The Voluntary Approach to GHG Reduction: A Case Study of BC Hydro

Voluntary programs for environmental protection are increasingly popular with governments, but it is difficult to assess the extent to which such programs change the behaviour of firms. We conduct a hindsight decision analysis of the electricity supply strategy that BC Hydro chose in the late 1990s while it participated in a Canadian government program for voluntary greenhouse gas (GHG) reduction. The electric utility chose an electricity generation strategy for 2000 - 20 I0 that under its own input assumptions provides negligible financial advantage relative to a strategy that dramatically lowers GHG emissions. If BC Hydro's decision is indicative of other industries during the 1990s, this may explain in part the continued increase in Canadian industrial GHG emissions in the decade since the launching of the voluntary program, and Canada's inability to achieve its 1992 target of reducing emissions back to 1990 levels by 2000.