Green protectionism as a threat to Ukraine's economic security amidst the circular transformation of the global economy

Abstract

The article investigates the impact of the green protectionism phenomenon on Ukraine's economic security within the context of the global economy's circular transformation. The topic’s relevance is driven by the formation of the “third wave” of protectionism and the “carbon polarization” of world trade, where the requirements of the European Green Deal (EGD) – specifically the Carbon Border Adjustment Mechanism (CBAM) and the Regulation on Deforestation-free Products (EUDR) – are becoming powerful non-tariff trade barriers. These regulations, realized amidst intensifying geoeconomic competition between major centers of influence – the EU, the USA, China, and India, create a “green squeeze” for exporting countries, deepening asymmetry and disregarding the social dimension (including the well-being of households and children). This is particularly critical for Ukraine, as a transition economy, given its high GDP energy intensity, which is among the highest globally.
The research objective is to analyze the systemic dual-vector mechanism of green protectionism’s influence and to develop proposals for an institutional adaptation strategy for Ukraine, capable of transforming external challenges into internal drivers for modernization and increased competitiveness. A conceptual model in the form of a cause-and-effect chain is proposed, illustrating that protectionist pressure has a destructive effect (manifested in reduced export activity, foreign exchange earnings, weakening macro-financial stability, and a temporary decline in competitiveness) and a simultaneous transformative effect (acting as a catalyst for technological innovation, digitalization, and structural modernization).
The study identifies CBAM as a key global determinant for Ukrainian exports, given the dominance of raw material and carbon-intensive sectors. According to the Federation of Employers of Ukraine (FEU), CBAM threatens annual export losses of €1.1 – 1.3 billion (0.6% of GDP), but it mandates Ukraine’s urgent “climate modernization” of industry and the accelerated implementation of a national Monitoring, Reporting, and Verification (MRV) system. The analysis also revealed the uneven readiness of Ukrainian sectors for the green transition (with the greatest progress in energy and climate policy), underscoring the critical need for intersectoral coordination. It is emphasized that an effective institutional strategy must be based on the principle of global justice and include a review of fossil fuel subsidy policies.
The article formulates key strategic directions for adaptation to the EU's carbon regulations, which should form the basis of post-war recovery policy: MRV implementation, creation of a decarbonization fund, stimulating the export of low-carbon goods, and active participation in shaping “green market” rules. The conclusion is that only such a proactive policy is capable of turning the risks of green protectionism not just into a threat, but into a real opportunity to reformat the national growth model based on the circular economy.