# Does a Ruhr steel mill pay CBAM, the EU ETS, or both?

Canonical: https://senseible.earth/answers/ruhr-steel-mill-cbam-or-eu-ets

The mill pays for its own emissions under the EU ETS. CBAM applies only to goods it imports from outside the EU, such as pig iron, DRI, slabs or ferro-alloys, where it must buy CBAM certificates as the importer. Free allocation under the ETS falls as CBAM phases in from 2026.

## Two systems, one carbon price

The EU ETS covers installations inside the EU. CBAM puts the same carbon price on covered goods entering the EU, so imported steel and EU steel face a comparable charge. CBAM certificates are priced on EU ETS auction prices, averaged over the period the Commission publishes for each year.

## Where CBAM touches an EU mill

- Imported precursors: pig iron, DRI, HBI, slabs, billets and covered ferro-alloys.
- Imported finished steel the mill trades alongside its own products.
- Goods under inward processing that are re-exported are outside CBAM; those released into the EU market are not.

## Free allocation phase-out

Free allocation for CBAM sectors falls from 97.5% of the benchmark-based amount in 2026 to zero in 2034. The same factor reduces the CBAM obligation on imports, so both sides lose their free share on the same schedule.

## What Senseible does here

Senseible's CBAM cost calculator estimates certificate cost from 2026 to 2034 for covered goods, and non-EU suppliers can use Senseible to keep document-backed fuel and electricity records to share with you. Senseible does not file CBAM declarations or verify emissions.

- [EU ETS and CBAM difference](https://senseible.earth/answers/eu-ets-vs-cbam-difference)
- [CBAM and inward processing](https://senseible.earth/answers/does-cbam-apply-to-inward-processing)
- [Lower CBAM cost for German importers](https://senseible.earth/climate-intelligence/lower-cbam-costs-importer-germany)

Sources: [Regulation (EU) 2023/956 (CBAM Regulation), consolidated](https://eur-lex.europa.eu/eli/reg/2023/956/2025-10-20), [Directive 2003/87/EC (EU ETS), consolidated, on EUR-Lex](https://eur-lex.europa.eu), [European Commission, price of CBAM certificates](https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism/price-cbam-certificates_en)

Last reviewed 2026-10-21.