Green Tech

Verisae, a small Minnesota-based company, has received a patent for a system to track and report greenhouse gas emissions with software, a business attracting a growing field of companies.

The company on Wednesday said that the U.S. Patent and Trademark Office issued a patent to Verisae for a method for calculating a corporation's emissions. The patent, filed in May of 2007, describes a business process for gathering corporate emissions data, generating reports, and managing carbon credits.

Verisae is already offering hosted carbon accounting software focused primarily on retail companies, basing its tracking and reporting on the protocols established by the nonprofit Climate Registry, which sets guidelines for emissions reporting.

"This is a shot across the bow to others building this stuff," said Verisae product manager Daniel Stouffer. "This is a big story for those venture capital companies which might be spending money with firms that might be building solutions that might already be covered."

Verisae's hosted software compiles the greenhouse emissions data from a corporation's different assets. For example, a refrigerator in a store has emissions associated with its energy use and the refrigerant which is a powerful greenhouse gas, Stouffer explained.

The company is also working on a way for businesses to monetize incentives to reduce emissions, Stouffer said. Businesses can make money by participating in demand response programs, where the utility reduces the electrical load of the business--such as turning down lights in a supermarket or cooling in a building--during peak times.

Reason for worry?
The patent disclosure comes at a time of heightened interest around carbon emissions-related software. Investors expect that this year will see a lot of activity in software for tracking and reporting greenhouse gases, sometimes called carbon accounting software.

On Monday, start-up Hara Software, backed by venture capital firm Kleiner Perkins Caufield & Byers, announced its Web-based software. SAP purchased another carbon accounting company, Clear Standards, earlier this year in a sign of consolidation among providers.

The claims of Verisae's patent appear to describe a fairly general method for managing a business' greenhouse gas emissions. But how broadly it can be enforced is unclear, said patent attorney Eric Lane in the clean-tech practice at Luce, Forward, Hamilton & Scripps.

The claims on the patent include a number of different processes, noted Lane, who examined the patent and some related documents. That means that another carbon software company could develop a product that doesn't combine all of Verisae's claims.

Still, Lane said that the patent is worth noting for the growing number of carbon accounting software companies.

"Whether other companies ought to be worried is hard to say. Should they be aware of this? Yes," Lane said. "They have a nice package."

Growing field
Patents around different forms of carbon accounting have seen a surge in the past year, according to a recent study. In programs designed for trading carbon permits, there were six patent familes in 2000, nine in 2002, and 15 in 2006.

A significant case likely to affect carbon software is a decision by the federal appeals court that made it harder to claim business process patents often implemented in software applications, Lane said.

Part of the reason for the uptick in carbon accounting software is the expectation that heavy polluters in the U.S. will be need to comply with looming regulations to cap greenhouse emissions.

The American Clean Energy and Security Act of 2009 bill calls for the creation of a cap-and-trade program to limit emissions. But the earliest a bill would pass is next year and caps on carbon emissions would be phased in over many years.

Even before a national U.S. mandate, companies are investing carbon-tracking software as part of corporate sustainability programs or to administer energy efficiency initiatives.

Start-up Hara Software is betting that businesses need to get smarter about managing natural resources and carbon emissions even before regulations force them into it.

The Silicon Valley start-up on Monday is scheduled to come out of stealth mode after 18 months to announce the details of its software service which it designed for what its founder calls a "post-carbon economy era."

The 25-person company received $6 million in venture capital from Kleiner Perkins Caufield & Byers, where partner Al Gore played a role in getting Hara funded. It's the second software-focused investment after PC power management company Verdiem that KPCB has funded as part of a green tech push first launched in 2006.

Hara has developed a hosted software application called Hara Environmental and Energy Management, which is meant to give large organizations a way to monitor their water and fuel consumption and to lessen their environmental impact by planning ways to cut greenhouse gases and waste.

The software also has a content database to share information on effective efficiency programs and green technology products that a company can use, explained CEO Amit Chatterjee, who left SAP to start Hara. Its product is now being used by about 12 organizations, including Coca-Cola and the city of Palo Alto, Calif.

Chatterjee argues that metrics related to the environment, such as energy consumption, water use, and waste, are often indicators of how well a corporation performs financially. Companies with sustainability programs tend to run efficiently, have a positive brand, and have minimized the risk from things such as environmental fines, he said.

"Businesses are now becoming unprofitable because of the way they manage natural resources," he said. "Now (managing) natural resources is a core element of a business' processes."

City planners at Palo Alto, for example, were able to cut out $2.2 million in expenses related to waste and energy use.

Niche business?
Once caps on greenhouse gases are in place, which will affect large corporations, then Chatterjee predicts there will be a "tidal wave" of attention in tools to mitigate carbon emissions. Statements from President Obama on the importance of climate change regulation drove some businesses seeking better tools to Hara, he said.

The American Clean Energy and Security Act of 2009, a bill making its way through the House, would impose a nation-wide cap on greenhouse gases and force heavy polluters, such as utilities, to report and lower their own emissions. The bill has a long way to go before becoming law, which would be next year at the earliest, and caps will be phased in over many years.

But even with the absence of a national carbon regulations, there is a growing number of software companies developing programs focused on helping businesses improve their environmental profile.

In a sign of consolidation among providers, SAP last month purchased Clear Standards, one of several companies young software companies with tools for tracking carbon emissions. Some focus on giving a very accurate picture of emissions and the impact of energy-efficiency programs, while others are designed for purchasing carbon offsets in voluntary or regulated markets.

The basic idea behind carbon regulations is to put a price on putting pollutants in the atmosphere. Within businesses, analysts expect that carbon will be treated as a commodity which financial planners will have to account for and track the price of.

Hara plans to sell its software to financial planners as well as business people responsible for purchasing energy and sustainability officers. Chatterjee said the company seeks to differentiate itself from others by tracking a number of environmental attributes, not just greenhouse gases and energy use.

There are already many programs, called Environmental, Health and Safety software, to help companies comply with environmental regulations. What remains to be seen is whether the latest generation of software focused on climate change abatement will be used for a relatively narrow function, such as energy procurement, or for more strategic initiatives.

Chatterjee said Hara's software is designed to be flexible so that companies can manage relatively straight-forward initiatives, such as fuel reduction, and make plans for deeper changes with the company, such as adopting on-site renewable energy or developing new products.

"This is not another ERP package. Because the business is changing, you want something that is flexible, not something institutionalized," he said.

Planet Metrics on Tuesday joined the ranks of carbon-software specialists with the launch of its emissions modeling software and the announcement of $2.3 million in funding.

The San Francisco-based start-up said that it completed its series A round with participation from venture-capital firm Draper Fisher Jurvetson and angel investors.

It also said that the Consumer Electronics Show will use Planet Metrics' hosted software service to track carbon emissions for CES' upcoming conference in January.

Planet Metrics is one of a growing number of software companies that have developed tools for getting a grip on corporations' carbon emissions.

Some global companies are already regulated and need to report their carbon emissions. But Planet Metrics CEO Andrew Leventhal said that even without mandates, corporations are feeling pressure from consumers and non-governmental organizations to report and reduce their carbon footprint.

"I will argue that no one's got a gun to their head, but it's becoming more and more risky not to do things like this," said Leventhal. "In the electronics industry, there has been a fair amount of industry backlash about toxins in products and the big carbon footprint...Sustainability is a hot topic for the industry association."

Planet Metrics' software uses scientific and industry data to create a picture of the carbon footprint from different activities. With very accurate data, company executives can make decisions on the best way to reduce emissions, Leventhal explained.

Buying solar panels, for example, may be a visible way to reduce fossil fuel energy use. But with the proper tools, a company may find that upgrading to more efficient heating and cooling has a much quicker return, in terms of carbon reduction and financial savings.

Levanthal said that the most under-appreciated portion of a company's carbon footprint lies in understanding the contribution of its supply chain, which typically contributes far more than a single company's facilities.

Other carbon-related software companies include CarbonFlow, which last week completed its series A round of $2.9 million, and Carbonetworks. Products from both of those companies are designed for managing carbon offset projects within a company.