Can new software take the hard work out of carbon management?
Sunday, 19 October 2008
David Metcalfe
Carbon calculating software is slowly starting to find corporate buyers. David Metcalfe of research company Verdantix surveys how firms are using the new technology and argues that this virgin market can only get biggerCarbon calculating software is slowly starting to find corporate buyers. David Metcalfe of research company Verdantix surveys how firms are using the new technology and argues that this virgin market can only get bigger.
A fresh market is opening up for software providers - carbon management. This virgin market has already spawned new ventures like Greenstone Carbon Management, Carbonetworks and Tradeslot; consulting firms like Logica and Carbonops; environmental compliance vendors such as Enviance, ESS and IHS/ESP; and business intelligence firms like SAS.
What is carbon management software for? A recent survey of ten software firms by Verdantix, "Smart Vendors: Carbon Management Software", shows that its principal function is to aggregate emissions data from multiple sources, such as electricity meters, fleet fuel consumption and business air travel, then to provide a window into the data with accounting capabilities, reporting functions and business intelligence tools.
Combine that core function with workflow management, real-time carbon price data feeds and secure global access and you have a way to manage multiple carbon reduction projects on a global basis with a consistent view of the cost of abatement.
Fancy stuff - but who is buying? Adoption is in its early days: vendors are looking for visionary buyers. Ford has implemented the Emissions Logic application from Logica/CarbonSim at 70 installations in 17 countries. E.ON UK is using the CPCP solution from Carbonops; and Cisco has a 700-site pilot of SAS for sustainability management. However, customer references are thin on the ground and implementations too recent to offer robust evidence of payback for wavering carbon managers.
The Verdantix research uncovered three main factors holding back adoption of carbon management software:
* Lack of accurate energy, fuel and travel data. Carbon management software requires an ongoing stream of comprehensive data. Without such data there is minimal added value from high-powered tools for accounting, reporting and financial analysis. Today, most firms don't have the management systems to capture emissions data on a frequent basis.
* No evidence of manual process failure. Compliance solutions from providers like Enviance and ESS are often adopted due to problems associated with manual processes, such as inconsistent manual data capture, data overload, version control and poor scalability. The immaturity of carbon management means most firms haven't yet run into problems caused by broken and inefficient manual processes.
* Dispersed responsibility and no budgets. Climate change is an emerging issue. Few business leaders have appointed senior climate-change directors. The result? Responsibility for climate change is allocated to CSR directors, environment health & safety managers and facilities directors. These people are not visionary buyers of IT solutions for carbon management.
It's not all doom and gloom though. Powerful drivers on the horizon will push many more firms to consider buying software.
Firstly, as the costs of climate-change legislation ratchet up, there is a business case for optimising carbon management. Consider the case of Drax Group, the UK coal-fired power station operator: expenditure on carbon emissions allowances increased from £11m in the first six months of 2007 to £107m in the same period in 2008. At these levels of expenditure, managing greenhouse gas inventories becomes a priority, easily justifying £20,000 a month for hosted software that optimises GHG inventories and reduction opportunities.
Secondly, the fear of non-compliance with climate legislation is growing. Under-reporting emissions under the EU's Emissions Trading Scheme (ETS) and missing deadlines to report emissions under the UK's Carbon Reduction Commitment carry heavy financial penalties and reputational risks. The confidence of a firm's board in compliance is strengthened by internal auditing, management systems, external assurance and also by software that secures data, defines processes and enhances reporting.
Thirdly, the battles between businesses to lead their sectors on climate-change issues is hotting up. As a result, big players like GE, Cisco and Tesco need to turbo-charge their programmes and ensure they keep ahead of the pack. Carbon management software accelerates the global rollout of climate-change programs by aggregating data, bringing consistency and visibility. Since the analytical tools are pitched at finance directors, it's worth noting that they could also be used for cutting energy costs.
As CEOs come to realise that carbon management is a business process, not a CSR project, they will conclude that more robust techniques are needed. We recommend that firms use hosted carbon management software in one division and compare the cost/benefits with manual processes in another division. The software-as-a-service "light solutions" from Carbonetworks, Enviance and Greenstone Carbon Management come at a monthly price, which a company's head of energy or finance director can justify even in the midst of the credit crunch.
(David Metcalfe is a director of Verdantix)
.............
Internet
Carbon calculating software is slowly starting to find corporate buyers. David Metcalfe of research company Verdantix surveys how firms are using the new technology and argues that this virgin market can only get biggerCarbon calculating software is slowly starting to find corporate buyers. David Metcalfe of research company Verdantix surveys how firms are using the new technology and argues that this virgin market can only get bigger.
A fresh market is opening up for software providers - carbon management. This virgin market has already spawned new ventures like Greenstone Carbon Management, Carbonetworks and Tradeslot; consulting firms like Logica and Carbonops; environmental compliance vendors such as Enviance, ESS and IHS/ESP; and business intelligence firms like SAS.
What is carbon management software for? A recent survey of ten software firms by Verdantix, "Smart Vendors: Carbon Management Software", shows that its principal function is to aggregate emissions data from multiple sources, such as electricity meters, fleet fuel consumption and business air travel, then to provide a window into the data with accounting capabilities, reporting functions and business intelligence tools.
Combine that core function with workflow management, real-time carbon price data feeds and secure global access and you have a way to manage multiple carbon reduction projects on a global basis with a consistent view of the cost of abatement.
Fancy stuff - but who is buying? Adoption is in its early days: vendors are looking for visionary buyers. Ford has implemented the Emissions Logic application from Logica/CarbonSim at 70 installations in 17 countries. E.ON UK is using the CPCP solution from Carbonops; and Cisco has a 700-site pilot of SAS for sustainability management. However, customer references are thin on the ground and implementations too recent to offer robust evidence of payback for wavering carbon managers.
The Verdantix research uncovered three main factors holding back adoption of carbon management software:
* Lack of accurate energy, fuel and travel data. Carbon management software requires an ongoing stream of comprehensive data. Without such data there is minimal added value from high-powered tools for accounting, reporting and financial analysis. Today, most firms don't have the management systems to capture emissions data on a frequent basis.
* No evidence of manual process failure. Compliance solutions from providers like Enviance and ESS are often adopted due to problems associated with manual processes, such as inconsistent manual data capture, data overload, version control and poor scalability. The immaturity of carbon management means most firms haven't yet run into problems caused by broken and inefficient manual processes.
* Dispersed responsibility and no budgets. Climate change is an emerging issue. Few business leaders have appointed senior climate-change directors. The result? Responsibility for climate change is allocated to CSR directors, environment health & safety managers and facilities directors. These people are not visionary buyers of IT solutions for carbon management.
It's not all doom and gloom though. Powerful drivers on the horizon will push many more firms to consider buying software.
Firstly, as the costs of climate-change legislation ratchet up, there is a business case for optimising carbon management. Consider the case of Drax Group, the UK coal-fired power station operator: expenditure on carbon emissions allowances increased from £11m in the first six months of 2007 to £107m in the same period in 2008. At these levels of expenditure, managing greenhouse gas inventories becomes a priority, easily justifying £20,000 a month for hosted software that optimises GHG inventories and reduction opportunities.
Secondly, the fear of non-compliance with climate legislation is growing. Under-reporting emissions under the EU's Emissions Trading Scheme (ETS) and missing deadlines to report emissions under the UK's Carbon Reduction Commitment carry heavy financial penalties and reputational risks. The confidence of a firm's board in compliance is strengthened by internal auditing, management systems, external assurance and also by software that secures data, defines processes and enhances reporting.
Thirdly, the battles between businesses to lead their sectors on climate-change issues is hotting up. As a result, big players like GE, Cisco and Tesco need to turbo-charge their programmes and ensure they keep ahead of the pack. Carbon management software accelerates the global rollout of climate-change programs by aggregating data, bringing consistency and visibility. Since the analytical tools are pitched at finance directors, it's worth noting that they could also be used for cutting energy costs.
As CEOs come to realise that carbon management is a business process, not a CSR project, they will conclude that more robust techniques are needed. We recommend that firms use hosted carbon management software in one division and compare the cost/benefits with manual processes in another division. The software-as-a-service "light solutions" from Carbonetworks, Enviance and Greenstone Carbon Management come at a monthly price, which a company's head of energy or finance director can justify even in the midst of the credit crunch.
(David Metcalfe is a director of Verdantix)
.............
Internet