This research aims to examine the role of cleaner production in reducing environmental costs within the framework of carbon accounting, with an application at Al-Kadhimiya Spinning and Weaving Mill, affiliated with the General Company for Textile and Leather Industries in Baghdad, Iraq. The research relies on the mill’s production and cost data to identify the main sources of carbon emissions, determine the associated environmental costs, and examine engineering measures that could reduce emissions and minimize resource waste. The main conclusions indicate that integrating carbon accounting with cleaner production helps identify environmental costs more clearly and link them to the production activities responsible for them. Addressing pollution at its source through waste heat recovery, improved equipment efficiency, automated chemical dosing, and textile waste recovery provides a practical approach to improving resource utilization and reducing environmental costs. The research also concludes that the effectiveness of these measures depends on accurate environmental cost allocation and continuous monitoring using actual operational data to verify cost savings and changes in carbon emission levels.