Case Study Findings
What follows are brief descriptions of the different programs and highlights of the key findings and observations by the case study authors.
The 33/50 Program
EPA's first voluntary program, 33/50, was established in 1991 amid rising interest in finding a quick, cost-effective, relatively noncontroversial approach to address concerns about toxic releases. Focusing on 17 high-priority chemicals reported to the Toxic Release Inventory, the program emphasized pollution prevention as an environmental management technique. The 33/50 name derives from the program's goal of a 33 percent reduction by 1992 and 50 percent reduction by 1995 below a 1988 baseline.
Although some of the reductions clearly were driven by mandatory provisions of the Montreal Protocol and the 1990 Clean Air Act Amendments, covered releases declined considerably between 1988 and 1995, well in excess of the established goals. Several sophisticated studies have linked participation in the 33/50 program to such declines. However, one recent study, excluding two chemicals regulated by the Montreal Protocol, found negative results ? 33/50 participation led to higher emissions. While precise conclusions are difficult, this most recent study does raise questions about program performance.
Firms participated in the program for several reasons: they were motivated to cut their toxic releases out of a desire to differentiate themselves from rivals, garner positive publicity, and respond to perceived regulatory threats. Some companies simply welcomed formal recognition for efforts already under way.
Japan's Keidanren Voluntary
Action Plan on the Environment
Japan's Keidanren Voluntary Action Plan on the Environment was initiated by industry in 1997, just prior to the negotiation of the Kyoto Protocol. It encompasses large enterprises drawn from 58 business associations, including the industrial, electricity, construction, commercial, and transport sectors. The plan initially was embraced by industry as a means of demonstrating cooperation with the government on greenhouse gas emissions while avoiding mandatory requirements. At present, the nonbinding targets are widely recognized as commitments with which industries are to comply.
Three factors that seem to be motivating industry to comply with the plan are the cooperative relationship between the Keidanren and companies; threats of mandatory policies, such as a tax or cap-and-trade schemes; and awareness of private companies' social responsibility. Some or all of these notions may be particular to the relationship that exists in Japan between the government and business.
In terms of absolute emissions, Keidanren members are committed to stabilizing their collective greenhouse gas emissions at 1990 levels by 2010?a goal for which they are now on track. The key question -confounded by an economic slowdown during the early years of the program- is whether this is significantly different from business as usual.
UK Climate Change Agreements
The United Kingdom was an early and strong supporter of the Kyoto Protocol and has adopted a proactive position on climate change, both domestically and internationally. In 2001, the UK government established voluntary, quantified, climate change agreements (CCAs) with 48 sectoral associations in the industrial, commercial, and public sectors as part of a complex policy mix involving an energy tax, a climate change levy, and an emissions trading system.
When first taking on a CCA, firms could choose either intensity-based or fixed targets (most chose the former) expressed in terms of either energy use or carbon emissions. Overall, CCAs cover about 12,000 individual sites?virtually all those eligible?representing almost 44 percent of total UK industry emissions. Compliance could occur via reductions in energy use or by the purchase of emissions rights in the recently established pilot emissions trading program.
Aggregate emissions during the first two years of implementation were well below the targets, regardless of how they were set. Although a government-sponsored study found widespread compliance, given the low observed credit prices and relatively small number of transactions, CCAs appear only modestly effective in encouraging reductions beyond business as usual.
Denmark's Voluntary Agreements on Energy Efficiency
Beginning in 1996, the Danish Energy Agency established voluntary agreements on energy efficiency as part of a set of revenue-neutral CO2 and other green taxes imposed on the industrial, trade, and service sectors. Lower rates were applied to energy-intensive firms and those most vulnerable to foreign competition. Virtually 100 percent rebates were given to energy intensive firms if they entered into a voluntary agreement on energy efficiency with the energy agency. The voluntary agreements thus were considered complements to the tax scheme. If companies failed to follow through with their agreement, there was an explicit sanction: they had to repay the rebate in full.
Although the voluntary agreements did not involve quantitative targets, rebates were initially conditioned on the completion of verified energy audits and the implementation within three years of all measures estimated to have a payback that exceeded given criteria. Measures to be undertaken included energy-savings projects, special investigations, and energymanagement systems. Analyses of the effects of these agreements found reductions of between 2 and 8 percent, with the upper end somewhat suspect because of the small number of firms in that study. In addition, analysts found that most of the savings were realized in early years, leaving less opportunity in the future.
The German Cement Industry
In 1995, the Federation of German Industries, a group of 16 industrial associations representing major sectors of German industry, voluntarily issued the ?Declaration of German Industry on Global Warming Prevention? (GGWP), which called for voluntary reductions in fuel consumption of up to 20 percent below 1987 levels by the year 2005. Initial industry commitments did not involve any government-provided incentives nor were they accompanied by threats of future regulation. By 2000, five years in advance of the target date, most of the commitments already were fulfilled, an indication that the targets were not very ambitious.
Subsequently, as the result of pressure by the government and the desire of industry to avoid mandatory requirements, the GGWP goals were made more stringent. For purposes of evaluating the effectiveness of the GGWP declaration, the cement industry was the only one among the 19 industries now in the German Federation for which sufficient historical data were available to compare the CO2 emissions of the industry following development of the GGWP to emissions in prior years. The authors calculate that the annual fuel efficiency improvements achieved when the voluntary commitment was in effect were about the same as the average over the prior two decades. Thus, they conclude that the industry has not gone much beyond good intention.
Climate Wise is a voluntary EPA program designed to encourage the reduction of CO2 and other greenhouse gases in the nonutility industrial sector. Originally established in 1993, it remained in operation until 1999 - 2000, when it was renamed and placed under the agency's Energy Star umbrella. The requirements were that a participating firm develop baseline emissions estimates, self-designate forward looking emissions reduction actions, and make periodic progress reports.
EPA provided a checklist of major actions, such as specific boiler modifications and waste-heat recovery systems, and firms were strongly encouraged to select at least some of their proposed actions from this list. EPA also offered several kinds of technical assistance, including a guide to industrial energy efficiency, various government publications on energy efficiency, and free phone consultation with government and private-sector energy experts.
When comparing program participants with equivalent, nonparticipating firms, the principal result is that Climate Wise appears to have had little to no effect on fuel use, while slightly increasing demand for electricity, a seemingly counterintuitive result. There are several possible reasons why this happened. For example, firms may have chosen to increase electricity use to reduce direct CO2 emissions. In addition, although the focus of the program was on energy efficiency and the reduction of CO2 emissions, a few firms proposed non-energy reductions, suggesting the fuel focus may be missing part of the story. All of these results become indistinguishable from the absence of any effect after two years, suggesting any program consequence is temporary.
Residential Demand-Side Management Programs in California
Beginning in the 1970s, at the instigation of the regulatory authorities, California electric and gas utilities sponsored programs to promote the residential adoption of energy-efficient technologies and energy-conserving behavioral practices.
At least two of the three programs examined found energy savings on the order of several percent that would not have occurred in their absence. This magnitude is consistent with previous findings of the savings accruing from demand-side management programs such as these that do not include financial incentives.
Savings were reported to be driven principally by changes in the behavior of households - such as improving maintenance of appliances or discontinuing use of secondary refrigerators - rather than by the installation of new equipment. While vaguely aware of the energy benefits of the recommended actions, customers tended not to act on this knowledge until it was suggested by an expert. This implies that a key barrier to action by homeowners may be information from an authoritative source.