The Performance of Voluntary Climate Programs: Climate Wise and 1605(b)

28 Pages Posted: 20 Aug 2008 Last revised: 18 May 2010

See all articles by William A. Pizer

William A. Pizer

Duke University

Richard D. Morgenstern

Resources for the Future

Jhih-Shyang Shih

Resources for the Future

Date Written: May 18, 2010

Abstract

Despite serving as the principal basis of U.S. climate policy over the past two decades, corporate voluntary environmental programs have been subject to quite limited evaluation. The self-selection of participants—an essential element of such initiatives—poses particular challenges to researchers because the decision to participate may not be random and, in fact, may be correlated with the outcomes. The present study is designed to overcome these problems by gauging the environmental effectiveness of two early voluntary climate change programs with established track records, the U.S. Environmental Protection Agency’s Climate Wise program and the U.S. Department of Energy’s Voluntary Reporting of Greenhouse Gases Program, or 1605(b). Both programs provide quite flexible criteria for firms to participate. 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, we find quite modest effects: the reductions in fuel and electricity expenditures from Climate Wise and 1605(b) are no more than 10 percent and probably less than 5 percent. Virtually no evidence suggests a statistically significant effect of either Climate Wise or 1605(b) on fuel costs. Some evidence indicates that participation in Climate Wise led to a slight (3–5 percent) increase in electricity costs that vanished after two years. Stronger evidence suggests that participation in 1605(b) led to a slight (4–8 percent) decrease in electricity costs that persisted for at least three years.

Keywords: voluntary, regulation, energy, climate change

JEL Classification: Q2, Q4

Suggested Citation

Pizer, William A. and Morgenstern, Richard D. and Shih, Jhih-Shyang, The Performance of Voluntary Climate Programs: Climate Wise and 1605(b) (May 18, 2010). RFF Discussion Paper No. 08-13-REV. Available at SSRN: https://ssrn.com/abstract=1213082

William A. Pizer

Duke University ( email )

100 Fuqua Drive
Durham, NC 27708-0204
United States

Richard D. Morgenstern (Contact Author)

Resources for the Future ( email )

1616 P Street, NW
Washington, DC 20036
United States

Jhih-Shyang Shih

Resources for the Future ( email )

1616 P Street, NW
Washington, DC 20036
United States
202-328-5028 (Phone)

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