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The performance of industrial sector voluntary climate programs: Climate Wise and 1605(b)

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  • Pizer, William A.
  • Morgenstern, Richard
  • Shih, Jhih-Shyang

Abstract

Corporate voluntary climate programs have had limited evaluation. The self-selection of participants—an essential element of such initiatives—poses challenges to researchers because the decision to participate may not be random and may be correlated with outcomes. This study aims to gage the environmental effectiveness of the industrial sector elements of two early voluntary climate change programs with established track records, the U.S. Environmental Protection Agency's Climate Wise and the U.S. Department of Energy's Voluntary Reporting of Greenhouse Gases Program (1605(b)). Particular attention is paid to the participation decision and how various assumptions affect estimates of program outcomes using propensity score matching methods applied to plant-level Census data. Overall, the effects are modest: reductions in fuel and electricity expenditures are no more than 10 percent and probably less than 5 percent. Virtually no evidence suggests either program has a statistically significant effect on fuel costs. Some evidence indicates that participation in Climate Wise led to a 3–5 percent increase in electricity costs that vanished after two years. Stronger evidence suggests that participation in 1605(b) led to a 4–8 percent decrease in electricity costs that persisted for at least three years. These results suggest that while voluntary programs can play some role in addressing climate change, they are unlikely to bring about the kinds of steep reductions called for in the current debate.

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  • Pizer, William A. & Morgenstern, Richard & Shih, Jhih-Shyang, 2011. "The performance of industrial sector voluntary climate programs: Climate Wise and 1605(b)," Energy Policy, Elsevier, vol. 39(12), pages 7907-7916.
  • Handle: RePEc:eee:enepol:v:39:y:2011:i:12:p:7907-7916
    DOI: 10.1016/j.enpol.2011.09.040
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    4. Donatella Baiardi & Maria Gaia Soana, 2021. "Macroeconomic and microeconomic environmental and energy policies: are they effective for improving environmental performance of listed companies?," Working Paper series 21-17, Rimini Centre for Economic Analysis.
    5. Naonari Yajima & Toshi H. Arimura, 2019. "Effectiveness of Multiple-Policy Instruments: Evidence from the Greenhouse Gas Reduction Policy in Japan," Working Papers 1916, Waseda University, Faculty of Political Science and Economics.
    6. Daniel Matisoff, 2012. "Privatizing Climate Change Policy: Is there a Public Benefit?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 53(3), pages 409-433, November.
    7. Hintermann, Beat & Zarkovic, Maja, 2020. "A carbon horse race: Abatement subsidies vs. permit trading in Switzerland," Working papers 2020/05, Faculty of Business and Economics - University of Basel.
    8. Xiang Bi & Madhu Khanna, 2017. "Inducing pollution prevention adoption: effectiveness of the 33/50 voluntary environmental program," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 60(12), pages 2234-2254, December.
    9. Yang Stephanie Liu & Xiaoyan Zhou & Jessica Yang & Andreas Hoepner, 2016. "Corporate Carbon Emission and Financial Performance: Does Carbon Disclosure Mediate the Relationship in the UK?," ICMA Centre Discussion Papers in Finance icma-dp2016-03, Henley Business School, University of Reading.
    10. Andreas Ferrara and Ian Lange, 2014. "Voluntary Programs to Encourage Diffusion: The Case of the Combined Heat-and-Power Partnership," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1).
    11. Matisoff, Daniel C., 2013. "Different rays of sunlight: Understanding information disclosure and carbon transparency," Energy Policy, Elsevier, vol. 55(C), pages 579-592.
    12. Yajima, Naonari & Arimura, Toshi H., 2022. "Promoting energy efficiency in Japanese manufacturing industry through energy audits: Role of information provision, disclosure, target setting, inspection, reward, and organizational structure," Energy Economics, Elsevier, vol. 114(C).

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