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Daedalus was the mythical great architect and artificer of the classical world. Today, embedded intelligence is enabling the most profound changes in the way we create and use buildings since his day.

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Monday
May142007

The End of the Bottom Line

Saturday’s Wall Street Journal (May 12, 2007) had a front page story on the end of the bottom line. The old style bottom line, designed to give banks a picture of whether they would be paid if the company failed, and where the cash was coming from, is deemed to have outlived its usefulness. Years of taking special charges and hedging income off-line put it in the emergency room. Financial plays, foreign hedges, and other high end tricks that can swamp the numbers from business operations have killed it. New statements will replace the bottom lines with separate P&Ls for the company's operating business, its financing activities, investing activities and tax payments. The overall message is that it was easier to game the old statements than to just do well in business.

Isn’t it time we retire other unidimensional measures that are easier to game than they are to do well? Readers of this blog may guess that I am referring to carbon credits, green power, and green buildings.

Stanford Professor Mark Jacobson was the first to declare loudly, publicly, and with actual energy calculations that Corn Ethanol was a net energy loss. However renewable the corn was, oil was used to fertilize it, to drive tractors around it, and often the final distillation used coal. Others will find over the next year that using government subsidies to misuse a key food crop used in meat production across the US, causing the price of not only corn, but soon meat fed on corn, to rise, brings its own problems.

California has recognized this, and is creating new standards will only award carbon credits based upon full life cycle analysis of alternative automotive fuels. This will undoubtedly cause its own controversies, but it is a step in the right direction. We need to look beyond first glance at all alternative fuels.

Green power is one of those things consumers want, but with an asterisk. People want renewable power but want to know how. To some, bird deaths make wind power unacceptable. (I have a friend who installs renewable power systems who has learned to describe turbines in “fractional cat-years’ – but that is another story…). In other areas, energy systems that use scarce water resources make some renewable power technologies a poor choice. People want to be able to choose between fish runs and reliability. For automated green power markets to work, we need to commit to full verifiable ontologies, meaning computer readable meanings of green power that will express the different values that consumers want.

Green buildings are finally hot. Multiple reports in the last few weeks have suggested that at last we are seeing increased rent for green buildings. But what does this mean?

In the middle of the largest building boom in a generation at UNC, I note that we always seem to build on parking lots. We always seem to put parking lots in places where buildings are eventually going to go. Under LEEDS, you will always get extra points for building upon a brown field, whose definition includes a parking lot. So the campus always gets extra green points for each building.

OSCRE (Open Systems for Commercial Real Estate) develops standard data structures to describe all the dimensions of value in piece of property. Clearly, GREEN-ness has become a source of value. Will we be able to describe this value in some way other than a single LEEDS number?

http://online.wsj.com/article/SB117893520139500814.html

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