Walls, Nelson, Safirova
Telecommuting and Environmental Policy
Credit Values
The other component of the emissions credit incentive is the value of the credit. In order to be
able to realize the benefits of telecommuting, the holder of the credit should be able to sell credits on the
market at a price higher than the incurred costs. Apparently, telecommuting is not the only source to
produce such credits. In order to get some idea how valuable telecommuting credits can be, we consider
six alternative programs. As one can imagine, credit values depend greatly on the specific conditions.
We present values based on six scenarios: (1) current and predicted NOx allowance prices in regional
cap-and-trade programs; (2) current and historical prices of DERs in various state programs; (3) a
comparison with the costs of other on-road mobile source reductions; (4) the costs of MERCs used by
firms to comply with southern California’s rideshare regulation; and (5) the price of NOx allowances in
the RECLAIM program during the California electricity crisis, which represents a likely upper bound
for the value of credits; and (6) the cost-effectiveness of other telecommuting programs23.
Given figures for the yearly emissions saving from telecommuting and the prices of credits, it is
possible to estimate the revenue that a firm would generate per year per telecommuter. Table 15
displays revenue estimates based on the range of NOx credit prices presented in the above scenarios and
an emissions reduction of 10 pounds of NOx per year per telecommuter. Revenue can be as low as 1.50
cents per year per telecommuter based on the low prices for DERs. Higher prices are found when credit
prices are based on other mobile source strategies. The range of revenue is mainly between $40 and
$100 per year per telecommuter.
Table 15. Estimated Value of Emissions Reduction Credits
per Teleworker per Year, $
|
NOx credit prices |
Revenue per teleworker per year | |||
|
Scenario |
Low price |
High price |
Low revenue |
High revenue |
|
NOx allowance prices |
1,000 ~ |
7,500 ~ |
5.00 |
35.00 |
|
DER prices_____________ |
300_______ |
1,300 |
1.50_________ |
6.50_________ |
|
Mobile source reductions |
7,200 |
33,700 |
36.00________ |
168.0_________ |
|
Rideshare programs______ |
8,000 |
19,000 |
40.00________ |
95.00________ |
|
RECLAIM__________ |
15,000 |
75.00________ | ||
|
Other telework programs |
16,250 ~ |
81.26 | ||
The potential revenue from telecommuting credits is part of the equation for evaluating whether
emissions trading will promote telework on a large scale. The other piece of information is an
understanding of how responsive telecommuting is to financial incentives. Unfortunately, there has been
little experience with direct subsidies for telecommuting, and thus, how it responds to financial
incentives is not well understood.
Discussions with business leaders participating in the ecommute Business Roundtable produced
estimates of about $500 to $1,000 per teleworker per year as an amount needed to prompt firms to
implement formal telework programs. The proposed Teleworking Advancement Act sponsored by Sen.
John Kerry of Massachusetts would give employers a tax credit of $500 for each employee participating
in an employer-sponsored telework program.24 If $500 per employee per year is indeed the sort of
number necessary to get major increases in telecommuting activity, revenue from emissions trading is
likely to fall short, even using high-end estimates for the future value of credits. However, as stated
above, the responsiveness of telecommuting behavior to financial inducements is not well understood,
23 See Nelson (2004) for more details on the 6 hypothetical scenarios.
24 Teleworking Advancement Act, S. 1856, 107th Congress, December 18, 2001.
23