Climate change heats carbon software firms

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Competition is heating up in the carbon accounting software market.
Interest among investors and customers about global warming is pushing companies to take action to monitor energy use and emissions. And that has catalyzed a cluster of Bay Area companies, ranging from startups with A-list management teams to offshoots of enterprise software giants like Oracle Corp., to help companies track and manage their emissions and energy use.

Since May, 10 more U.S. companies have formed or come out of stealth mode. That brings the total of known carbon accounting software companies nationwide to 51, with at least half a dozen of those in the Bay Area.

All are chasing a market that’s expected to explode. While only 300 companies worldwide have purchased carbon accounting software, that number is expected to quadruple in the next two years even if the United States does not create a market to trade greenhouse gas emissions credits, according to report by Groom Energy Solutions. In the absence of such a market, hopes of lowering energy bills through better information are driving carbon accounting forward.

But it’s clear the Bay Area’s companies will face stiff competition, as companies across the globe clamor for a piece of the carbon accounting action.

“Because carbon accounting rules are set globally, if you’re solving this problem for French companies, you probably can solve it for American companies,” said Paul Baier who authors the twice-yearly report for Groom Energy on the carbon accounting industry.

There are other companies known to be in development, including Q3, a venture from Thomas Siebel, founder of Siebel Systems. A message left for him through his foundation was not returned.

All the companies focus on helping companies manage and track energy use and carbon emissions. And some go farther to help companies develop strategies to decrease those emissions and save money. Many companies, like San Francisco-based Climate Earth, are specializing in one area.

Climate Earth sells a subscription software service that measures and tracks greenhouse gas emissions and energy use in construction projects.

“There are a slew of companies just focused on that compliance market, but we think that’s too narrow of a perspective to take,” Climate Earth CEO Chris Erickson said. “That’s sort of the baseline for playing.”

Among Bay Area carbon accounting companies are Oakland-based Vintara, founded in 1997, which recently added enterprise carbon management to its enterprise software offerings; San Francisco-based StakeWare, which grew out of Salesforce.com’s AppExchange incubator; and startups San Bruno-based Planet Metrics and San Francisco-based CSRware.

Baier said it’s not a terrible time to be competing with the big enterprise guys.

“It’s hard to innovate when you’re in a recession,” Baier said. “There’s clearly an opportunity for these small guys to grab some share.”

One company hoping to do so is Hara, a Kleiner Perkins Caufield & Byers-backed startup led by a former division head at SAP, Amit Chatterjee. The company emerged from stealth mode in June with 12 customers, including Coca-Cola. Hara is still headquartered in the offices of Kleiner Perkins, which invested $6 million in the startup.

Chatterjee admits it’s an increasingly crowded space — he’s even competing with SAP, which just bought a market leader in carbon accounting, Sterling, Wash.-based Clear Standards.

Chatterjee said Hara’s software goes beyond carbon measurement, providing information on energy, water, wastewater and solid waste and telling companies what steps they can take to manage those resources in a cost-effective way.

“We’re focused on being the environmental and energy management solution system of record,” said Chatterjee. “We’d like to help companies understand how a business process should exist when thinking about natural resources.”

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