusion in the relevant list in Annex III.

Do Guarantees of Origin reduce the number of CBAM certificates?

Not by themselves. They do not replace the PPA, network and nomination evidence, or the verification required to use actual emissions.

Are the proposed EU exemptions for operational electricity flows already in force?

No. When this article was prepared, they remained elements of the ongoing legislative negotiations and had not become part of the binding CBAM Regulation.

Is launching an ETS sufficient for Ukraine to obtain an exemption?

No. The specific exemption also requires market coupling, the absence of a technical solution for applying CBAM, compliance with all other conditions and inclusion in the relevant list in Annex III. A separate general exemption route requires the application of the EU ETS or an agreement fully linking the national ETS to the EU ETS, a carbon price effectively charged on embedded emissions without rebates exceeding those available under the EU ETS, and inclusion in the other relevant list in Annex III. Introducing a Ukrainian ETS alone does not secure either exemption.

How DLF Can Help

DLF attorneys-at-law supports electricity generators, traders, importers and investors where CBAM intersects with Ukrainian energy and tax regulation. Assistance may include reviewing contractual structures for the use of actual emissions, analysing PPAs and data and verification requirements, assessing Ukrainian carbon-pricing implications, allocating CBAM risk in commercial contracts, and structuring energy projects. Relevant DLF practice areas include renewable energy law and tax law.

Yaroslav Anikieiev, Counsel — DLF attorneys-at-law

Contacts: +380 44 384 24 54, info@dlf.ua

This material is intended for general information. The application of the approaches described depends on the circumstances of the specific situation and requires a separate legal assessment. Legal position checked as at 5 October 2026.