An environmental start-up backed by Al Gore's venture capital firm aims to take advantage of coming U.S. climate change legislation by helping companies like Coca Cola and even cities cut pollution.

Hara, a 25-employee company that debuted in 2008, provides online software to help companies reduce their carbon footprint -- a $2.5 billion market that will grow 10-fold if the proposed energy bill, which will require companies to get permits for emissions, becomes law, Chief Executive Amit Chatterjee said.

At the heart of the legislation is a cap-and-trade system that will gradually reduce the amount of greenhouse gases emitted by industry, by requiring them to have permits to spew their emissions.

Then companies will be forced to act, as opposed to seeing the business benefit of acting, he said in an interview, The debate alone of 'cap and trade' is a driver for our product.

Hara will have to compete with business software companies SAP and Oracle, as well as lesser-known players such as CarbonNetworks and Enervity, all of which are hoping to grab a slice of a potential boom market.

Cap and trade sets an ever-decreasing limit on carbon emissions and offers permits for companies exceeding it. Those lacking permits must trade with companies that emit less.

Paying for carbon emissions will mark a sea change in the country's pricing of energy, said AMR Research analyst Stephen Stokes.

The details need to be worked out but it is absolutely undoubted that carbon markets will be arriving, he said.

Positioning itself for the new market, Silicon Valley venture capital firm Kleiner Perkins last year invested $6 million in Hara -- which counts the city of Palo Alto as a client -- with the endorsement of former U.S. Vice President Gore, who is a partner.

This company would not have existed if Al Gore had not bought off on the idea, said Chatterjee. The venture firm has also snagged important customers, persuading Coca Cola to agree to a three-month test.

Bryan Jacob, who directs Coke's climate protection efforts, liked Hara for its comprehensiveness.

It's kind of one-stop shopping for all of my greenhouse gas management needs, he said, as opposed to three programs he used before that don't talk to each other.

Individuals interviewed for this story spoke with Reuters last week.

Hara software first collects information on a company's use of electricity, water, gas and chemicals and compares it to outputs of greenhouse gases, solid waste and waste water.

Then, the online software helps prepare strategy and run what-if scenarios. Finally, it tracks the changes.

Analyst Rob Enderle of the Enderle Group said Hara is less precise than rivals but vastly faster to implement and can be used ... to create a more comprehensive planning and reporting system.

That is important for government reporting and for providing incentives for change, he said.

(Reporting by David Lawsky; Editing by Edwin Chan and Carol Bishopric)

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