Voluntary Energy Efficiency Agreements in China: History, Impact, and Future

The first Voluntary Energy Efficiency Agreements in China – modeled after voluntary or negotiated agreements inEurope – were initiated through a pilot program with two steel mills in Shandong Province in 2002. Following thepilot program, the Chinese government initiated the Top-1000 Energy-Consuming Enterprises Program in 2006, inwhich the 1000 largest energy-using enterprises were assigned mandatory 2010 energy-saving targets. Alsofollowing the pilot program, nearly 300 voluntary energy efficiency agreements have been signed in China. Many ofthese agreements are between city-level governments and local enterprises, but agreements between national-levelgovernment agencies and large enterprises are also beginning to be seen. These agreements are voluntary andtypically proposed by the enterprises, not mandatorily imposed by the government as is the case with the Top-1000program. They are used to engage enterprises that are either not included in the mandatory agreements or that wantto commit to energy savings beyond their mandatory targets. The China Energy Conservation Association has madea concerted effort to disseminate information regarding the use of such agreements throughout China in order toengage these enterprises. This paper will describe the history of the adoption of this policy mechanism in China andprovide information on a number of agreements that have been signed, including their actual or expected energysavings. The paper will also discuss the prospects for continued adoption of voluntary energy efficiency agreementsunder China's 12th Five Year Plan, which covers the period 2011-2015, making recommendations for improvingthe use of this policy mechanism in China.