For most technology planners, CO₂ emissions have historically sat outside the cost calculation. That is changing fast. EU regulations are putting a real price on carbon, and that price is rising. The gap between where regulations are heading and what most planning processes account for is closing faster than many teams expect.
At the Tset Summit 2025 in Munich, we brought together manufacturing industry leaders, cost engineers, and researchers to explore the intersection of cost engineering and sustainability. One of the standout sessions came from Prof. Dr. Jana Backes from RWTH Aachen University. Her talk, "Emissions in Technology Planning: The Relevance of a Standardized Sustainability Assessment," made a clear case that CO₂ emissions are no longer just an environmental concern. They are a cost factor that technology planners can no longer afford to ignore.
Read the main takeaways from this session.
Prof. Backes opened with a straightforward message: sustainability assessment has moved out of the ecological lane and into the financial one.
Regulatory frameworks like the EU Emissions Trading System (EU-ETS) and the Carbon Border Adjustment Mechanism (CBAM) are already pricing CO₂ into the supply chain. At the time of the summit, the EU-ETS price stood at around €55 per tonne of CO₂, with projections reaching up to €120 per tonne and full pricing of emissions expected from 2034 onward.
This shift has a direct impact on product cost analysis. Emissions costs are often not visible in a line item, but they travel through the value chain and will increasingly surface as a concrete cost factor for components.
To put numbers to the argument, Prof. Backes presented a head-to-head comparison of two technologies with the same functional output.
Technology A has a base cost of €473, while Technology B costs €673. On base costs alone, the choice is clear: pick A. However, factor in production emissions and end-of-life recycling credits, and the picture changes. Technology A carries a net emission load of 5.5 tonnes CO₂, compared to 2.5 tonnes for Technology B. At a CO₂ price of €67 per tonne, which is only marginally above current levels, the two technologies reach a break-even. Above that threshold, Technology B becomes the less cost-intensive option over the full lifecycle.
This example captures exactly why product costing needs to extend beyond production costs and into lifecycle thinking. Early decisions carry the most leverage, and the opportunity to influence total cost shrinks the later in the lifecycle you act.
Lifecycle assessment (LCA) is the established method for evaluating environmental impact across a product's full lifecycle, from raw material extraction through to end of life. Prof. Backes explained why, despite ISO norms and widespread use, LCA results often cannot be reliably compared across companies or even within the same organization.
Three challenges stand out:
The same steel coil yields a carbon footprint of 1.69 kg CO₂e per kilogram in one database (Ecoinvent v3.9) and 1.98 kg CO₂e in another. Scaled across a full vehicle or machine, that gap is substantial.
Impact assessment methodologies treat greenhouse gases differently. Under the ReCiPe method, methane is weighted at 36 times the impact of CO₂. Under CML-IA, that factor is 28. Two companies assessing the same component can arrive at very different numbers without either one being wrong.
Many companies still rely on Excel for carbon footprint calculations. For a basic product carbon footprint, that may work. For multi-indicator assessments covering acidification, eutrophication, or ozone depletion, it does not. Without shared tools and transparent methodology, cross-company comparison becomes unreliable.
Prof. Backes closed with a call to action for the industry. Standardizing LCA methodology, integrating carbon accounting into ERP systems, and using AI and machine learning to improve data quality and consistency are the steps needed to make sustainability assessment credible and comparable at scale.
The convergence of cost engineering and carbon accounting is not a future scenario. It is already underway. The question for cost engineers, procurement teams, and technology planners is whether their tools and processes are ready to reflect that reality.
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