UNCLASSIFIED us Department of State Case No F-2012-40055 Doc No 005574600 Date 03 24 2015 - IN W7 i353 United States gepartment of State 1 Bureau of Ocean and International Environmental and Scientific Affair War 51 ton D C 20520 dag 34 3 'i'c TCt w h I need can wLa - Gu i a Iu- fb lq61mtaut-5 r44 '94 I nit-M l 03 win-L I '9 W r A u Rama-Wu r 1 93 LJS- weft July 15 1997 REVIEW AUTHORITY BEST COPY Alan Flanigan Senior - AVAILABLE Reviewer TO Distribution FROM OBS - Rafe Pl merance SUBJECT Principals Meeting Developing Country Paper Attached please' nd a dra paper on developing countries for consideration at the principals meeting this Friday We have scheduled a meeting on Wednesday July 16 at the State Department 'orn noon to 1 00 pm in Room 7835 to discuss it For entry into the building please contact Ms Debra Clark-Ware on 202-647-2232 Ifyou are unable to attend the meeting we ask that you send us your cements no later than COB tomorrow July 16 1997 The fax number is 202-647-0217 Ifyou have any questions about the paper please contact Dr Jonathan Pershing on 202 647- Thank you for your attention to this matter a - US Department of State Case No DOC No 005574600 Date 03 24 2015 UNCLASSIFIED us Department of State Case No 12201240055 Doc No 005574600 Date 03 24 2015 UNCLASSIFIED U S Department of State Case No Doc Ne 005574600 Date 03 24 2015 DISTRIBUTION 1 Organization Name Fax 3' Phone State Eileen Claxissen 647-0217 647 1554 Rafe Pomerance 647-2232 Commerce Jeffrey Hmaker 482-4636 482-6055 OSTP Rosina Bierbaum 455-5025 456-6077 CBA Alicia Murmell 395-6958 395-5036 Jeff Frankel 395-6947 395-5046 NBC Mark Mazur 395-6809 395-5147 Treasury Robert Gillingham 622-2633 622-2220 Jusciee Lois Schiffer 514-0557 514-2701 Jim Simon Interior Brooks Yeager 208 4561 208-6182 Brooke Shearer 208-1873 208-6291 NCAA Terry Garcia 482-6313 482-3567 OMB TJ Glauthier 395 4639 395-4561 - Eosh ottbaum 395-1005 395-3 060 USTR Jennifer Haverkamp 395 4579 395-7320 5 USDA Charlie Rawls 720-5437 720-6158 DOE Dan Reicher 586 0148 586-9500 Mark Chupka 586-0861 58 6-5523 Joe Romm 586-9260 5 86-9220 EPA Maxy Nichols 260-5155 260-7400 David Donigcr David Gardiner 260-0275 260 4332 DOT Frank Kruesi 366-7127 366-4544 Pete Jordan 45 6-9500 456-9513 PCSD Marty Spitzer 408-6839 408 5296 Christine Ervin CCTF Dirk'Forrister 343 1 162 343-1060 Steve Seidel USALD Sally Shelton-Colby 647 3028 647-1827 DaVid Hales 703-875-4639 703-875 4205 DOL Ed Montogmery 21 9-4902 219-5 108 DOD Sherri Goodman - 703 693-7011 703-695-6639 UNCLASSIFIED us Department of State Case No Doc No 005574505 Date 03 24 2015 IN REVIEW AUTHORITY Alan Flanigan Senior Reviewer DEVELOPING COUNTRY PAPER DRAFT 7 15 97 Greenhouse gases are emitted by all countries in varying quantities The United States is the world s largest emitter with approximately 22 percent of the global total Collectively the developed countries of the world including the countries with economies in transition as RussiaJNIS and Eastern Europe account for more than 60 percent of the global total- However developing country emissions are growing much more rapidly than those in the industrialized world within the next 30 years developing country emissions will comprise more than half of the world s aggregate emissions although they will account for 80 percent of global population While compelling in shggesting the need for global action these statistics obscure a critical point per capita emission levels varywidely as do national totals and developing countries have the lowest levels Currently global average emissions of C02 are approximately 4 tons per person this contrasts with emissions of nearly 20 tons per person in the United States 16 tons per' person in the OECD and less than two tons per person in most of the developing world Furthermore the contribution to global concentrations of greenhouse gases is the result of cumulative emissions over time When considered from this vantage North America 1s responsible for 35 percent of the increase in ambient concentrations of C02 since 1800 Western Europe 26 percent the USSRIFSU and Eastern Europe nearly 20 percent the combined total of the developing countries is only about 15 percent see gures charts Recognizing-both the unequal contribution to global emissions and the unequal capacity - to develop and implement policies and measures to reduce emissions the United Nations Framework Convention on Climate Change F established differentiated levels of commitments for develoPed and developing centuries It called upon developed countries to take the lead in addressing the climate change problem and to aim to return emissions to 1990 levels it provided no similar aim for the developing country Parties Similarly in agreeing on the mandate for negotiations of a next step the Parties recognized that developed countries had failed to lead over the three years after the was signed in Rio in 1992 a period during which developed country emissions continued to rise The next step therefore focused on a more concerted effort by developed countries toward reducing the rising trend in atrnospheric concentrations Thus while calling on developed countries to set quanti ed emissions limitation and reductions objectives and to elaborate policies and measures to reduce emissions the mandate speci cally stated that there would be no new commitments for developing countries and that they would instead continue to advance the implementation of their existing-- commitments U S Protocol Proposal Recognizing the need for a solution that involves all countries yet agreeing that the Berlin Mandate appropriately acknowledges valid differences between Partiesrthe U 8- draft protocol proposal sought to develop a set of appropriate elements for a developing country strategy It included three elements 1 an elaboration of the existing commitments de ning what would he meant by continuing to advance the implementation of existing commitments 2 establishing a new category Annex B of commitments for the most advanced developing countries providing a halfway house between a limited obligation and the more extensive Obligations agreed by the OECD members and 3 calling for the negotiation of anew UNCLASSIFIED US Department of State Case No DOC No 005574605 Date 03 24 2015 UNCLASSIFIED U S Department of State Case No Doc No 005574605 Date 03 24 2015 DRAFT 7 15 97 - - 2 agreement by 2005 which would include legally binding emissions targets for all countries including developing countries the evolution concept The rst element contained three separate components includinga requirement to annually inventory and report on emissions and actions taken to reduce emissions 2 taking no regrets actions actions which would bene t the climate system - but which might be taken for other economic or environmental reasons and 3 calling foi an 1n depth reuiew prbcess so that the actions taken by developing countries could be assessed by a neutral grbu p and examined for adequacy While the rst of the U S elements is considered within the ambit of the Berlin Mandate by nearly all Parties to the to date most other countries have argued that the other two Annex and evolution are beyond its scope The has been urged to drop its proposal for a new annex with many countries suggesting that the annex concept be revisited in light of the revision to the existing groupings in the Convention scheduled for 1998 We have also been urged to drop our proposal for evolution in favor of a separate agreement at some future date Incentives for Developing Country Participation While a combination of peer pressure and self-interest may guide the willingness of developing countries to commit themselves to legally binding obligations to reduce emissions a series of incentives may facilitate this choice To this end the Administration has established a number of elements in its developing country approach both within the draft protocol proposal but moresigni cantly outside the agreement These include a strong bilateral assistance program an ongoing to providing a contribution to the Global Environment Facility designed to support the incremental global bene t of development projects calls for reorienting the loan guidelines for the international lending institutions and the establishment of a proposal for joint implementation which would encourage the private sector to undertake projects in developing countries to reduce emissions and claim credit for these reductions against a domestic obligation The rst of these announced in the President s New York statement at the UN Special Session on the Environment establishes a $1 billion ve-year package to help developing countries plot a climate friendly path to development The primary component of this initiative will be a five year minimum of at least $150 million per year in bilateral assistance for climate related programs and the potential to use development credits dedicated to climate friendly investment projects- The initiative will also include a $25 million 5-year interagency program to assist developing countries to meet the terms of the A signi cant focus in this initiative will be on using credit tools to induce greater U S private sector involvement in transferring climate friendly technologies Our nancial contribution to the GEF was one of the original incentives to developing - countries to support the - and to take action to mitigate climate change However while the U S had pledged a contribution of $430 million to the GEF over a three year period Congressional funding has lagged considerably FY96 contributions were at $35 million rather than $110 million and FY97 prospects are just about as bleak To date we have no proposals within the Administration to cover our previous pledged amounts In combination with the steadily declining percentage of the U S budget that is directed toward development assistance the reduced U S contribution to the GEF will make any subsequent calls for developing country action much more dif cult to sustain UNCLASSIFIED U S Department of State case No Doc No 005574605 Date 03 24 2015 UNCLASSIFIED U S Department of State Case No F-2012-40055 DOC No C05574605 Date 03 24 2015 DRAFT 7 15 97 3 it One of the most signi cant elements of the U S approach to encourage developing country participation is joint implementation II Similar to the concept of emissions trading It allows countries to offset emissions at home through projects undertaken elsewhere However unlike the situation in emissions trading under a II regime projects could be undertaken in developing countries - countries without legally binding emissions budgets The analytic work performed to date suggests that allowing 11 could reduce costs within the U S substantially Emissions trading could reduce costs by as much as 40 percent l I could reduce Zio'sts by another 50% - or by as much as 80 percent below costs in systems which did not allow trading or J1 Developing countries see enormous bene ts as well in the form of technology transfer and private sector investment flows In spite of the potential bene ts signi cant opposition remains develoPing countries are concerned at the loss of control over domestic emissions environmentalists are concerned that it may be impossible to measure project based emission reductions and some in the private sector and Congress have suggested that II will result in signi cant transfers of wealth overseas The International Recgmion Views on DevelopigCounhies by Negotiating Blocs Other countries have had a varied reaction to the U S proposals on developing country engagement in the process The following blocs are active in the negotiations and provide a sense of the current dynamics in the process European Union While calling for an extremely aggressive commitment from developed countries 15 percent reduction in emissions below 1990 levels by 2010 the EU has proposed only very soft commitments on developing countries- They have supported U S proposals for elaborating commitments in the Article 4 1 and have proposed that Mexico and Korea commit to the same obligations as those in the OECD not too far removed in substance from k the U S Annex B but are not prepared to accept the U S language on Evolution adOpted as part of the Kyoto agreement They do not support II with developing countries OECD Members principally Japan Canada Australia This group of countries broadly supports including developing country obligations under the Kyoto Agreement Australia and Canada are the most vocal in support at action while Japan as host of the December session is concerned that an aggressive approach would potentially derail the negotiations As nearly all countries in this bloc have extensive-competitive trade outside of the OECD they are more aggressive in demanding developing country action For comparative purposes nearly 90 percent of EU trade is within the OECD while for Australia it is only about 50 percent With the exception of Japan this group supports JI Big Developing Countries China India and Brazil These three countries are the primary drivers of the developing country position and some of the world s largest emitters China is second after the U S and India is number six These countries have taken a standard north- south line arguing that global warming has been caused by the developed world and calling upon the industrialized countries to pay for the clean up They claim that when developing countries have incomes and per capita emissions equal- to those of the North they will then participate in the clean-up effort In spite of their often strident public rhetoric these countries particularly China and Brazil have shown a willingness to constructively engage on this issue on a bilateral basis- They have active domestic climate change mitigation efforts and have privately indicated a support for many elements of the U S preposal However they have all opposed JI - OPEC Well organized in the climate negotiations the OPEC countries have been led by Saudi Arabia and Nigeria and advocate positions designed to slow or block the negotiations UNCLASSIFIED U S Department of State Doc No 005574605 Date 03 24 2015 UNCLASSIFIED us Department of State Case No Doc No 005574605 Date 03 24 2015 7 15 97 4 These countries have strongly urged 1 that developing countries should not have to tict now a - recognizing that this is antithetic to the US view and will therefore help derail negotiations and 2 that industrialized countries should compensate developing countries that might be affected by any action taken in industrialized countries to reduce emissions principally noting that reduction in oil revenues should be compensated This group has also created procedural barriers to reaching agreement including blocking the adoptibn bf rules of- procedure this last tactic may require any agreement be by consensus in Ky'oto and allow OPEC countriesto block at the end Small Island States A group of 37 small island states have banded together to create an alliance AOSIS that seeks to balance in uence Largely composed of member countries with low lying territory which will be gradually inundated by climate associated sea level rise these countries have pushed an aggressive next steps to combat the problem calling for a 20 percent reduction in indusnialized country emissions below 1990 levels by the year 2005 Unfortunately despite their convictions they are often quelled by the big developing countries and by OPEC 30 that their moral righteousness is often muted in public debates Thus in spite of a recognition - that to solve the problem all countries must participate the A0818 countries have been reluctant to support U calls for developing country action their proposal omits any mention of any developing country commitments to be undertaken as part of the Kyoto agreement and they oppose H NISIFSU While active in some elements of the negotiations emissions trading this group has been relatively silent on the issue of developing countries Russia has a proposal similar to that of the U S on evolution but they have not been particularly vocal on this positidn They A have supported 11 Other Countries Playing mostly lesser roles in the negotiating process the in uence of these countries is more a function of individual personalities than institutional positions These countries may be individually persuaded by elements of the US position and will occasionally voice public support for these but most of the positions are driven by internal Cir-77 politics largely dominated by the more organized OPEC group or by the large and dominant big countries The formal 3-77 position on developing country obligations has been to deny any obligation to act under the Kyoto agreement to insist that developed countries transfer to developing countries appropriate technologies and resources and to call for compensation and to date to oppose 31 The Domestic Debate Congress the Private Sector and the Environmental Community While for the majority of the deliberations under the the lssue of developing countries had taken a back seat to the establishment of a target and timetable it' has more recently moved to the fore For most observers the issue seems to have been created as a red herring to derail the negotiating process Certain industry lobbies opposed to any action to address climate change have parlayed their message on developing countries into Congressional objections full- page neWSpaper advertisements and international consternation Those concerned with developing country participation have pointed to two principal - rationales for action 1 that the problem cannot ultimately be solved without developing country participation and 2 that any action we take if not balanced by equal developing country commitments will have an immediate signi cant and negative impact on our competitiveness While there is some grain of truth in both arguments neither is fully supported - by an analysis of the US proposal- On the rst the US draft protocol language does not envision a gap between developed and developing counuy commitments and recognizes UNCLASSIFIED U S Dep artmentof State Case No Doc No 005574605 Date 03 24 2015 UNCLASSIFIED us Department of State Case No Doc No 005574605 Date 03 24 2015 1 DRAFT 7 15 97 5 that the international negotiations at this stage will never stand for a concurrent commitrrient in- light of the enormous disparity in per capita emissions per capita income and historic contribution to the problem On the latter the level of action likely to be called for is anticipated limited value in reducing global emissions but also too low to ll signi cantly effect international competitiveness While more stringent reductions might have this effect any such future reduction obligations would beanticipatedt dlcover allnountries urn n Notwithstanding these arguments opponents to the treaty have persuadedanany that the developing country issue is adequate reason not to act now Senator Robert with more than 60 co-sponsors has proposed a sense of the Senate resolution which warns the Administration that the Senate will not provide advice and consent to rati cation of any agreement that does not call for and adopt'new scheduled developing country commitments in the same time period as those adopted by developed countries The Global Climate Coalition made up of the coal companies the coal red utilities and many in the manufactrning sector has set forward a similar albeit more rhetorically strident position They have actively sought to delay postpone or derail negations since they began The environmental community strongly supportive of the developed countries acting rst has yet to make a clear and cogent case for this view and has been unable to persuade many in the Senate of its validity Getting to Yes Agreement in Kyoto An agreement in Kyoto that accommodates the current US developing country position which while considerably more stringent than that of any other country is substantially less stringent than that demanded by the Senate will be extremely dif cult to achieve The next scheduled negotiations July 28-August 7 will not resolve any of the developing country questions absent some change in the USS position However we can anticipate that the meeting will be a dif cult one in which US intent to seriously address the climate change problem will be fundamentally questioned Reports similar to those that surrounded the Denver Summit and the New York UN session will be repeated To avoid another repetition in October at the last of cials level negotiations prior to the Kyoto meeting a number of steps should be taken although even these do not guarantee success in December 1 It will be necessary to continue an intensive diplomatic campaign to convince other cpuntries of the appropriateness of our views and the fact that wexwill walk away from an agreement which does not adequately cover our developing country concerns Such an effort must proceed at all levels from the staff levelto the cabinet to be successful it must ultimately include both the President and Vice President Calls to key players in each of the international blocs will be necessary to persuade - and ultimately to exhort to join in On the US position A possible pitfall here is that some developing countries may not want an agreement yet not only OPEC but China may choose to let us take the heat for detailing negotiations 2 It will be necessary to reach a domestic agreement on the level and timeframe of a target which would be acceptable tons - and it must be suf ciently progressive to convince other countries we are serious about the problem and therefore entitled to demand more from developing countries A signal of the directi which we intend to move must be given as soon as possible Ifno signal is provided tthe next ne otiating session we will begin to see elements of the US position par crm y positions - removed from the table 3 It will be necessary to compromise with others particularly developing countries This will necessitate giving up or some of our most cherished ideas We may need to be - UNCLASSIFIED US Department of State Case No Doc No' C05574605 Date 03 24 2015 UNCLASSIFIED U S Department of State Case No Doc No C05574605 Date 03 24 2015- DRAFT 7 15 97 6 exible in the timing of various actions 11 might be postponed until 2005 in order to be included in the agreement or we might delay beyond 2005 in agreeing on a new legal instrument It will be dif cult to know where the nal deal 15 until the end of the day December in Kyoto 4 Developing countries must be molli ed This will be particularly dif cult in light of the U S inability to pay our pledged contribution to the Global Enviromnent Facility Persuading developing countries that they must engage in next steps while at the same time denying them nancial support to help them undertake these steps will be nearly impossible An aggressive effort must be mounted to support the GEF replenishment and to seek Congressional support for paying off our earlier pledge The President s announcement of the $1 billion initiative may also be viewed with considerable skepticism internationally as it largely involves reprogramming of existing funds a factor which will not be well-received by many in the developing country community and the fact that we do not yet have a clear view on how the funds will be distributed However properly packaged it could provide an enormous boost 5 0f the U S developing country proposals the most dif cult to obtain will be agreement on evolution the commitment from all parties to negotiate a next step with legally binding I obligations including for deveIOping countries by 2005 Nearly as hard will be getting agreement for the creation of a new category to allow countries to graduate from the ranks of developing to developed To get the international agreement will ultimately require high level contact and ann twisting no amount of technical or scienti c support for the position will be persuasive Given the enormous importance attached to the developing country commitments in Kyoto decisions will need to be made probably at the cabinet level on what negotiating exibility might be given to the delegation on these issues le brie ng papersldeveloping country paper doc 1 UNCLASSIFIED U S Department of State Case No F-2012-40055 Doc No 005574605 Date 03 24 2015