Does working from home help save energy?

Millions of people across the world have been working from home since the onset of the COVID-19 pandemic. This unprecedented scale of adoption of work from home (WFH) has helped alleviate some of the prior concerns about its feasibility and effectiveness. Both government and industry have worked to make necessary interventions and investments to enable a rapid transition to remote working. Multiple global companies have already announced an indefinite or permanent WFH for their employees. The Government of India, for the first time, formalized the concept of work from home, and relaxed guidelines to enable WFH in its draft model standing order for the services sector. There is a strong belief that WFH will be the new norm in a post-COVID world. 

How large (if any) are the energy impacts of widespread adoption of WFH in India? 

The answer to this question seems straightforward – more WFH means fewer people traveling every day to work and hence reduced transportation related energy demand. However, the actual energy reductions are highly uncertain and depend on various complex factors. WFH not just affects transportation demand, but also has potential to change home and office related energy consumption. There are also indirect effects such as increased personal travel that can undermine any energy savings from WFH; these are known as rebound effects. Both, the direct and indirect energy use changes have underlying uncertainties that make it hard to determine the long-term energy savings from WFH.

Direct Energy Impacts

Reduced office-commute is the primary source of energy savings

The primary energy savings are from reductions in office commute related energy demand. These energy savings mean less fuel is burnt, and hence fewer pollution related emissions and reduced GHG emissions as well. In India, WFH can be a particularly promising intervention as transportation related energy demand is growing very rapidly, with a large part of the increase being driven by private vehicle ownership. 

Reduced demand for and use in commercial buildings

The next largest source of potential energy savings is the reduced demand for new office buildings, and cut down in the energy use in existing office spaces. CISCO, a large IT company in the US with global offices, has a significant number of employees’ WFH and by doing so have closed over 200 of their office buildings since 2012. The degree to which WFH can downsize the need for new buildings will shape the India’s commercial energy demand trajectory given that 40% of the commercial buildings that will exist in the next 10 years are yet to be built.

Increased residential demand may offset reduced energy demand in office buildings

Even as WFH reduces demand for commercial buildings, it could potentially increase home energy use. People may buy and use more appliances such as coolers and air conditioners to be comfortable and productive while working from home, thereby potentially increasing the residential energy consumption.

Sharp increases in energy use from ICT services

Information and Communication Technologies (ICT) is an essential enabler of work from home. EY recently did a survey in India during the lockdown period and found 30% increase in internet data consumption. Increased WFH and digital content streaming will increase the energy demand from ICT services. Global forecasts of energy use in ICT show a dramatic increase where it is expected be about 21% of the total global electricity demand by 2030.

However, several sources of uncertainties exist, which will shape the WFH-related long-run energy outcomes. 

Uncertainties over Long-run Energy Patterns

Adoption rates of WFH in the workforce are uncertain

It is hard to ascertain what fraction of the workforce across the different sectors of the economy will continue to work from home after the pandemic. A full range of variations are possible from sectors switching completely back to regular office working, those choosing hybrid models and some shifting to near-complete WFH. IT industry leaders such as TCS have remarked that 75% of their workforce will work from home by 2025. Fast digitizing sectors such financial services, education, healthcare, retail may also see fair share of remote workers, whereas sectors that depend heavily on physical presence such as manufacturing will go back to regular office work. 

The scale and pace of adoption of WFH will also depend on the access to uninterrupted and equitable access to IT infrastructure and high-speed internet, and level of digital literacy in our workforce. About 600 million Indians (50% of population) have broadband internet subscriptions, and close to 30% of people have smartphones. These numbers are expected to grow substantially in the coming years, and show that there is a huge potential of WFH in years to come. But, given the huge digital divide in India, WFH may exacerbate the social inequities if not implemented in a careful and considerate manner. 

Rebound effects may undermine WFH gains

Energy savings from WFH can potentially be outweighed by actions that could increase energy consumption, these are commonly termed as rebound effects. Two commonly observed rebound effects from WFH are: 1) People choosing to live further away from place of work, thus increasing the commute on days they work from office, and 2) Increased personal and leisure travel. The scale of these rebound effects will determine the extent of energy savings from WFH.

Long-term trends in the nature of transportation may change

Widespread WFH may impact the future of transportation, and in particular, the ownership and use of private vehicles. With many people working from home, the demand for last mile deliveries for both food and non-food items may increase, as has been the case during the past year. The future changes in transportation patterns and related demand are very uncertain, and needs a more careful review.

The future of the built environment may be different

WFH has the potential to alter how urban spaces develop in India, and consequently alter the urban energy demand patterns. Higher adoption of WFH might lead people to live further away from the metros and city center. Also, as discussed, demand for new commercial buildings may go down. Environmental impacts of such alternative urbanization patterns are unclear.

WFH promises to be among the most prominent and permanent lifestyle changes that has been brought about by COVID-19. However, the inherent uncertainties around the magnitude and trend of the energy patterns that will emerge make it hard to draw conclusive claims about the potential energy savings. How widespread the adoption of WFH across the economy is, and how organizations, government and the society respond to this flexible work practice will shape long-term energy trends. A thorough assessment of pros and cons will be key to designing effective policy measures to support WFH as a socially, economically and environmentally beneficial practice.

Environmentality is a collection of ideas, perspectives, and commentary by researchers at the Initiative on Climate, Energy and Environment, Centre for Policy Research, New Delhi. Views and opinions expressed in this blog are solely those of the authors. They do not represent institutional views.

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