consider new policies and legislation to help stop climate change, verifying whether they actually work is going to be a big deal.
And it's really encouraging to see a bunch of companies already trying to help. Picarro is one of them. It helps monitor the atmosphere's gases to determine whether one of the main ideas for fighting global warming, a "cap-and-trade" system, is working.
By the way, startups that help verify compliance with legislation are just one group we're hoping to court for our "Innovation Competition" at GreenBeat next month. We're looking to showcase any entrepreneur who is working on technology that is disruptive in the Smart Grid arena. We've invited Picarro to come, because they're aiming high -- trying to solve one of the globe's biggest problems.
Here's why Picarro (see VentureBeat profile) is doing something really meaningful. There's urgent need to act if we're going to save the planet, and the Obama administration and Congress are scheduled to tackle major climate change legislation in a few months. The bills currently pending center around the establishment of a cap-and-trade system, a regime that is now gaining global acceptance too, and will be the focus of United Nations talks in Copenhagen in December.
With cap-and-trade, a price is placed on a unit of carbon (usually a ton in the U.S.). The idea is to let companies trade units on an open market. They have to pay for units if they want to pollute more, or they can sell the units if they become more efficient and can afford to pollute less. Here's the beauty of it: It forces companies to pollute much less than they otherwise would, but does so without inflicting too much economic pain. Companies unable to reduce their power needs can continue to operate, even if its marginally more expensive to do so.
But wait a second! There's no way to prove that companies are actually abiding by the credits they are buying? What if they're secretly emitting carbon gasses, and not playing by the rules? Or worse, what if they are playing by the rules, but the results aren't reflected in a cleaner environment? Who is even capable of being the judge of that?
We've already witnessed a bunch of related scandals. Last month, the United Nations pulled the accreditation of SGS UK, the world's largest auditor of clean-energy projects after it was unable to prove its staff had properly vetted projects that were approved for carbon credits. This comes at the time when Europe is leading the effort to pull the U.S and China, the world's two largest polluters, into binding agreements in Copenhagen. This suspension of SGS UK follows a similar move taken against Norway's DNV last year. (In a separate area of green verification, the U.S. Energy Department determined that it is not properly tracking whether manufacturers that give their appliances an "Energy Star" label have met the required specifications.)
The costs of not getting the legislation right could be immense. Once a version of the U.S. Senate's "Boxer-Kerry" legislation is passed, and once the U.S. and other nations sign off on the Copenhagen Protocol, some players could conceivably be set to make billions of dollars through carbon trading while others lose billions. "If we determine at some point that none of this is working, the whole thing pops, and it pops fast," Picarro CEO Michael Woelk told VentureBeat in an interview.
The system would lose credibility and we'd be set back a decade in figuring out a way to tackle climate change. Indeed, Woelk said he was surprised when the EU reported it was compliant with the Kyoto agreement, having reduced its emissions by 1.5 percent in 2008, but no one was able to prove it one way or another. Similarly, the U.S. Energy Information Administration claimed that 2009 emissions will fall 5.9 percent.
"But no one can see that," said Woelk. "You'd better be able to measure that in real time. If you don't, the whole thing is a house of cards."
This is where Picarro comes in. The company makes what is basically a laser in a small box (see image) -- it's like something straight out of a James Bond movie. The Mercury News recently wrote a good article on the piece explaining the company's progress here.
When I spoke with Woelk yesterday, he explained why the company's technology is pushing beyond what competitors are already doing. Picarro's laser technology -- called WS-CRDS, for wavelength-scanned cavity ring-down spectroscopy -- measures gases like carbon dioxide and methane in quantities as small as parts per billion.
The box costs about $50,000, and weighs 58 pounds. You plug Picarro's device in a place permanently for six months. For a region like the San Francisco Bay Area, you'd need several. Picarro would need 500 monitoring stations across the U.S. and about four or five times that globally to do an accurate job. It's already selling its product to the National Oceanic and Atmospheric Administration (NOAA), the federal agency monitoring oceans and the atmosphere, and to the environmental protection agencies in China, France and Germany. All of these groups report to the United Nations' World Meteorlogical Organization (WMO).
Picarro's competitors -- including Thermo, Varian and Agilent -- rely on inspections and calculations about emissions that aren't actually observed. Some use tall communications towers, take air samples from different heights on the tower, put the samples in flasks, cap them, and take them to the lab to analyze them. This is called gas chromatography. But that's expensive and slow, says Woelk. So far, there's been no company that actually permanently monitors the atmosphere.
Picarro launched seven years ago, and has at least $22 million in funding from a group of investors including big name venture capital firms Benchmark Capital and Greylock Partners. Other investors include SkyMoon Ventures, Staenberg Venture Partners and Weston Presidio Capital.
Picarro started as a spin-out from Stanford University. The company first developed a laser component for the telecom industry, but sold that business more than two years ago. Money from the sale was put back into the business, where Woelk and his team decided to refocus the technology to solve the gas monitoring problem for climate change.
It's a challenge, but the company is already being rewarded for its hard work. After just two years, it is profitable, and its revenues has grown three-fold each year, said Woelk. Revenue is expected to accelerate by as much over the next two years, he said. If Congress is serious about verification, it will need to spend about $300 million over the next five years, he said.
A whole range of other companies are working on ways to measure carbon footprints, including AMEE (which demonstrated its product at DEMO earlier this year). Other related companies (mostly makers of carbon accounting software) are Ecosynergy and Carbonetworks and Hara.
VentureBeat is hosting GreenBeat, the seminal executive conference on the Smart Grid, on Nov. 18-19, featuring keynotes from Nobel Prize winner Al Gore and Kleiner Perkins’ John Doerr. Get your early-bird tickets for $625 before Oct. 31 at GreenBeat2009.com.