Voluntary Programs to Encourage Diffusion: The Case of the Combined Heat-and-Power Partnership

Abstract

In the last decade, voluntary environmental programs have increased considerably in number and scope. A novel use of these programs is to diffuse new technology in industry as means to improving their environmental outcomes. This paper tests whether the U.S. Environmental Protection Agency’s Combined Heat-and-Power (CHP) Partnership has encouraged the diffusion of CHP systems. Using a nearest neighbor matching estimator with electricity plant data and conditional logit estimation for electricity and manufacturing plants in the U.S., we find evidence that the program has helped CHP systems spread, controlling for the selection of firms into the partnership. On average partner firms have a 3% higher probability of installing CHP.