Designing Energy Conservation Voluntary Agreements for the Industrial Sector in China: Experience from a Pilot Project with Two Steel Mills in Shandong Province

China faces a significant challenge in the years ahead to continue to provide essential materials and products for a rapidly growing economy while addressing pressing environmental concerns. China's industrial sector consumes about 70% of the nation's total energy each year and is heavily dependent on the country's abundant, yet polluting, coal resources. Industrial production locally pollutes the air with emissions of criteria pollutants, uses scarce water and oil resources, emits greenhouse gases contributing to climate change, and produces wastes. Fostering innovative approaches that are tailored to China's emerging market-based political economy to reduce the use of polluting energy resources and to diminish pollution from industrial production is one of the most important challenges facing the nation today. The use of Voluntary Agreements as a policy for increasing energy-efficiency in industry, which has been a popular approach in many industrialized countries since the early 1990s, is being tested for use in China through a pilot project with two steel mills in Shandong Province. The pilot project was developed through international collaboration with experts in China, the Netherlands, and the U.S. Designing the pilot project involved development of approaches for energy-efficiency potential assessments for the steel mills, target-setting to establish the Voluntary Agreement energy-efficiency goals, preparing energy-efficiency plans for implementation of energy-saving technologies and measures, and monitoring and evaluating the project's energy savings.