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Voluntary Agreements: Definition

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Voluntary Agreements: Definition

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  1. Voluntary Agreements for Energy Efficiency and Emissions Reduction in Industry:A Survey of International Experience and Initial Results from a Pilot Project in Shandong Province, ChinaLynn Price Scientist, Lawrence Berkeley National Laboratory, Berkeley, California, USAWang XuejunProfessor, College of Environmental Sciences, Peking University, Beijing, PR China

  2. Voluntary Agreements: Definition Agreement between an industrial enterprise and government that establishes a mutually agreed upon target for energy-savings over a long-term period given specified supporting policies. • Signed, negotiated agreement with specific targets • Long-term outlook (typically 5-10 years) • Government supporting policies assist companies in reaching targets • Includes an implementation plan for reaching the targets • Includes annual monitoring of progress toward the targets

  3. Voluntary Agreements: Philosophy Command-and-control approach is out-dated • Establishes an antagonistic relationship between government and industry • Government dictates specific actions that may be difficult for some industries Voluntary agreement approach is innovative • Establishes a positive working relationship between government and industry • Work toward mutual goals such as energy savings or pollution prevention • Reduces costs, increases flexibility

  4. Voluntary Agreements: Experience to Date • 1990s: 12 initial VA programs in Australia, Canada, Denmark, Finland, France, Germany, Ireland, Japan, Netherlands, New Zealand, Republic of Korea, Sweden • 2000s: 7 strengthened VA programs in Australia, Canada, France, Germany, Ireland, Netherlands, New Zealand • 2000s: 5 new VA programs in Belgium, Chinese Taipei, Switzerland, U.K., U.S. • Of these, most of the 1990s programs were primarily voluntary (exceptions are Netherlands and Denmark), while many of the 2000s programs ensure participation through implied or explicit threat of future regulation and/or association with energy or carbon taxes • Emissions trading is a component of 5 programs: Canada, France, New Zealand, Switzerland, and UK

  5. Voluntary Agreements: Netherlands Experience 22.3% savings over 10-year period 2x business-as-usual 29 sectors signed Agreements Many met or exceeded the target

  6. Effectiveness of Voluntary Agreement Programs Review of 7 VA programs • 50% of observed energy-efficiency improvement or emissions reductions was due to the VAs • Other effects include: • changes of attitudes and awareness of managerial and technical staff regarding managing energy and emissions relative to an established target • addressing barriers to technology adoption and innovation • creating market transformation to establish greater potential for sustainable energy-efficiency investments • promoting positive dynamic interactions between different actors involved in technology research and development, deployment, and market development • facilitating cooperative arrangements that provide learning mechanisms within an industry • improved understanding of non-energy benefits • increased number of trained specialists • reduced transaction costs

  7. The Industrial Sector is Extremely Important in China • The industrial sector represents nearly 75% of all primary energy consumption in China • There is strong growth in industrial primary energy use • China is the world’s largest producer of cement, steel, and ammonia and in top-10 for production of aluminum, paper, and petroleum • Industrial production is necessary for China’s infrastructure development: roads, buildings, equipment • High levels of industrial production and energy use can have serious environmental consequences including air pollution, water pollution, industrial waste, and greenhouse gas emissions contributing to global warming

  8. Energy Efficiency Voluntary Agreements Pilot Project in China • 1999: Energy Foundation project to investigate use of new industrial sector energy efficiency policy mechanism began • 2000/2001: Chinese experts evaluate international experience and choose voluntary agreements for pilot project • 2001/2002: Chinese experts choose steel sector and Shandong Province for pilot project • 2002/2003: Voluntary agreements designed and negotiated between Shandong Province Economic and Trade Commission and two steel mills (Laigang and Jigang) • Voluntary agreements between Shandong Economic and Trade Commission and Laigang and Jigang were signed on April 24, 2003

  9. Assessment of Enterprise Energy-Efficiency Potential

  10. Assessment of Enterprise Energy-Efficiency Potential

  11. Supporting Policies Regulatory relief: annual emissions measurements which enterprises pay for are waived due to VA reporting Government provided assistance to enterprises in obtaining loans for energy-efficient technologies, including providing the loan guarantee Positive media publicity, government “seal of approval” Provided services of government-backed technical experts free of charge to the enterprises

  12. Potential Energy Savings: Shandong Province Pilot and China Steel Sector

  13. 1st Year Evaluation • Both steel mills implemented strong energy management programs • Established monitoring and reporting protocols • Extensive positive publicity – television, newspapers, magazines, journals • Both steel mills met their interim targets in terms of energy savings, CO2 emissions reductions, and SO2 emissions reductions • Government and industry learned how new policy mechanism works – tailored it to “Chinese conditions” • Additional supporting policies being investigated: recycling of pollution levy for purchase of energy-efficient equipment

  14. Other Voluntary Agreement Projects in China • UNDP/GEF End-Use Energy Efficiency Program (EUEEP): iron and steel, chemical and cement sectors • United Nations Industrial Development Organization (UNIDO), Energy Conservation and Greenhouse Gas Emissions Reduction in Chinese Township and Village Enterprises: cement, brick, metal casting, and coking sectors • Asia Pro Eco, Europe Aid Programme: Feasibility Study on Demonstration of Voluntary Approaches for Industrial Environmental Management in Nanjing, China • 15 Enterprises in Qingdao City sign voluntary energy agreements: Tsingdao Haier Group, Huangdao Power Plant, Tsingdao Huanghai Rubber Group, Ltd., Jimo Cogeneration Power Plant, Tsingdao Haijing Chemical Group, Ltd., Tsingdao Kaiyuan Group, Ltd., Tsingdao Cigarette Factory, Tsingdao Soda Company, Ltd., Tsingdao Lianchuang Company, Ltd., Tsingdao Petro-chemical Plant, Tsingdao Beer Plant, Tsingdao Cogeneration Company, Ltd., Tsingdao Taineng Gas Company, Ltd., Tsingdao Iron and Steel Company, Ltd., Tsingdao Power Plant

  15. For More Information… LBNL China Group website: http://eetd.lbl.gov/EA/partnership/China/index.html LBNL Industrial website: http://eetd.lbl.gov/ea/IEUA/IEUA.html Lynn Price LKPrice@lbl.gov (510) 486-6519

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