Carbon Accounting in Manufacturing

Carbon Accounting refers to the systematic recording, calculation, and allocation of greenhouse gas emissions—at the corporate, plant, line, or individual product level. In a manufacturing context, it is no longer just about a company's total emissions. The more critical question is: How much CO2 is embedded in a specific product, batch, or production order?

This granularity is no longer an academic exercise. CSRD reporting, Scope 3 data requests from OEMs, the Digital Product Passport (DPP), and the Carbon Border Adjustment Mechanism (CBAM) all require emissions data to be calculated at the product and batch level.

Corporate vs. Product Carbon Accounting

• Corporate Carbon Accounting: Follows the GHG Protocol and calculates total organizational emissions across Scope 1, 2, and 3. The result is an annual greenhouse gas balance sheet—useful for CSRD compliance but too broad for specific product proofs.
• Product Carbon Accounting (PCF): Calculates the carbon footprint of a single product or batch over its lifecycle (typically Cradle-to-Gate). The result is a product-specific CO2 value expressed in kilograms of CO2 equivalent ($kgCO_2e$) per unit or kilogram of output.

For manufacturers responding to supply chain inquiries or preparing for the Digital Product Passport, the product-based approach is the essential standard.

Components of the Product Carbon Footprint

Several key factors contribute to a manufactured good's CO2 footprint:

• Material Emissions: Usually the largest share. This includes emissions from the raw materials and components—the emission factor per kg of material multiplied by the actual quantity used.
• Process Energy: Direct energy consumption from manufacturing processes (electricity and heat for machines, furnaces, presses). This is multiplied by the emission factor of the energy source (e.g., the current grid mix or certified green energy).
• Auxiliaries: Consumables like coolants, welding gases, and packaging materials.
• Internal Logistics: Allocation of energy used for internal transport and infrastructure.

The Challenge of Allocation

The greatest methodological hurdle in product-based Carbon Accounting is allocation: how to distribute shared emissions among individual products. If a machine produces three different items in one hour, how is the energy divided? ISO 14067 recommends the following order:

1. Physical Allocation (Preferred): Emissions are assigned based on physical properties like mass, volume, or—most accurately—production time. If Product A takes 60% of the machine's runtime, it receives 60% of the emissions.
2. Economic Allocation: Distributed based on market value (less precise, used as a last resort).

For most mid-sized manufacturers, time-based or mass-based allocation is the most pragmatic entry point. Pulling machine runtimes per order from an MES provides the perfect data foundation for this.

Essential Production Data for Carbon Accounting

Order-specific carbon accounting is only possible if the following data is structured and available:

• Energy Consumption: Ideally linked to specific orders via meters; otherwise, allocated via line-time.
• Machine Runtime: Directly available from the MES, allowing for precise time-based allocation.
• Material Input: Tracking which raw materials from which suppliers were used in a specific batch, as emission factors vary by supplier.
• Scrap and Rework: Scrap consumes energy and material without output. To calculate a correct intensity per "good unit," the emissions from scrap must be attributed to the final shippable products.

Software Architecture: MES vs. Carbon Accounting Tools

• Carbon Accounting Software (e.g., Persefoni, Watershed, Sweep) acts as the Reporting Layer. It handles the aggregation, calculation logic, and final reporting.
• The MES is the Data Layer. It provides the raw, shop-floor data (runtimes, energy, material, scrap, batch links).

Without clean data from the MES, reporting tools are forced to use estimates and industry averages, leading to inaccurate and non-verifiable results.

FAQ

What is the difference between Carbon Accounting and a Carbon Footprint?

Carbon Accounting is the process (the methodology of tracking and calculating). The Carbon Footprint is the result (the actual metric/value).

What is ISO 14067?

It is the international standard for calculating the Carbon Footprint of products. It is the methodological reference for CBAM, the Battery Passport, and most OEM data requests.

How accurate must the calculations be?

For initial CSRD reports, activity-based averages are often acceptable. However, for verifiable product passports or OEM requirements, "primary data" (actual supplier data and order-specific production data) is increasingly required.

Who owns Carbon Accounting in the company?

It is often a cross-functional task: Sustainability defines the logic, Procurement provides supplier emission factors, and Production delivers the shop-floor data.