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

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.

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JEL Codes: Q41: Energy: Demand and Supply; Prices, Q42: Alternative Energy Sources, Q54: Climate; Natural Disasters and Their Management; Global Warming, Q58: Environmental Economics: Government Policy

Keywords: Voluntary Environmental Measures, Combined Heat and Power, Fossil Fuels

DOI: 10.5547/01956574.35.1.9

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Published in Volume 35, Number 1 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.


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