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

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.