By Sajith Kumar
Every problem has a solution but it also creates opportunities for those eager to cash in on the anxiety created by the problem. With countries and corporates vying with each other to announce carbon emission reduction targets, the information technology industry has got another opportunity to tap — carbon software.
Hardly two months ago, San Francisco-based CarbonFlow raised $2.9 million in its first round of venture funding from Clean Pacific Ventures, OVP Venture Partners, and Meridian Energy Limited, a New Zealand renewable energy supplier, which is a strategic partner.
IT giant IBM, which has a carbon management tool, has partnered with an Australian IT company to test the appeal of Supply Chain Consulting’s CarbonView software. The enterprise software company hopes that its player in the increasingly crowded field of carbon-counting software programs, Carbonview, will win over corporations seeking to understand and upgrade the most energy-intensive and highest-emitting divisions of their businesses.
Meanwhile, CarbonFlow’s software, which is still under development, is being designed for managers of carbon emissions-reduction projects that want to monetise their carbon credits. CarbonFlow’s hosted software service will give project managers a way to manage projects and provide the audit documentation required to comply with the Kyoto Protocol and other state or regional climate change regimes.
A report from the World Bank says India is the second largest seller of carbon credits in the world with a 6% share in 2007, while China tops the list with a 73% share. National Association of Software and Service Companies (NASSCOM) has estimated that India’s software product will grow from $1.4 billion in FY 2008 to 12 billion in FY 2015.
But their recently released report even when highlighting the point that companies need to explore new industries and opportunities is silent on the emerging segment of carbon software. “While the early movers in the Indian software product landscape had predominantly focused on the financial and accounting domains, the surge in start-up activity has also contributed to the widening of the industry product portfolio with players introducing offerings in other areas such as business intelligence (BI), engineering, security, content and collaboration applications etc,” NASSCOM said in its report.
Carbon footprint reporting is increasingly becoming part of the purchasing process with purchasers seeking carbon footprint data from their vendors. It will in time be mandatory and when that happens, every company will have a requirement for this kind of software. Companies establishing a name for themselves at this early stage will be well-placed when that requirement comes to pass.
San Francisco’s CarbonFlow isn’t the only company that attracted venture funding. Both Victoria, British Columbia’s Carbonetworks also attracted venture funding for their software suites. Climate Earth is another player in this segment. According to Neal Dikeman, co-founder and CEO of CarbonFlow, the carbon credit industry at $64 billion last year is much bigger than solar and wind combined. Neal Dikeman is targeting companies in Europe, Asia and South America to sell his product.
Dikeman is a founding partner at Jane Capital Partners, where CarbonFlow was incubated, but he’s leaving the boutique merchant bank to head up operations at CarbonFlow. CarbonFlow is working to cut down on those weaknesses with a system designed to meet Kyoto standards for registration, verification, certification and monitoring of carbon emissions.
Enormous amount of time is lost in meeting all those standards that is why nobody wants to relax the environmental standards, and the environmental standards were not designed to take transaction costs out, they were designed to protect the integrity of the environmental project. CarbonFlow has partnered with Norway’s Det Norske Veritas, or DNV, for the development and marketing of the Carbonflow system. DNV was the first company to be accredited by the UN to verify greenhouse gas emission reductions from projects in the developing world under the United Nations Clean Development Mechanism 2004.
Despite the hype created by growth of carbon credit trading analysts are doubtful how many of the green IT start-ups may survive a market down turn — especially given the several hundred thousand dollar price tag of some programs — but for now it’s an open playing field as companies await legislation and true carbon accountability.
What gives Australia’s Supply Chain Consulting a decent chance in this marketplace is the launch of new carbon reporting requirements in its home land, Australia’s National Greenhouse and Energy Reporting Act 2007 came into effect July 1, mandating some medium-sized and most large companies to begin reporting their emissions and energy use statistics to the government. One of the act’s goals is to standardise the reporting process and to encourage the use of the government’s emissions trading scheme. For now, companies that emit at least 125 kilotonnes of greenhouse gases or produce or consume at least 500 terajoules of energy will meet the thresholds for reporting. With each successive year, those thresholds will drop, until about 700 medium-to-large corporations are covered by the reporting requirements.
IBM which has a carbon management tool may not be truly excited about the a carbon footprint software package developed outside of its labs even though it has tied up with an Australian company on a pilot project, analysts said. Even logistics solution providers are adding the carbon footprint extension to their products and solutions. For example, ILOG recently released a Carbon Footprint extension to its LogicNet Plus XE supply-chain application.
According to the company, it can estimate the carbon impact of changes to the supply-chain network by computing the total carbon emissions associated with the new distribution facilities, plants, and modes of transportation used between various points. The carbon figures come from a pool of data from reputable sources, including the U.S. Department of Transportation and the World Resources Institute.
Thus, the extension can provide a general estimate as to what the carbon emissions are of, say, a warehouse in New Mexico built in 1973 or the emissions from a train loaded with widgets traveling from Bismark, ND, to Boise, Idaho. Alternatively, a user can enter his or her own data about a specific facility or mode of transportation if it's more accurate. India with its software building capabilities and the second position worldwide in carbon credits trading should explore the potential of carbon footprinting.
This article appeared in COMMODITY MARKET, India’s No 1 news magazine on commodities
