Wednesday, October 07, 2009

Smart Buildings will Shrink Our Carbon Footprint

Do you need some good news in your life? Try this . In New York City, Vornado Reality Trust (a major commercial property landlord) is installing small electricity meters into its tenants offices. These sensors will provide data on energy use by 15 minute intervals to some big data base. This information will help tenants efficiently use electricity (i.e identify the energy hogs) and this will help to reduce their building's carbon footprint. Even Sherlock Holmes needs clues to figure out who commits the crime. This cheap information will increase accountability. Those who leave their lights or their computer on will be known about. This will change behavior and shrink electricity consumption.

Vornado must be betting that by installing the energy meters that this will make their buildings more attractive for potential tenants who are cost minimizers. Potential tenants will know that they will waste less $ on electricity if they locate in a Vornado building. Will this create a "race to the top" as other commercial building landlords mimic Vornado? In a world where electricity prices are rising due to carbon pricing, the answer is yes.

Technological optimists would be wise to continue to ponder the various pathways that evolutionary capitalism will help us to tackle the carbon mitigation challenge. But, this is a nice example.