7.9.2 Voluntary GHG programmes and agreements

7.9.2.1 Government-initiated GHG programmes and voluntary agreements

Government-initiated GHG programmes and agreements that focus on energy-efficiency improvement, reduction of energy-related GHG emissions and reduction of non-CO₂ GHG emissions are found in many countries. Voluntary Agreements are defined as formal agreements that are essentially contracts between government and industry that include negotiated targets with time schedules and commitments on the part of all participating parties (IEA, 1997). Voluntary agreements for energy efficiency improvement and reduction of energy-related GHG emissions by industry have been implemented in industrialized countries since the early 1990s. These agreements fall into three categories: completely voluntary; voluntary with the threat of future taxes or regulation if shown to be ineffective; and voluntary, but associated with an energy or carbon tax (Price, 2005). Agreements that include explicit targets, and exert pressure on industry to meet those targets, are the most effective (UNFCCC, 2002). An essential part of voluntary agreements is government support, including the programme elements such as information-sharing, energy and GHG emissions management, financial assistance, awards and recognition, standards and target-setting (APERC, 2003; CLASP, 2005; Galitsky et al., 2004; WEC, 2004). Voluntary agreements typically cover a period of five to ten years, so that strategic energy-efficiency investments can be planned and implemented. There are also voluntary agreements covering process emissions in Australia, Bahrain, Brazil, Canada, France, Germany, Japan, the Netherlands, New Zealand, Norway, the UK and the USA (Bartos, 2001; EFCTC, 2000; US EPA, 1999).

Independent assessments find that experience with voluntary agreements has been mixed, with some of the earlier programmes, such as the French Voluntary Agreements on CO₂ Reductions and Finland’s Action Programme for Industrial Energy Conservation, appearing to have been poorly designed, failing to meet targets, or only achieving business-as-usual savings (Bossoken, 1999; Chidiak, 2000; Chidiak, 2002; Hansen and Larsen, 1999; OECD, 2002; Starzer, 2000). Recently, a number of voluntary agreement programmes have been modified and strengthened, while additional countries, including some newly industrialized and developing countries, are adopting such agreements in efforts to increase the efficiency of their industrial sectors (Price, 2005). Such strengthened programmes include the French Association des Enterprises por la Réduction de l’Effet de Serre (AERES) agreements, Finland’s Agreement on the Promotion of Energy Conservation in Industry, and the German Agreement on Climate Protection (AERES, 2005; IEA, 2004; RWI, 2004). The more successful programmes are typically those that have either an implicit threat of future taxes or regulations, or those that work in conjunction with an energy or carbon tax, such as the Dutch Long-Term Agreements, the Danish Agreement on Industrial Energy Efficiency and the UK Climate Change Agreements (see Box 13.2). Such programmes can provide energy savings beyond business-as-usual (Bjørner and Jensen, 2002; Future Energy Solutions, 2004; Future Energy Solutions, 2005) and are cost-effective (Phylipsen and Blok, 2002). The Long-Term Agreements, for example, stimulated between 27% and 44% (17 to 28 PJ/yr) of the observed energy savings, which was a 50% increase over historical autonomous energy efficiency rates in the Netherlands prior to the agreements (Kerssemeeckers, 2002; Rietbergen et al., 2002). The UK Climate Change Agreements saved 3.5 to 9.8 MtCO₂ (1.0 to 2.7 MtC) over the baseline during the first target period (2000–2002) and 5.1 to 8.9 MtCO₂ (1.4 to 2.4 MtC) during the second target period (2002–2004) depending upon whether the adjusted steel sector target is accounted for (Future Energy Solutions, 2005).

In addition to the energy and carbon savings, these agreements have important longer-term impacts (Delmas and Terlaak, 2000; Dowd et al., 2001) including:

• Changing attitudes towards and awareness of energy efficiency;
• Reducing barriers to innovation and technology adoption;
• Creating market transformations 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, and
• Facilitating cooperative arrangements that provide learning mechanisms within an industry.

The most effective agreements are those that set realistic targets, include sufficient government support, often as part of a larger environmental policy package, and include a real threat of increased government regulation or energy/GHG taxes if targets are not achieved (Bjørner and Jensen, 2002; Price, 2005) (medium agreement, much evidence).