Energy Gains Currency in Evolving Carbon Software Market

Software solutions to help companies to manage, report and reduce carbon dioxide emissions continue to evolve. Our research shows that customer needs and vendor solutions to reduce and report emissions increased in 2010.

Today, Groom Energy and GreenBiz.com launched a new report that takes stock of the carbon accounting software vendor landscape. One of the most noteworthy findings from our research on software vendors offering carbon management products was the increased emphasis on energy management. This led us to revise the name of the category in the report from Enterprise Carbon Accounting (ECA) to Enterprise Energy and Carbon Accounting (EECA).

Our report names 10 EECA Leaders based on technical competency, financial strength, customers, energy management capabilities and vision. Among the highlights from our new report from Groom Energy and Greenbiz.com:

While momentum for carbon regulation has essentially stopped in many countries, the need to report and manage carbon emissions has not. Among the top drivers for companies to report carbon emissions is the requests from top customers for environmental data (carbon, energy and water usage, waste reduction, packaging and other sustainability and environmental information). These efforts have been led by large companies that use supplier environmental surveys and scorecards, such as Bank of America and Walmart. This area is sometimes called “customer compliance.”

Companies report carbon emissions to all stakeholders as part of their efforts to enhance company and brand image. With the unrelenting interest in and importance of green rankings, developing and maintaining a solid green reputation is a competitive advantage in some industries.

Companies have realized that carbon and energy reduction involve the same processes and teams. More job titles and descriptions include both carbon and energy responsibilities and companies are looking for software and services that reduce both carbon and energy.

In response, vendors continue to innovate and to offer new features and services. We note a number of important trends. One is the trend toward integrated solutions that offer a carbon reporting module along with other features. Software to calculate and report carbon emissions is no longer solely available as a stand-alone product, but often a module of larger suite of energy management or environmental, health and safety (EHS) capabilities.

More than 75 vendors offer a carbon module and we group vendors into three categories:

• EHS vendors: Offer a carbon module, includes Enviance and IHS
• Traditional energy management vendors: Offer a carbon module, includes Johnson Controls and EnerNOC
• Specialists: Vendors began with carbon and expanded to energy management, including CarbonSystems, Hara and ENXSuite

Firms that are heavy emitters of carbon, such as oil & gas and utility companies, tend to use carbon modules from EHS vendors. Less carbon-intensive firms, such as retailers and services firms, tend to purchase carbon modules from traditional energy management or specialist vendors.

Firms continue to move beyond spreadsheets to manage carbon data and are migrating to database driven, multi-user, auditable and commercially supported software products. Hundreds of firms purchased carbon software in 2010, including Arch Coal, Bayer, RJ Reynolds, Safeway, and Wyndham Hotels.

For 2011, we expect the trend by companies to manage carbon and energy together to persist and for vendors to expand energy management offerings. The trend toward energy management strengthens the market position of traditional energy management firms, many of which now offer solid carbon module with customer references.