Carbon accounting is moving from a corporate sustainability exercise to a financial necessity. Carbon border adjustment mechanisms (CBAMs), mandatory emissions reporting, and customer requirements for low-carbon supply chains mean that foundries need to understand, measure, and document their carbon emissions — and the reductions achieved through investments like solar induction melting.
MONTE INTELLIGENCE helps our solar induction customers document their carbon reductions for use in regulatory compliance, customer reporting, and voluntary carbon markets. This article explains the carbon accounting methodology and how foundries can claim the value of their decarbonization investments.
The carbon footprint of induction melting has two main components: Scope 1 emissions (direct emissions from the foundry's own operations) and Scope 2 emissions (indirect emissions from purchased electricity). For a conventional induction furnace connected to the grid, Scope 1 emissions are minimal — the furnace burns no fuel, so direct emissions are limited to the small amount from the natural gas used in the ladle preheater or the diesel used in the forklift. Scope 2 emissions, from the grid electricity used to power the furnace, dominate the carbon footprint.
The Scope 2 emission factor for grid electricity varies enormously by country. In China, where coal dominates the generation mix, the grid emission factor is approximately 0.55-0.65 kg CO2 per kWh. In India, it is about 0.70-0.80 kg/kWh. In France, with its nuclear-heavy generation, it is about 0.05-0.07 kg/kWh. For a foundry in China melting 10,000 tonnes of iron per year with an energy consumption of 600 kWh per tonne, the Scope 2 emissions are 10,000 × 600 × 0.60 = 3,600 tonnes of CO2 per year.
A solar induction system displaces grid electricity with on-site solar generation. Each MWh of solar electricity generated avoids the grid emission factor of MWh of grid electricity. For the Chinese foundry example, if the solar system generates 1500 MWh per year, the avoided emissions are 1500 × 0.60 = 900 tonnes of CO2 per year. Over a 25-year system life, the total avoided emissions are 22,500 tonnes of CO2 — a substantial reduction.
The carbon accounting methodology follows the GHG Protocol, the internationally recognized standard for corporate greenhouse gas accounting. Under the GHG Protocol, Scope 2 emissions can be reported using two methods: the location-based method, which uses the average grid emission factor for the region where the electricity is consumed, and the market-based method, which uses the emission factor of the specific electricity purchased (through contracts, certificates, or on-site generation).
The market-based method is where solar induction shows its carbon value. Under this method, the foundry reports the grid electricity that is displaced by on-site solar generation as having zero emissions — because the solar electricity has zero direct emissions. The remaining grid electricity is reported using the residual grid mix emission factor (the grid average after subtracting the renewable generation that has been claimed by others). The market-based method provides a more accurate picture of the foundry's actual carbon footprint and rewards investments in on-site renewable generation.
Documentation requirements for carbon claims include: metered data of solar electricity generation (a revenue-grade meter at the inverter output, recording kWh at 15-minute intervals), metered data of grid electricity consumption (the utility meter or a check meter), the system design documentation showing the rated capacity and expected annual generation, and the emission factors used in the calculation (grid average and residual mix, with the source and date of the factors).
For carbon credit generation — selling the emission reductions as verified carbon credits in voluntary or compliance carbon markets — additional requirements apply. The project must be registered with a carbon credit standard (such as Verra VCS, Gold Standard, or a national carbon credit program), the emission reductions must be verified by an accredited third-party auditor, and the credits must be issued and tracked in a registry. The process adds cost — typically $15,000-30,000 for registration and verification — and takes 6-12 months from project start to credit issuance.
The value of carbon credits varies by market and credit type. Voluntary carbon credits for renewable energy projects have traded in the range of $1-5 per tonne of CO2 in recent years, though prices are increasing as demand from corporate net-zero commitments grows. Compliance carbon credits — those used for regulatory obligations like the EU Emissions Trading System — trade at much higher prices, $50-100 per tonne in 2026. A foundry that can access compliance carbon markets for its emission reductions can generate significant revenue: 900 tonnes per year at $60 per tonne is $54,000 per year.
The Carbon Border Adjustment Mechanism (CBAM), being implemented by the European Union and under consideration by other jurisdictions, will impose a carbon price on imported goods based on their embedded carbon emissions. Foundries exporting castings or forged products to the EU will need to report the carbon content of their products and will eventually need to purchase CBAM certificates to cover those emissions. A solar induction system reduces the embedded carbon in the foundry's products, reducing the future CBAM liability — an additional financial benefit beyond the energy cost savings.
MONTE INTELLIGENCE provides carbon accounting support for our solar induction projects, including emission reduction calculations, documentation preparation, and guidance on carbon credit registration.
For carbon accounting consultation for your foundry operation, contact helenxu@cnlymonte.com.
