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With Carbon Regulation Looming, SAP to Buy Carbon Software Startup

SAPClearStandardsWhile the Waxman-Markey energy and climate bill is being fiercely debated right now, some form of carbon regulation will be implemented in the U.S. in coming years. That means there will be a massive need for software to manage the process of validating and recording greenhouse gas emissions. Business software giant SAP (s SAP) sees the writing on the wall, and this morning announced that it will buy 2-year-old startup Clear Standards, which sells software to manage carbon emissions, energy consumption, and water use.

Terms of the deal weren’t disclosed, but we’re guessing it wasn’t much. Sterling, Va.-based Clear Standards only announced a Series A financing round of $4 million from Novak Biddle Venture Partners and Kinetic Ventures back in November 2008. With those modest funds, the company has built a subscription service in which customers pay an annual or quarterly fee for its web-based emissions management tools and services. Large companies like SAP generally weigh two factors when moving into a new business and deciding whether or not to build their own service or buy a new company: How much does it cost, and how can it be integrated into the current business? On both factors the Clear Standards purchase seems like a good deal for SAP.

With the market still early for emissions management tools, expect more software giants to follow suit. Oracle already sells a product called Business Activity Monitoring that manages companies’ carbon footprint back into the supply chain, but could easily beef that up by buying one of the newer startups on the cheap. IBM has developed emissions monitoring and certification software called GreenCert and has also partnered with Oracle on carbon data management.

Who are some of the other new players that could offer good deals? Planet Metrics is a Burlingame, Calif.-based startup that says it hopes to be the software of choice for companies, from technology firms to grocery chains, that are ready to dig deeper into their business’ carbon footprint. Planet Metrics raised $2.3 million in Series A funding from Draper Fisher Jurvetson around the same time that Clear Standards did. Carbonetworks, a startup selling software and services to help companies reduce their carbon footprint, raised $5 million in funding from NGEN in the middle of last year. Carbonetworks’ software calculates and tracks a client’s carbon footprint, and connects a network of partners including carbon traders, verifiers, offsetters, energy analysts and other software developers with the customer.