The market for carbon management software and services for the manufacturing sector is expected to grow by 33 percent annually from 2009 to 2017, according to “Carbon Management Software and Services,” a new study by Pike Research.
According to an executive summary of the report, Western Europe will remain the largest market for carbon management software until 2011, at which point it will be overtaken by North America. The market is expected to reach $124 million in size this year, and grow to $742 million in size by 2017. Global manufacturing accounts for about 40 percent of global greenhouse gas emissions, according to the report.
The report cited mounting pressure on manufacturers to report their emissions and improve on environmental efficiencies by large end customers such as Wal-Mart, Whole Foods, and Costco. Just recently, PG&E, California’s largest utility, announced that it would be auditing greenhouse gas emissions in its supply chain.
In addition, consumers are increasingly paying attention to the carbon emissions of products. A number of different countries have adopted a carbon footprint and reduction labeling scheme, such as the United Kingdom, France, Australia, and Japan. The Carbon Trust in the United Kingdom has been at the forefront of this practice, as it has helped manufacturers to demonstrate their commitment to managing their carbon emissions through its subsidiary, the Carbon Label Company. In Japan, which launched its labeling scheme in 2008, several dozens of Japanese companies have voluntarily started to display carbon footprint labels on food packaging, drinks, and other products. In the United States, California is the first state to take legislative steps toward carbon labeling. The state has developed the Carbon Labeling Act, a voluntary program to help consumer product goods companies obtain a carbon footprint label.
The report identified confusion about standards and a lack of clarity regarding upcoming regulations while facing overlapping mandates and initiatives from multiple sources as roadblocks to faster adoption of carbon management initiatives. Meanwhile, the market of carbon management software suppliers itself is fragmented. Relatively young companies, such as Hara, CarbonView, and Verisae, are competing against the more established and mature niche firms like PE International. There are also many vendors from the “establishment”; that is, software and services firms that have served manufacturers for decades. Accenture, McKinsey, Bain, Deloitte, PwC, IBM, SAP, and A.T. Kearney are some examples. In addition, the Indian service providers like Wipro and Tata Consultancy Services are leveraging their extensive outsourcing capabilities to play in this market. Competition is also emerging from corporations themselves, as some have decided to provide their homegrown tools for free or at low cost to their customers.
Moreover, there is a group of companies (like Johnson Controls) whose main business may not be directly connected to carbon management, but may be in a related area, such as building efficiency or industrial automation.