3-in-1: Improving Energy Efficiency, Local Air Quality and Climate Protection

Abstract:

The Chinese national government has put energy efficiency and pollution control at the heart of its 11th five-year plan (2005-2010). In an economy, which relies on coal for 70% of its energy consumption, industrial energy efficiency is recognized for its co-benefits in reducing local air pollutants, as well as CO2 emissions through reduced energy demand per unit output. However, implementation of national policies is notoriously poor in China. To overcome this problem an ongoing EU-funded project is testing voluntary agreements as new policy approach in China. In the pilot project voluntary agreements were signed between local Environmental Protection Bureaus and 14 mostly state-owned companies from different energy-intensive sectors in Nanjing, Xi’an and Kelamayi. In Nanjing, for instance, agreed targets are in the range of a 3-5% reduction in energy intensity, as well as air pollutants (mainly SO2 and particulates) by 2009 over a 2007 baseline. In one case even a 90% reduction of SO2 emissions is planned through desulfurization in a power plant. The pilot agreements are informed by Dutch experiences with long-term agreements on energy efficiency (LTA / 1989-1999) as European best practice, but have been significantly adjusted to Chinese circumstances. This means that much emphasis was put on process management applying a cooperative approach throughout. The combination of ambitious but realistic target setting of industry in cooperation with local authorities and the assistance of external experts developing concrete measures to achieve the targets marked a large difference to conventional top-down policy-making. Furthermore, Environmental Protection Bureaus offered prioritized approval of environmental funds for participating companies, as well as priority in awarding the prestigious Environmental Friendly Company status to incentivize participation of industry. By lifting industry on a more equal power level with government authorities, voluntary agreements showed to be an effective policy instrument to overcome traditional institutional constraints of implementing environmental policies on the local level in China.