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Solve Climate – January 14, 2010
Tech Experts Taming the Wild West of Greenhouse Gas Emissions: Software Makers Tackle the Vast Challenge of Tracking Carbon
By Leslie Berliant
The voluntary emissions reduction market is still the "Wild West" of corporate greenhouse gas target-setting (...). Companies are not held accountable for verifying or explaining the emissions they report, nor is there any central body monitoring whether they meet the emissions reduction promises that they make to their customers and their stock holders. (...)
Dan Vogel, CEO of carbon management software maker Enablon concurs. “You have to manage your carbon units the same way you manage finance,” he told me. “You cannot manage what you don’t measure. And too many companies are not measuring at all, or not measuring accurately and transparently,” he says.
Both companies are working on solutions. In the case of Enablon, which first developed its software in 2004 for a major oil company, the solution also simulates the most cost-effective ways to minimize emissions, as well as develop and execute long term reduction plans.
Currently, most companies are only tracking emissions that are readily apparent, like those that come from energy use. But the bulk of emissions in manufacturing come from the supply-chain, Vogel says. “Something that we need to be very careful of is that when you try to measure carbon, most of the time the carbon is not made within the company but outside the company,” he explains. “Take a food company, for example. Generally the carbon emitted within the company is only 25% of the emissions. The majority of emissions are through agriculture, through suppliers, transportation, and then add the use of coal energy in China for packaging, for example. So 75% of the carbon is emitted in the supply chain.”
“Very often when a company says it is carbon neutral, it is within the company but it’s not neutral if you take into account Scope 3 emissions, those within the supply chain. Enablon's software is used by more than 250 global corporations and thousands of smaller companies,” Vogel said, including one of the top three packaging companies and the world’s largest producer of sports apparel and foot wear both of which are tracking supply chain emissions. (...)
When Reductions Become Mandatory
Enablon's clients are in a different position. They are primarily located in Europe, where emissions regulation is mandatory and the market in carbon trading is around 100 billion euro. In order to meet their needs, the software must provide a number of capabilities in addition to measurement including energy consumption reduction strategies and opportunities to mitigate costs. “The software will propose different types of tools where the manager of a refinery or the sustainability manager of a company will have a screen to simulate different scenarios and decide what changes to make,” Vogel explains. “They can simulate changing a tool, a machine, a supplier, a factory location, and see how CO2 emissions change as a result.” At the same time, companies can manage offsets and credits.
Vogel was at the UN climate talks in Copenhagen in December to talk about best practices in emissions tracking. I asked him if he was disappointed from a business perspective with the outcome.
“Obviously we didn’t reach a legally binding agreement,” Vogel said, “but what is important is that we have succeeded in gathering 192 world leaders and those people are all being watched by their own countries and all those countries are expecting something from them. We’ve made a very big step in reaching an agreement at some point or another. At worst, if we can’t get a UN agreement, the countries which do agree will sign something for themselves. Secondly, there were lots of side events at Copenhagen and those side events have put business in the spotlight. There is so much business being created around green technology. Software is one of them but also wind, solar, sequestration; this is actually giving energy impetus into building a post-carbon economy."
Vogel admits that the European trading scheme is flawed, but says that, in the end, CO2 has been reduced and that the system will continue to improve. He is convinced that creating economic opportunity in emissions reduction is the key to managing the gap between industrialized nations and developing countries when it comes to a final international agreement. And on a corporate level, he hopes his company's software will not just help measure emissions and create long term action plans for managing them — 84% of companies still only focus on short term targets — but also help identify efficiency measures that will lead to cost savings.
Meeting science-based emissions reductions takes long range planning, and in some cases, investment, that doesn't always fit with the focus on quarterly profits and losses of public corporations. Technology and analysis can help demonstrate the improvement to the bottom line that emissions reductions can provide. (...)
More information about Enablon Carbon Management Solution - Enablon GHG-MS
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