Carbon Accounting Software Market Size, Share & COVID-19 Impact Analysis, By Deployment (Cloud-based and On-premise), By Industry (Energy & Utilities, IT & Telecom, Healthcare, Transportation & Logistics, Retail, Construction & Infrastructure, Food & Beverages, Chemicals and Others), and Country Forecast, 2023-2030

The carbon accounting software market size was valued at USD 12.73 billion in 2022 and is projected to grow from USD 15.31 billion in 2023 to USD 64.39 billion by 2030, exhibiting a CAGR of 22.8% during the forecast period. North America dominated the global market with a share of 28.28% in 2022.

Carbon accounting software is the process of analyzing, calculating, measuring, and reporting an organization’s Greenhouse Gas (GHG) emissions for auditing. The adoption of this software allows enterprises to develop their management of carbon releases. It enables better financial opportunities for enterprises, as investors are likely to invest in a firm that is pursuing to minimize their carbon emissions. This helps to establish better transparency among stakeholders and potential investors.

Hence, several key players in the market are innovating solutions to help enterprises better control their carbon emissions. For instance, in July 2022, McKinsey launched Catalyst Zero, an end-to-end decarbonization solution that assists clients in finding and removing carbon from their commercial operations. Catalyst Zero combines sustainability proficiency, sector-precise high-tech knowledge, and transformation expertise.

Several firms are joining the program to attain net-zero emissions by 2050. In such a scenario, carbon accounting and pursuing third-party assistance to handle carbon emissions would be imperative to sustain industry position.

COVID-19 IMPACT

Improvement in Reduction of Carbon Emissions to Propel Market Growth

The COVID-19 pandemic has severely impacted the global economy due to the imposition of lockdowns around the globe. The market was not affected during the pandemic due to rising government measures for initiating control over carbon emissions. The shift to sustainable business practices is being driven by investors, consumers, and even employees.

Additionally, the deployment of technologies such as blockchain in supply chain and logistics is making carbon footprint measurement reporting faster and easier. Besides, improved data management permits suppliers to calculate emissions with greater transparency and accuracy.

In June 2020, SAP announced the Climate 21 program to support customers in tracking their climate-related purposes. The SAP Product Carbon Footprint Analytics application will help customers to understand their carbon footprint and provide a foundation for analyzing and optimizing greenhouse gas emissions.

LATEST TRENDS

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Use of Digital Twin Technology in Carbon Accounting Software to Mitigate Carbon Emissions in the Construction Industry

Digital twin technology plays a central part in decarbonizing the environment. A digital twin is a computer program that uses real-world data to simulate a physical object such as a building or a service. It helps to predict the process or product performance and optimize all aspects of design, construction, operations, and management. Additionally, city planners, building owners, and governments use digital twins to manage, track, and minimize emissions from new and old buildings during construction. It also predicts traffic flow or controls individual room temperatures. For instance,

• In September 2021, Scottish company Integrated Environmental Solutions (IES) proved that digital twin technology can reduce the carbon footprint of a wider area. This software optimized local wind power on Eday, allowing an entire community to reduce its energy requirements by 76% in a payback of fewer than six years. The change allows the community to eradicate fossil fuel consumption on the island.

Considering another instance,

• In June 2021, Accenture recognized digital twins as one of the key trends driving businesses forward. The firm said that increased investments in data and Artificial Intelligence (AI) have led to a new generation of business and intelligence solutions.

Thus, digital twin technology can be applied to both new and existing buildings to mitigate carbon emissions in the construction industry.

DRIVING FACTORS

Increasing Government Initiatives toward Net-Zero Emissions to Surge Product Demand

Governments of various countries are taking initiatives to reduce carbon emissions by framing energy-related guidelines and protocols. The financial influence of non-compliance and the rising demand for energy-efficient products from customers are convincing enterprises to adopt carbon accounting software in their businesses. Several organizations are focusing on global warming by making policies and guidelines to reduce environmental emission levels and greenhouse gases. For instance,

• In November 2022, COP27 (Conference of the Parties to the United Nations Framework Convention on Climate Change) announced the Net-Zero initiative conference that will contribute along with several governments to achieve net-zero emissions operations by 2050.


• In May 2021, Germany's government announced new targets to minimize carbon emissions and become greenhouse neutral by 2045. The country aims to reduce its carbon emissions by 65% by 2030 compared to 1990 and 88% by 2040.

To meet the global net-zero target, enterprises must cut their emissions and evaluate and report on their progress, achieving the transparency and liability that investors and other shareholders demand.

Such initiatives by various countries worldwide motivate enterprises and organizations to work toward zero emissions. This is expected to propel the product demand in the market.

RESTRAINING FACTORS

Increasing Greenwashing Practices to Hinder the Demand for Carbon Accounting Software 

Greenwashing can be a misleading way for fossil fuel companies to portray themselves as contributing toward sustainability. It is cited as a deceitful and harmful way of marketing for enterprises and organizations to portray their sustainable contribution.

Enterprises have been involved in greenwashing through commercials and press releases flaunting their clean energy and pollution reduction initiatives. Several enterprises have been caught in greenwashing in various ways.

For instance,

• In January 2022, ExxonMobil, one of the largest oil giants, showed interest in marketing its algae biofuels that would reduce transport emissions. Also, the firm has no net-zero target and does not include any products contributing to the 2025 emission reduction target.            

Such increasing greenwashing practices would harm the contributions toward net-zero emissions, eventually hindering the demand for carbon accounting software.  

SEGMENTATION

By Deployment Analysis

Growing Adoption of Cloud-based Services to Propel Market Growth 

Based on deployment, the market is segmented into on-premise and cloud-based.

The global market is fragmented as more vendors provide monitoring and management software. This increase in number is due to the rise in adoption of cloud services. Additionally, the increasing implementation of online banking and the proliferation of mobile payment apps are driving paperless progress. As a result, governments encourage businesses to use digital alternatives to paper. The carbon accounting software industry can be benefitted from both the prevalence of cloud computing and its increasing demand. Modern IT can streamline document management processes in the workplace by scanning documents and storing them in the cloud. Therefore, integrating paperless with cloud computing in carbon accounting software will strengthen the market. For instance,

• Alibaba Cloud, the backbone of Alibaba Group, launched Carbon Management Solution - Energy Expert. It is a sustainable platform for customers globally for analyzing, measuring, and managing carbon emissions of business activities and products.

By Industry Analysis

Energy & Utilities Segment to Emerge Prominent Due to Rising Electricity Demand

Based on industry, the market is categorized into energy & utilities, construction & infrastructure, IT & telecom, retail, healthcare, food & beverages, transportation & logistics, chemicals, and others.

The energy & utilities segment held the largest carbon accounting software market share and the highest CAGR in the market. The demand for natural gas, fossil fuels, solar, and wind energy has doubled in the last few years. Higher electricity demand also increased energy needs in the energy and utilities sector. Furthermore, energy efficiency is progressively becoming the major focus of private enterprises and government authorities across the globe. The expansion of economic activities has led to higher energy consumption rates, pushing the global power grids to its limits. Vendors are increasingly focused on expanding their presence in the sector. For instance,

• In January 2021, Schneider Electric launched EcoStruxure Microgrid Solution - Small and Medium Buildings in Canada. The solution provides a more accessible addition of Distributed Energy Resources (DERs) across facilities such as industrial and commercial buildings, healthcare services, and educational organizations, providing enterprises with reduced energy costs, better energy resiliency, and lower carbon footprint.

COUNTRY INSIGHTS

The market is studied across China, the U.S., India, Russia, and the rest of the world.

China dominated the market share in 2021. The growth of the semiconductor, electronics, and pharmaceutical industries has increased the emission of greenhouse gases. So, China is considered as one of the leading contributors to energy-related CO2 emissions. Additionally, China alone accounts for the significant presence of coal-fired power plants. Furthermore, China has taken concrete steps to tackle carbon emissions. For instance,

• According to the World Bank Report, China's long-term growth prospects will increasingly rely on realigning the economy from exports to domestic consumption, infrastructure investment to innovation, and state-led to market-led resource allocation.

The U.S. relies heavily on electricity for its energy demands. The type of energy source used to generate electricity is the main factor influencing emissions. Therefore, the electric power sector is the largest consumer of coal in the country. However, the increased investments in research, development, demonstration, and deployment of advanced technologies in producing iron and steel, cement, chemicals, and other industries enable these sectors to adopt low-carbon production.

• According to the Inventory of U.S. Greenhouse Gas and Emissions, electricity generators used 31% of the U.S.’s energy from fossil fuels and emitted 33% of CO2 from fossil fuel combustion in 2019.

India is expected to show a steady growth rate due to the increasing adoption of policies on carbon emissions worldwide. Additionally, emissions of greenhouse gases and other pollutants are increasing in India with rising electricity demand. Additionally, the Indian government plans to increase the share of gas in the primary energy mix and has approved the construction of new gas infrastructure.

On the other hand, India continues to support fossil fuels and renewable energy through fiscal incentives, price regulation, direct subsidies, and other government support. Still, subsidies for fossil fuels are nine times more complex than renewables and are mainly targeted at oil. However, the introduction of stringent regulations and the rising adoption of policies on carbon emissions are expected to drive significant growth opportunities for vendors in the market.

Russia is one of the leading emitters of greenhouse gases, along with the U.S., which has made insufficient efforts to slow climate change. The major industries heavily rely on revenues from oil and gas exports. Constituent entities make up Russia's wide-ranging powers and are considered essential policymakers and implementers of climate change mitigation. In addition, preparing the CO2 emissions inventory of Russian constituent companies is a priority step to achieve emission reductions.

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Similarly, many countries such as Japan, Germany, South Korea, Saudi Arabia, and Indonesia are adopting electrification in all sectors to boost electricity demand with renewables. Additionally, many countries are adopting measures that provide in-depth knowledge of greenhouse gas dynamics and impacts. Thus, the increasing demand for carbon accounting software among developed and developing countries is driving the carbon accounting software market growth.

KEY INDUSTRY PLAYERS

Market Players to Drive Merger and Acquisition and Development Strategies to Expand their Shares

Prominent players operating in the global market focus on increasing their global presence and market share through product developments, mergers, and acquisition strategies. These companies are concentrating on creating effective marketing strategies and developing new solutions for maintaining and growing their market share. The growing software market is expected to create lucrative opportunities for the market players. Consequently, the leading players focus on numerous strategic initiatives, such as mergers & acquisitions and partnerships, to stay competitive. The research reports provide a complete competitive landscape and an in-depth vendor selection methodology and analysis using qualitative and quantitative research to forecast the accurate market growth.

List of Key Companies Profiled:

• Persefoni AI (U.S.)


• IBM Environmental Intelligence Suite (U.S.)


• Sphera (Germany)


• Emitwise (U.K.)


• Sinai Technologies (U.S.)


• Net Zero Cloud by Salesforce (U.S.)


• Greenly (France)


• Net0 (U.S.)


• Sweep (France)


• Diligent Corporation (U.S.)

KEY INDUSTRY DEVELOPMENTS:

• November 2022: Sphera announced a collaboration with Eastman, an innovative global specialty materials company, by adopting Sphera's Life Cycle Assessment (LCA) automation software. The LCA automation solution would allow businesses to quickly receive complete real-time analysis into the environmental tracking of their product portfolios. It would also support businesses more effectively by reducing their greenhouse gas emissions at every production phase, from design to assembly.


• February 2022: Salesforce partnered with the South Australian government by opening a carbon accounting software hub in Adelaide. The alliance would combine net zero clouds with machine learning and artificial intelligence capabilities from the Australian Institute for Green Industries SA (GISA) and Machine Learning (AIML) to support improved capability to capture the report on carbon emissions across supply chains.


• January 2022: IBM announced its acquisition of Envizi, a data and analytics software provider for environmental performance management that would help organizations to create more resistant and sustainable operations and supply chains. It would help streamline tracking and reporting of its progress in GHG emissions reduction and renewable electricity procurement.


• August 2021: Diligent Corporation acquired Accuvio, an ESG data aggregation and reporting software company, to enhance climate reporting capabilities. Diligent would enable organizations to prepare, disclose, and track key metrics in alignment with GHG emissions and standards, including major regulatory frameworks across the entire value chain.


• October 2021: SINAI Technologies Inc. and RMI, an independent nonprofit organization, announced a research partnership to improve measurement for Scope 3 emissions and carbon tracking across industrial supply chains.

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An Infographic Representation of Carbon Accounting Software Market

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The research report provides a detailed market analysis. It focuses on key aspects such as leading companies and major software and services applications. Besides this, the report offers insights into the market trends and highlights key industry developments. In addition to the aforementioned factors, the report encompasses several factors that have contributed to the growth of the market in recent years.

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