1999-012768 The Secretary of Energy Washington DC 20505 August 23 1999 MEMORANDUM FOR THE VICE PRESIDENT FROM BILL RICHARDSON SUBJECT Climate Change Strategies for the Next Year How to proceed over the next year on the issue of climate change is currently the subject ofdebate among the different agencies with an interest in this issue In order to get the Kyoto Protocol ratified we need a dual-track approach — pursuing effective domestic and international strategies I believe ifwe act aggressively now we could consider submitting the Kyoto Protocol for ratification in 2001 and have a reasonable expectation ofsuccess As you know the Byrd-Hagel Sense ofthe Senate Resolution stated that the United States should not enter into a legally binding agreement to reduce greenhouse gas emissions unless 1 there would be no serious economic costs to the United States and 2 developing countries agreed to take substantial steps to reduce their greenhouse gas emissions in the same time period as developed countries generally viewed by Senators as adopting emissions targets While the terms ofthe Byrd-Hagel resolution are not binding on the Administration it is clear that the hurdle for ratification ofthe Kyoto Protocol will be quite high unless the conditions ofthe resolution are adequately addressed Domestic Concerns The main thrust ofthis portion ofthe overall strategy is to reduce the cost to the United States ofmeeting the emissions targets contained in the Kyoto Protocol We must be able to demonstrate that the United States can meet these emissions' targets while maintaining vigorous economic growth This strategy must involve efforts to address climate change issues during the upcoming budget discussions with Congress as well as various policy initiatives that the Administration is or soon will be pursuing First we need to be aggressive in our discussions with Congress on budget matters related to climate change We must not let accusations that we are implementing the Kyoto Protocol prior to ratification deter us from seeking funding for 0 Prlnl»d 00 locycKd papor important environmental and energy programs The budget discussions this Fall covering Fiscal Year 2000 will provide an opportunity to frame the issue ofglobal climate change as an increasingly important matter that should receive an appropriate level of attention from congressional appropriators At this time virtually all agencies are looking at inadequate funding levels for their climate change activities In the Department ofEnergy many of our offices have received indications from Congress that FY 2000 funding will be below FY 1999 levels and substantially below levels in the President’s Budget Request This is the year to press Congress to get'serious about climate change funding and to support the Administration’s request ifwe think we can successfully seek ratification In a similar manner we need to think strategically about the Fiscal Year 2001 Budget Request We should pursue increased investments under the Climate Change Technology Initiative in line with prior year plans and use the recent report from the President’s Committee ofAdvisors on Science and Technology on International Energy R D as support for further investments in these areas This report demonstrates how important it is for the United States to promote the use of our companies’ energy technologies in other countries As in prior years climate change should be one ofthe Presidential Priorities that gets specific attention in the Budget Request Second this Fall we need to push our proposal for electricity restructuring legislation This legislation among all the policy initiatives we are pursuing has the best chance of providing significant environmental benefits while making consumers better off at the same time We estimate that the Administration’s proposal would save American consumers at least $20 billion per year by 2010 while reducing annual greenhouse gas emissions by an estimated 40-60 million tons of carbon equivalent about 1 10 ofthe total reductions needed to meet our Kyoto Protocol target by 2010 Third we must show the American public that the Federal government is making serious efforts to address climate change as well The President has issued Executive Orders to substantially reduce energy use in Federal facilities and to increase use ofbioenergy We have established Energy Saving Performance Contracts for the entire country so that private companies will invest capital in energy-efficiency projects in Federal facilities and be paid back out of energy savings leveraging our scarce Federal budget resources The Federal Energy Management Program at the Department will be a key player in spreading highly effective energy efficiency techniques throughout the Federal complex We need to raise the profile of energy efficiency efforts in the Federal government to show that energy savings can come from being smarter about energy use and need not require sacrifices in safety or comfort Fourth we must set ambitious goals for the Nation to increase use ofrenewable energy technologies and to improve energy efficiency The President set the tone by establishing the Million Solar Roof program I have set a goal ofgenerating 5 percent ofthe Nation’s energy from wind power by 2020 an ambitious goal in our Wind Powering America program And the recent Executive Order seeks to triple the amount ofbioenergy used in our economy by 2010 These activities should be fully implemented and elaborated upon where appropriate by adding new energy sources for example We have to show success toward meeting these goals over the next year to demonstrate their credibility Finally we need to more successfully reach out to industry to engage them in taking steps to reduce their net greenhouse gas emissions In my discussions with major oil and natural gas companies I have seen a shift in position regarding climate change Where once there was skepticism over the science I now detect the beginiungs ofpreparations for reducing emissions both here and abroad We should be able to build upon the efforts of companies like BP Amoco to measure and reduce emissions in ways that encourage others to follow suit I am willing to reach out to selected companies in this industry to challenge them to take steps to reduce their emissions as part of our national effort in this area Ifwe can pull together these various efforts we will be well on our way to meeting one ofthe conditions ofthe Byrd-Hagel resolution — meeting the emissions targets with “no serious harm” to the United States International Concerns Our work in the international arena focuses on two items getting the rules right in the Kyoto Protocol negotiating process and ensuring that developing countries “meaningfully participate” in the global effort to reduce greenhouse gas emissions Clearly we need to demonstrate that the specific rules contained in the Kyoto Protocol address our need for market-based flexibility mechanisms Specifically we must avoid limitations or caps on international emissions trading and on the use ofthe Clean Development Mechanism in which companies or countries can get credit for deploying projects that reduce greenhouse gas emissions We also must secure a reasonably expansive definition ofsinks whereby forestry and land management practices that sequester carbon dioxide are counted as reducing greenhouse gas emissions Equally important is avoiding the addition of any “poison pill” provisions such as paying compensation to oil-producing nations for reduced demand from activities to lessen emissions The negotiating team led by the State Department continues to make progress Ifwe are not successful in this endeavor however there is little chance that the Kyoto Protocol can eventually obtain Senate ratification Regarding developing countries we need to develop a “portfolio” of actions on the part of a range of countries to demonstrate their “meaningful participation” We need some perhaps ten to voluntarily take on binding emissions targets perhaps a growth target or an indexed target Others including the largest emitters are unlikely to do so but virtually all will have taken significant actions that we can point to that improve their environment and reduce emissions Finally we need to show that large numbers of countries recognize the problem of climate change and the need to take steps to address it I have been working aggressively in each ofthese areas At present Argentina and Kazakhstan have announced their intention to voluntarily adopt emissions targets We are working hard to bring on board a few other countries in the Western Hemisphere and Afiica We can be successful in this regard ifwe have a concerted inter-agency effort Ofthe big developing country emitters I have targeted India China South Africa Brazil and Mexico for special attention In each case the strategy involves getting the governments to recognize the importance ofthe energy-efficiency programs we have with them or that they are doing themselves as constituting climate change related actions I have used DOE’s participation in your bi-national committees to develop this message and I believe we could be ready to make the case that many ofthese governments are taking significant actions to address the issue of climate change Finally as I host regional energy conferences - we just held a very successful Western Hemisphere Energy Ministers Conference in New Orleans and I have plans for similar African and Asian programs -1 consider it important to have these regions issue “clean energy statements ” similar to the one I signed with South Africa during the binational commission meeting I was pleased with the language we were able to negotiate with the 30 countries in the Hemisphere in New Orleans which recognized the right of developing countries to voluntarily adopt emissions targets These statements will allow us to demonstrate that each region as a whole is committed to taking actions to address climate change I believe that while none ofthese individual pieces alone constitute “meaningful participation” on the part of developing countries put together they make a very persuasive case Conclusion The approach ofpursuing dual domestic and international strategies on climate change provides us with the greatest chance ofsuccess in the climate change arena I would be happy to discuss these proposals with you as we develop the Administration’s core strategies for this important issue cc The Honorable George Frampton The Honorable Leon Fuerth The Honorable Roger Ballentine