Lawrence Berkeley National Laboratory

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 is heavily dependent on the country's abundant, yet polluting, coal resources. While tremendous energy conservation and environmental protection achievements were realized in the industrial sector in the past, there remains a great gulf between the China's level of energy efficiency and that of the advanced countries of the world. Internationally, significant energy efficiency improvement in the industrial sector has been realized in a number of countries using an innovative policy mechanism called Voluntary Agreements. This paper describes international experience with Voluntary Agreements in the industrial sector as well as the development of a pilot program to test the use of such agreements with two steel mills in Shandong Province, China.