Posts Tagged ‘GHG accounting’

The ECA Market grew up quickly

Tuesday, January 19th, 2010

Today Groom Energy published our newly updated ECA research report, 2010 Enterprise Carbon Accounting, which also included our selections for the market’s 2010 ECA Emerging Leaders.

The basis for our research report started back in 2006.  At that time, as Groom Energy engineers were working with a F500 customer to build a GHG reduction budget, it occured to us that GHG tracking and reporting would eventually represent a fundamentally new process within every large company.  Even by then, staying on top of reporting for the EPA’s Climate Leaders was requiring more and more time for our customers.  It was no surprise that spreadsheet tools were not going to scale – but it was the collaboration necessary to even gather and manage the data where the gap was most obvious.

What most people don’t know is that we even made a concerted effort to start our own Groom Energy spin-out GHG software company.  We had surveyed the market through our customers, found only a few third party software packages, and thought we saw a path to a new class of enterprise software, calling it “enterprise carbon accounting” or ECA for short.    (all new markets need a name, right?)

Within a few months we had detailed the basic software functionality and even recruited a software team to start building it.  After several initial meetings with traditional software VC’s in Boston (most of whom couldn’t spell G-H-G, but all of whom understood enterprise software) we sensed it was going to be a long slog to get early stage funding based on our powerpoint-ware.  Either we had bad breath, couldn’t convey the opportunity correctly or needed to live on Sand Hill Road…

Within a few months of our effort we starting uncovering more new ECA vendors, some established EHS vendors with GHG extensions, some VC funded pure start ups, some larger software companies who added GHG modules.  It seemed each week we were adding a new entrant to our wiki list, which was more and more daunting.  At 10 known players we were concerned.  At 20, we knew were were too late and abandoned our effort.  At 30, we knew that our customers were just as overwhelmed trying to understand the offerings, all while building their own strategies internally.

And hence the idea for our ECA research report was born.  We saw that the best way to leverage our effort was to help our customers with a more concrete deliverable – customer based research which could be regularly updated as the market developed.  Not as profound as an entirely new company, but worthwhile nonetheless.  The good news is that market response has been a bit overwhelming…

Check out the latest report and, if you’re an entrepreneur considering your own ECA software start up, study the vendor list carefully – its up to 60 and still going….

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United Kingdom – new Carbon Tax impact on Corporates

Thursday, June 18th, 2009

A few months ago one of our customers told us that they were facing a significant carbon tax for their United Kingdom based operations.  With a newly implemented UK carbon taxation policy they expected to pay @ $750k for their 60+ facilities located throughout the UK.  I decided it was well worth a quick trip to learn more and now after a few days of meetings here in London, I understand a bit more about this program.

It is called the CRC (Carbon Reduction Committment) and it’s goal is to extend the EU cap and trade scheme to the next tier of UK polluters, below the utilities and other large emitters (metals, cement, etc).   This will likely affect 5000 new organizations, including corporates, and it kicks off in April 2010.  Under the current program, your performance in reducing emissions gets ranked in what are called “league” tables.  These rankings impact your next year’s tax calculation.  The fund recycles the contributions to the payors, with better performers getting 110% of their initial tax payment returned and the lower performers getting 90% back.  In the following years the percentage for winners goes up (say to 120%) and the losers goes down (say 80%).

The cap works because the UK government will successively rachet down the number of available credits at auction.  It is complex, to say the least, and it has already kicked off a new consulting industry for many UK based environmental consulting shops – if you want to buy a report on this for @ $1k just check this out :)

Like any new carbon tax program there is stll a lot of debate about how these initial rules have been written.   One example I heard from James Murray at the BusinessGreen.com:  Under the CRC’s current form, British Telecom, who has been planning to build a significant wind farm and use it’s clean electricity for their operations, would NOT be given any credit against their CRC tax calculation.  The thinking being that as they had already received UK federal tax incentives on this project they would be “double dipping.”

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Enterprise Carbon Accounting – San Fran event

Friday, May 15th, 2009

Yesterday we co-hosted our Enterprise Carbon Accounting (ECA) seminar at the San Francisco Airport Hyatt, bringing our successful Feb 25th Boston event to the Left Coast, this time with our new partner GreentechMedia.   As he had done for Boston event, Paul Baier did another great job at putting together a set of speakers and topics to be discussed.

The ECA idea stems from the belief that as GHG emissions will ultimately have economic consequences  (ie. cap-n-trade or tax), a company’s GHG accounting system needs to be financial grade.   In the extreme, Mindy Lubber, CEO of Ceres, likened using this new metric for corporate performance to the need for understanding off balance sheet risk.  Hence, GHG reporting both now and in the future needs to be transparent and auditable.  Early voluntary corporate reporting through programs like Carbon Disclosure Project shows that these organizations understand the emerging problem and are proactively dealing with it.

However, in listening to Pankaj Bhatia from World Resource Institute and case studies from companies like Allied Materials, Autodesk, HP, Intuit and Symantec, it became clear how very early we are in this journey.  Each of these companies has needed to develop a new process for building their GHG inventory and their comments highlighted how much subjectivity remains in their interpretation of the boundaries for their emissions.   This is especially challenging around Scope 3 reporting.

The speakers also offered commentary about the Waxman/Markey bill and speculation about whether the US would or would not have a strong GHG regulation position going into Copenhagen in December of this year.  Speculation was high that cap and trade will prevail as the vehicle whenever policy gets enacted.

The side story is that cap and trade will work principally for political reasons.  It would be the only program that would allow US policy makers from states who have each different consequences from GHG regulation (coal vs gas power, mfg vs farms, etc) to satisfy their constituents by shifting the battle to “how many GHG credits do I get?”   One can imagine it won’t be as simple as the DOE’s stimulus financed Energy Efficiency and Conservation Block Grant program which has been allocated on a $ per capita basis to unsuspecting cities and towns throughout the US, regardless of need.

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