Unless you’re as clued in as Ms. Teen South Carolina, you’ve noticed that corporations are increasingly focused on lowering energy consumption, reducing carbon emissions and touting their general eco-friendliness. Less obvious is that the startups that are in the business of enabling this green trend – consulting, selling carbon offsets, etc. — are already making some surprisingly significant revenues. 3 Degrees is a San Francisco-based company that helps corporations limit their carbon footprint by selling renewable energy certificates (RECs) and carbon offsets. The company officially announced itself on Wednesday, as a spinoff from 3 Phases Energy, and says it is on track to make $20 million this year, up from $6 million in 2006.
That is not bad for a company that just started its PR launch campaign this afternoon. 3 Degrees actually formed in February of this year, and decided to spin out after seeing the growth of its parent company’s carbon footprint management business. At that time the company raised a Series A round and President and COO Dan Kalafatas said the company is in advanced negotiations to raise a Series B round of funding for a planned $10 million.
The company counts a dozen corporate clients like Starbucks (SBUX), Odwalla, and Safeway (SWY) and green utility programs in cities like Palo Alto, and Santa Clara, Calif. When I asked Kalafatas why corporations should pay the extra cost to work with 3 Degrees rather than just buy carbon offsets directly or use internal resources to focus on their carbon footprint, he said carbon emissions are not their clients’ core competency: “Our customers are in the business of coffee or computers,” he said, not carbon.
3 Degrees provides its customers with carbon offsets and RECs from a choice of 140 projects (like solar and wind-power installations), most of them based in the U.S. Paying extra money to carbon-reducing projects is controversial to say the least. Critics say the current voluntary carbon industry lacks standards and transparency, and gives companies an easy way to market green without making harder business choices. We think of carbon offsets as a necessary evil, and when combined with energy efficiency choices, a positive.