FEB -05-1998 FEB-05-1998 11 24 11 24 202 202 647 647 0191 0191 OES EGC □ES EGC P 02 25 P 02 25 Q's Q’s A's A's for for Climate Climate Change Change testimony testimony 2 98 2 98 THE The PROTOCOL Protocol How How can can you you say say the the Kyoto Kyoto Protocol Protocol is is aa success success if if there there is is no no mention mention of of developing developing countries The Protocol is severely ffawed countries The Protocol is severely flawed On On the the contrary contrary most most of of the the elements elements of of the the President's President’s package were put finnly firmly in place at Kyoto The The Protocol includes the market-based mechanisms of international emissions trading across across al joint implementation allI six six greenhouse greenhouse gases gases and and joint implementation among developed countries Moreover Moreover itit allows allows for full flexibility on the kinds of policies and measures a country may enact domestically domestically to to achieve achieve compliance and sets the targets on the basis of a multi-year objective rather rather than than aa single single fixed-year fixed-year obligation obligation With With regard to developing countries it it allows for investment in projects in developing countries to be used as offsets against obligations in investment in projects in developing countries to be used as offsets against developed developed countries countries through through the the Clean Clean Development Development Mechanism Mechanism CDM CDM The The Protocol also beefs up all Parties' national communications and gives advanced developing beefs up all Parties’ national communications and gives advanced developing countries the option option of of adopting adopting an an emissions emissions budget budget and and trading trading under under the the Protocol Protocol -potentially - potentially providing more more development development l'esources resources than than the the project-ba project-based CDM CDM There There is is of of course course more more work work to to do do particularly on gaining the meaningful participation of developing countries and we plan particularly on gaining the meaningful participation of developing countries and we plan to to make bilateral multilateral efforts to this make bilateral and and multilateral efforts to this end end INSTITIJTIONAI iPROCEDURAL SIGNA TIJRE RATIFICATION ISSUES iNSTlTUnONAL PROCEDURAiySIGNATURE RATIHCATION Issues Do Do you you plan plan to to sign sign the the Kyoto Kyoto Protocol and then ignore Senate advice and consent Absolutely Absolutely not not and and we we are are here here today today to to begin begin this this dialogue dialogue As As we we have have sai said U S U S ratification ratification will require the advice and consent of the Senate The United States may choose to sign the will require the advice and consent of the Senate The United States may choose to sign the Protocol during the year that it will be open for signature United Protocol during the year that it will be open for signature but that would not bind the Umted States to the Protocol's requirements States to the Protocol’s requirements When When do do you you expect expect the the President President to to sign sign the the Kyoto Kyoto Protocol Protocol The The Kyoto Kyoto Protocol Protocol opens opens for for signature signature in in March March 1998 1998 and and remains remains open open until until March March 1999 1999 We We hope hope and and expect expect to to sign sign during during that that period period When you expect to submit to the the Senate When do do you expect the the President President to submit the the Protocol Protocol to Senate for for its its advice advice 2nd and consent consent Isn't Isn’t the the President President disregardine disregarding the Senate's Senate’s appropriate constitutional role of advice advice and and consent consent As As we we have have said said U S U S ratification ratification will will require require the the advice advice and and consent consent of of the the Senate Senate The The United United States States may may choose choose to to sign sign the the Protocol Protocol during during the the year year that that itit will will be be open open for for signature signature but but that that would would not not bind bind the the United United States States to to the the Protocol's Protocol's requirements requirements 1 FEn-05-1 998 FEE-05-1998 11 24 11 24 0191 202 647 0191 OES EGC □ES EGC P 03 25 P 03 25 will it will said it Adminid ration said the Administration bes the achievement why has If the Kyoto Protocol is such a positive achievement If the ratification to ratification consent to and consent not submit it to the Senate for its advice and global of global the challenge of meet the The Kyoto Protocol is an historic step forward in the effort to meet The Kyoto to approach to economic ally sound approach warming environmentally strong and economically We believe it reflects an environmentally wanning We in out in work out need to work additional elements we need this difficult problem But there are details of additional very difficult this very yet not yet have not we have particular we submission to the Senate In particular order to have a package ready for submission for nt requireme 's President requirement for established mechanism and activities to ensure that the President’s established the mechanism makes Protocol makes countries g meaningfixl participation key developing is fully met Though the Protocol developin from meaningful participation also work l Additiona area this on such participation area Additional work also participation more needs to be done in payment on aa down payment market-based emissions trading procedures for market-based needs done in fleshing out the rules and procedures to be done needs to the submittin g the to submitting these pieces and looks forward to The Administration Administ ration is working hard to fill in diese achieved have been achieved Kyoto Protocol to the Senate once these objective objectivess have tbe over the all over effect all into effect Why did you agree to a provision that will allow this Protocol to go into the of the role of tbe role diminish the mtentionally diminish Didn't you IntentionaUy ratification Didn’t world without U S ratification Congress Congress reserve to reserve want to not want did not we did that we position that clear position negotiations with the very clear The U S entered these negotiations in not is It it international treaty simply by not ratifying it It is not in the importu nt international power to block this important the power serious very serious the very agains t the acting against from acting communi ty from international community American American interests to prevent the international threat of threat of climate climate change change apply must apply it must emissions it Nevertheless Nevertheless for the Kyoto Protocol to be effective in reducing global emissions must Accordingly to enter into force the Protocol must to the majority of the world’s world's large emitters Accordingly percent 55 least at for g accountin nations I be ratified accounting for at least 55 percent ratified by at least 55 countries including Annex meet to meet that to of the total 1990 carbon dioxide emissions of developed countries We anticipate that the if the even if ratify even to ratify Federation or the United States will have to this threshold either the Russian Federation this threshold countries g developin most as European Union and other developed Parties ratify as well as most developing countries Framewo rk UN Framework the UN under the participate as a Party under Regardless Regardless of when we ratify we will still participate processes related processes the related over the influence over Convention significantt influence Conventi on on Climate Change and have significan SCIENCE S cience Isn't this just too costly takin2 action Isn’t How How do we know there is any reason for taking than more than representing the work of more A 1995 report representing The science of global compelling A1995 warming is compelling global wanning evidence of balance ''the that s conclude that “the balance of evidmee 2 000 scientists concludes world's leading climate change scientists 2 000 of the world’s empirical clear empirical climate While aa clear le suggests that there discernible human influence on global climate ” discernib a is suggests record on record year on warmest year the warmest relationship relationship between cause and effect is difficult to establish 1997 is the warmest the among are years 11 last the of the last 11 years are among the warmest temperatures and nine out of for average global surface temperatures 2 FEB-05-1998 FEB-05-1998 11 25 11 25 OES EGC □ES EGC 202 647 0191 202 647 0191 P 04 25 P 04 25 believe not believe does not Administra tion does ever recorded More record warm years are in the forecast The Administration we however issue change climate the on action preventative talcing delay it is responsible to taking however we recognize that any action must proceed sensibly in a way that is economically sound tenns a greater Background The cost of inaction would be devastating in human and financial terms of our inundation the of incidence of droughts and storms relocating entire communities because coastal areas a higher incidence of tropical disease and a threat to plant and animal species throughout the United States Droughts and storms are indeed costly the Southern Plains drought of 1996 was estimated to cost $4 billion and the Northwest floods of 1996-97 about $3 billion Although recent examples of severe droughts cannot be unequivocally attributed to global warming wanningt they do indicate a pattern consistent with scientific understanding Abroad Africa exacerbating political tensions and climate change could devastate the Middle East and Afiica are problems are and distribution problems production food world's poorest countries already hurt by the world’s expected to suffer more in these areas because their countries will not be able to adapt to further climate change challenges posed by climate that We are shown graphs and data depicting global wanning but we have heard reports that do trend How do cooling trend How a cooling shows a fact shows in fact and in warming and refutes this warming say NOAA satellite data refutes contradiction yon explain this contradiction feet There is no contradiction Satellites measure temperature above ground 5 000-30 000 feet Surface eruptions Surface volcanic eruptions to volcanic taking into account aerosols and ozone loading due to as not as are not loading are ozone loading measurements are taken at ground and sea levels where aerosols and ozone 17 past 17 the past over the effective as in the atmosphere NOAA Satellite data consistently has shown over trend when adjusted for the influence of aerosols and ozone loading due years a global warming trend to volcanic eruptions such as Mt Pinatubo This pattern is consistent with the warming trend from balloon temperature readings and surface temperatures readings assessed fi om their Is it true that even if all the developed countries complied with their targets that their bucket in addressing climate change Over what time actions would be just a drop in the bucket required be to likely action scale is global binding The binding effon to address climate change The histori step in the effort The Kyoto Agreement is an historic groundwork the groundwork lay the and lay targets agreed to by developed nations provide important real reductions and future the in for additional reductions at aa emissions at Clearly however Kyoto is only one step in a long process To ultimately stabilize emissions be will be - wiU Kyoto in Kyoto agreed in safe level in the atmosphere signi 6 cant significant reductions -- beyond those agreed of those eclipse to likely are emissions whose countries needed Furthermore developing to eclipse those of effectively to effectively are to we are if we - must also begin to limit their emissions if industrialized nations by 2030 meaningful secure meaningful to secure working to to working committed to firmly committed is firmly Administtation is address the problem The Administration until Senate until the Senate to the Protocol to the Protocol submit the participation from key developing countries and will not submit such participation has been achieved achieved 3 FEB-O5-1998 FEB-05-1993 11 25 11 25 OES EGC OES EGC 202 202 547 647 0191 0191 P 05 25 Background Background Even Even the most stringent proposal tabled for consideration by the Parties Parties in Kyoto that proposed by the Alliance of Small Island States requiring developed country Parties to reduce emissions by 20 percent below 1990 levels by 2005 would have had only a smaIJ small impact on the overall problem It is anticipated that to maintain global concentrations at current levels global global reduction of approximately 60-70 percent of CO CO 2 emissions would be needed End Background How How can we trust the data emerging from the Intergovernm Intergovernmental ental Panel on Climate Change IPCC IPCC The ental Panel on Climate Change IPCC is the most authoritative body on the The Intergovernm Intergovernmental science world's pre-eminent climate experts The science of of climate climate change change reflecting the views of the world’s more than 2 000 scientists concluded in the IPCC's 1995 Second Assessment that there is a more than 2 000 scientists concluded IPCC’s discernible human influence uifluence on tho the climate system system ” For the first time we have a clear “discernible human scientific indication from experts around the world that human emissions of greenhouse gases are scientific affecting affecting the the climate system and we have ample indications about the potential impacts of climate climate change change ENFORCEMEN T COMPLIA CE U NJSOVEREI GNTY Enforcement Compliance U N7S overetgnty Given Given the the rules mles of procedure of the Conference of the Parties aren't aren’t we turning over decisions that will affect the prosperity of American citizens to the very developing decisions countries that are exempt from any obligations under the agreement No we are not The emission reduction commitments in the Kyoto Protocol were adopted with the the full full participation participation and consent of the Parties to which they will apply To take effect each of these these Parties Parties must ratify the protocol In the United Statest States ratification would occur only after the advice and consent of the Senate under our Constitution Moreover under the Kyoto Protocol advice and consent we we will will have have full national flexibility in how we meet our emission reduction commitment because because we we succeeded succeeded in in Kyoto in rejecting calls for mandatory standardized policies and measures measures such such as energy energy taxes Any change in the emission reduction commitments made in Kyoto could only occur Kyoto could only occur through an amendment to the protocol Any party that objected to such an an amendment amendment would would not be be bound by it Thus decisions that could affect the prosperity of American citizens will continue to be taken nationally by the United States and not by others American citizens will 4 FE -05-1998 FER-05-1998 11 26 li 26 OES EGC □ES EGC 202 647 0191 202 647 0191 P 06 25 P 06 25 If we ratify the protocol won't won’t developing developing countrie countries be able able to dictate dictate the the U S target in the future-and penalize us us if future—and penalize if we we fail fail to to comply comply No Any would have be agreed by the whom they No Any subsequent subsequent targets targets would have to to be agreed to to by the Parties Parties to to whom they would would apply apply Is the Kyoto Kyoto Protocol Protocol aa threat threat to to U S U S sovereiaoty sovereignty No it is not Under the Kyoto Protocol individual nations decide for themselves how best to comply with greenhouse gas emissions targets they have agreed to The Conference specifically rejected proposals which would have imposed mandatory standardized policies and measures such as energy taxes It does not threaten our sovereignty for us to agree to cooperate with other nations in combating climate change We cannot solve a global problem alone The Ad ministration believes that that the the Kyoto Kyoto Protocol Protocol is is in in the the best best interests interests of of the the United United States States and and Administration believes will provide important environmental protection while ensuring continued economic growth and competitiveness competitiveness lsn 't this just another Isn’t this just another way way of of establishing establishing another another UN UN mega-Secretariat mega-Secretariat Do Do we we need need anymore anymore big big international international bureaucracies bureaucracies subsidized subsidized by by the the U S U S taxpayer taxpayer Moreover Moreover aren't aren’t these people going to become an enforcement operation -- and and if if we don't don’t comply -what what will will happen happen International International penalties penalties for for noncompliance noncompliance The provisions intended promote compliance The Protocol Protocol contains contains several several provisions intended to to promote compliance It It calls calls for for each each Party Party to establish a system for national reporting and measurement of greenhouse gas emissions As a result of a U S -proposed provision provision a Party not in compliance with its measurement and reporting requirements cannot receive credit for joint implementation projects Thus Thus the primary responsibility for enforcement enforcem t is at the national level and the will to act is a domestic matter which cannot be imposed by any foreign authority We will work with other Parties to ensure that future compliance systems as yet undetermined will be strong but not overly bureaucratic In the Protocol the Parties sought to use existing institutions and to minimize the creation of new ones For example the subsidiary bodies and Secretariat under the Convention will wiD continue their functions under the Protocol Because the United States contributes approximately one their Because United contributes fourth of the Secretariat's budget under the Framework Convention on Climate Change we fourth of the Secretariat’s budget under the Framework Convention on Climate Change we have have considerable vis-a-vis its considerable influence influence within within the the Convention Convention and and vis-i-vis its Secretariat Secretariat In In all all of of its its actions actions under the must answer the under the Convention Convention the the Secretariat Secretariat looks looks to to the the Parties Parties for for guidance guidance and and must answer to to the Parties United States have Parties with with respect respect to to its its activities activities Ifthc If the United States ratifies ratifies the the Kyoto Kyoto Protocol Protocol we we '1 ' 'ill will have similar influence under that instrument Furthennore in the case of the Clean Development similar influence under that instrument Furthermore in the case of the Clean Development Mechani rn will oversee mechanism with with the the help board and Mechanism the the Parties Parties will oversee the the mechanism help of of aa small small executive executive board and operational entities to be designated “operational to be designated” will will certify emission reductions from from specific projects What verification procedures are there to ensure that other countries honor their obligations obligations 5 FE3-05-1998 FEB-05-1998 11 26 11 26 OES EGC □ES EGC 202 647 0191 202 P 07 25 There are several examples of different types of verification procedures in the Protocol In Article 8 expert review teams will assess Parties' implementation of their obligations These teams coordinated by the Convention Secretariat and nominated by Parties would initiate a thorough and comprehensive technical assessment of all aspects of the implementation by Parties Parties These These teams teams are are taken taken from from the the model model of of the existing system of in-depth review teams that that examine examine Parties' Parties' national national communications communications There There is is also also provision for the creation of verification and monitoring systems for emissions trading Article 16 bis joint implementation verification and monitoring systems for Article 6 and and the the Clean Dc vc lopment Development Mechanism Article 12 These will be developed in the Article 6 coming years beginning at coming years beginning at COP-4 this November as stipulated in the Protocol The U S will use to ensure use every every opportunity opportunity to to influence influence their their formulation formulation to ensure their acceptability How will the Protocol be enforced Either it will be an honor system without any real enforcement eet taken advantaee enforcement in which case the United States will get advantage of as we honor onr obligations while others ipore io obligations while ignore their own or there will be a real enforcement system in which which case international bureaucracies will be able to sit sh in judgment on whether we are meeting our obligations Which will wiU it be And aren't aren’t both these alternatives unacceptable As with most compliance systems whether they are legal or regulatory in nature there is usually some some middle ground ground There is still a tremendous opportunity to craft the compliance system of the Protocol as non-compliance the Protocol as effective effective procedures procedures and and a mechanism mechanism to determine and address non-comphance are to be decided at later meetings For are to be decided at later meetings For both both environmental and competitiveness reasons the United United Stat States will will be be working working on on proposals proposals to to strengthen strengthen the compliance and enforcement regime under the Protocol but no international bureaucracy will be able to sit judgment on whether under the Protocol but no international “sit in judgment” we are in primary responsibility we are in compliance compliance The The primary responsibility for enforcement is at the national level and the will to act is a domestic matter which cannot be imposed by any foreign authority We will the will to act is a domestic work with other Parties to ensure that level of responsibility is preserved ROGUE NATIONS Why doesn't doesn’t the Protocol exclude rogue nations like Iran Iraq or Libya Do you think they should be able to benefit from fi'om this Protocol The The Kyoto Kyoto Protocol Protocol is is aa global global effort effort to to reduce reduce the the trend of dramatically increasing greenhouse gas emissions All nations recognized by the United Nations are eligible to join in this effort gas emissions All nations recognized by Because Because Iran Iran Iraq and Libya are oil-producing countries with significant contributions to global emi 5 5ion emissions it it is is especially especially importaat important to to include them in effons efforts to reduce emissions The alternative alternative excluding excluding them them from from emissioru emissions reductions efforts would allow these countries to be free riders that is to enjoy the global environmental benefits without joining in the global gl bal “free riders ” effort Any possible activities W1der under the Clean Development Mechanism would be governed by existing sanctions or other trade restrictions existing sanctions or other TARGETIECONO MIC arget Economic sSUES Issues 6 FEB-05-1998 FEB-05-1998 11 27 11 27 OES EGC □ES EGC 202 647 0191 202 647 0191 P 08 25 P 08 25 'While While the President proposed in October that the U S reduce emissions to 1990 levels by 2008-2012 the U S agreed in Kyoto to a 7% reduction below 1990 levels in the same timeframe Why did we accept a more stringent target The 7% target is close to the President's President’s initial proposal It represents at most a 3% real reduction below the target of returning to a composite of 1990 1995 baseline levels by 2008-2012 2008-2012 The in the the way way certain gases and and activities The remaining remaining 44 percentage percentage points points result result from from changes changes in certain gases activities that absorb carbon are counted that absorb carbon are counted Why limitations II understand understand that that voluntary voluntary Why did did the the U S U S support support binding binding emissions emissions limitations programs may be equally as successful programs may be equally as successful Two gas emissions First First it it Two factors prompted the U S U S to propose binding binding limits for for greenhouse gas became became clear clear that that only only two two industrialized industrialized nations nations would meet the voluntary aim established in Rio to reduce emissions to 1990 levels by 2000 and neither of those for reasons related to climate change Second the IPCC's IPCC’s 1995 Second Assessment Report provided important new infonnation on the science of climate change further information fluther underscoring the need to take action While binding targets provide greater surety that obligations will be met they by no means preclude voluntary action Limited voluntacy voluntaiy here in the U S have proven effective in cutting emissions and the Administration has proposed significantly expanding such programs in an effort to meet the Kyoto target As an example the Administration will be working with industry initiatives for reducing industry over over the the next next nine nine months months to to develop develop voluntary voluntary sector-by-sector sector-by-sector initiatives for reducing emissions emissions What's What’s all all the the fuss fuss over over sinks ‘‘sinks” The accounting method method for for caibon-absorbing carbon-absorbing The treatment treatment of of sinks sinks in in the the Protocol Protocol altered altered the the accounting activities account for for about about 3% of the the 7% activities such such as as planting planting trees trees in in the the U S U S total total sinks sinks account 3% of 7% reduction The President's original goal assumed that the 1990 baseline would be lowered by reduction The President’s original goal assumed that the 1990 baseline would be lowered by carbon-absorbing activities activities but under the method agreed in Kyoto such activities do not lower the 1990 baseline Because the 1990 level baseline is thus higher under the Kyoto agreement the U S target becomes somewhat less stringent Specifically had the U S maintained the same level of effort assumed by the President in October and no other factors had changed the shift in the accounting method for carbon-absorbing activities would alone have transformed tire the Presidenfs goal of 1990 levels into a goal equivalent to at least 3% below 1990 levels As President’s noted above certain carbon-absorbing activities will count against emission reduction noted above certain carbon-absorbing activities will count against emission reduction commitments number of countries the the United United commitments in in the the budget budget period period Despite Despite opposition opposition from from aa number of countries States insisted that they be included in the interest of encouraging activities like afforestation States insisted that they be included in the interest of encouraging activities like afforestation and and reforestation is critical critical to to aa comprehensive comprehensive and and reforestation Accounting Accounting for for the the role role of of forests forests is 7 FES-05-1998 FES-05-1998 11 27 11 27 OES EGC OES EGC 202 647 0191 202 647 0191 P 09 25 P 09 25 with sector with private sector the private provides the environmentally responsible approach to climate change It also provides emissions reduce to low-cost opportunities an at an put at not put What is the Administration proposing to do to ensure that the United States is is not economic disadvantage While the U S and other industrialized countries would incur some reduction costs that would tenn energy e g higher short-medium term only gradually be borne by the developing countries e g costs in the industrialized countries the weight of the evidence suggests that in the aggregate these costs would be insignificant to U S competitiveness or exports Where the question addresses competitiveness concerns of a few energy-intensive manufacturing her In her following In industries such as aluminum paper and chemicals we should consider the following others of expansion of others the expansion and the Yellen noted the contraction of some industries and testimony Dr Janet Yellcn testimony Some that one could expect in any instance of significant structural change to the economy Some 2 2% only 2 2% facts however provide a perspective on the issue 1 on average energy accounts for only and U S and the U S between the of total costs to U S industry 2 energy prices already differ significantly between and countries other docs not generally flee to indwitry does countries such as Venezuela and yet U S industry and not - not sectors buildings sectors and “buildings” 3 2 3 of all emissions are generated by the transportation and and energy efficiency U S energy manufacturing To those observations I would add one more the U S efficiency and other As the world in the competitive in and competitive alternative energy sectors are among the most advanced and world As other countries expand their own domestic climate change action plans significant export fields these fields in these manufacturers in up for U S manufacturers opportunities are sure to open up economy How will the Kyoto Protocol impact the U S economy The President has put forward a comprehensive program that if fully implemented can reduce U S greenhouse gas emissions to the targeted levels while maintaining economic growth and unrealistic targets proposed by other competitiveness In Kyoto the U S succeeded in rejecting unreahstic Furthennore we won acceptance of key market-based mechanisms such as emissions countries Furthermore targets emissions targets with emissions complying with of complying trading which will substantially lower the costs of Jobs U S Jobs of U S mllllons of wtlI cost millions suggest iDg that the Kyoto Protocol will aren't there studies suggesting But aren’t economy the economy tank the and tank and environment our environment protect our to protect action to takes action We see these kinds of studies every time this nation takes that believe that who believe those be to continue there water clean or air clean change it's climate Whether it’s to be those who the at the look at must look We must environmental protection must come at the expense of economic growth We booming is investment low is inflation 5% than less at stands unemployment record Today than 5% inflation is low investment is booming jobs since new jobs real wages are rising and the economy has generated more than 14 million new since 1993 1993 All this good news despite the doomsday predictions of self-interested economic studies that 8 FEB-05-1998 FEB-05-1998 11 28 11 28 OES EGC □ES EGC 202 202 547 647 0191 P 10 25 warned of the disastrous consequences of the Clean Air Air Act Clean Water Act and other efforts to protect the environment How do you respond to the serious concerns of U S business agricultural groups and labor about the Protocol In In the months leading up to Kyoto the Administration conducted an extensive outreach effort to solicit the views views of major interest groups including the business labor agricultural and environmental sectors This effort included a White House Conference which brought together leading leading experts from around the country to explore different aspects of the climate issue What we learned contributed heavily to the U S policy announced by the President in October In In Kyoto Kyoto we succeeded in gaining agreement on the key elements of the U S position including aa realistic achievable and comprehensive emissions target and flexible implementation mechanisms mechanisms like like international international emissions trading and joint implementation Accordingly a number of interest groups have been supportive of the agreement That is not to say that all sides are are happy happy A A wide wide range range of of issues issues have have been been raised raised and and we we look look forward forward to to working working with interested parties to address legitimate concerns Did the Vice President's President’s visit -- with his call for greater ffenbility flexibility on the U S side -diminish yonr your negotiating levera2e and help lead to the cave-in of our position of 1990 leverage levels by 2008-2012 The Vice President's President’s visit injected new life into the negotiations by urging all Parties to seek common ground Earlier in the meeting the U S signaled its openness to consider differentiated targets for developed countries This move helped bring_ bring on board a number of critical countries and demonstrated that we were serious about obtaining a successful outcome in Kyoto The Vice and President's President’s call for greater flexibility went further in building trust trust among our negotiating partners We were able to convince them to lower their expectations of higher unrealistic partners We were their targct s targets and and include include all all six six major major greenhouse greenhouse gases and carbon caibon sinks “sinks” -- elements which they had previously opposed In the end the U S level of a 7% reduction in emissions actually previously opposed In the the represents most a 3% real reduction below the President's President’s initial target for stabilization of emissions at 1990 levels by 2012 when the sinks and all six gases are factored in by 2012 Does Does the the Protocol Protocol create create aa perverse perverse incentive incentive for for the destruction of rain forests around the world • No The Protocol actually creates incentives through the Clean Development Mechanism in developing countries The CDM will encourage afforestation and reforestation projects ·as as well as investments in clean technology and allow these efforts to partially fulfill the emission reduction commitments of industrialized countries Thus industrialized Annex I countries will see ad vantages advantages to working with developing countries in these and other areas as a means of achieving achieving cost-effective cost-effective reductions reductions Through such projects developing countries will be able to obtain the financial resources technology financial t hnology and know-how to promote their own sustainable 9 FEB-05-1998 FEB-05-1998 11 29 11 23 OES EGC □ES EGC 202 647 0191 P 11 25 development In terms terras of temperate rain forests in developed countries countries the way in which sinks are counted in the budget period actually penalizes countries that engage in deforestation Comment The deforestation or loss of carbon sinks equates to increased emissions Annex B Parties would have to reduce other emissions to a greater extent in the budget period to meet their targets GENERAL GENERAL IMPLEMENTATION What What enabling enabling legislation legislation might be necessary to implement Implement any agreement that would mandate mandate legally-binding legally-binding emissions emissions reductions redactions on the United States Legislation to implement the agreement domestically will depend on the policies chosen to implement it domestically For example bringing a domestic carbon emissions trading program into into effect effect -- as the the President has proposed to start in 2008 -- would in all likelihood require legislation For legislation For now now the President has chosen to emphasize those measures that are more voluntary voluntary and and incentive-based incentive-based in nature such as the his five-year $6 billion initiative involving tax cuts and R D tax cuts and R D aimed aimed at at cutting cutting greenhouse greenhouse gas emissions The greater the success of these early efforts efforts the less we will need to rely on tougher measures to bring us into compliance with our emissions target down the road The Administration will seek Congress's Congress’s assistance in fully funding these initiatives and is still evaluating a wide range of options for other domestic implementation efforts and therefore I cannot state with any specificity what implementing legislation might be required Will we wait until the Protocol is ratified to take domestic actions to reduce emissions No No President President Clinton has has laid laid out out aa comprehensive plan for cutting U S emissions of greenhouse greenhouse gases gases that will enhance not diminish our economic growth and competitiveness The The President's President’s plan includ includes $6 billion in tax incentives and R D spending on energy efficient and and low low carbon-emitting carbon-emitting technologies technologies restructuring restructuring of of the electricity electricity industry that will both cut emissions and save taxpayer dollars overhauling ofFedeml emissions and save taxpayer dollars of Federal energy use and procurement practices voluntary plans for reducing practices and and industry-by-industry industry-by-industry consultations to develop specific volxmtary emissions We look to the Congress for support in these endeavors emissions We look to the Congress for support Talcing Taking quick quick decisive and economically sensible action to cut emissions will also send a powerful signal to the rest of the world that the United States is prepared to lead in the effort to address global wanning In particular this will help in our efforts to recruit developing countries to play a greater role Are Are you you planning planning to to implement implement the Protocol by Executive Order • 10 FEB-05-1998 FES-05-igg8 11 2g 11 ■■23 OES EGC □ES EGC 0191 647 0igi 202 647 202 P 12 25 P 12 25 and advice and providing advice in providing The Administration fully recognizes the important role of the Senate in Senate the with working to forward look we and consent to ratification of the Kyoto Protocol forward to working with the Senate will we will and with this Committee in particular toward this end The President has stated that we key from participation meaningful submit the Protocol for ratification once we have secured from key emissions international emissions for international developing countries and further elaborated rules and procedures for trading trading talcing begin taking can begin we can that we actions that As the President said in his State of the Union address there are actions ore economy ore our economy making our and making money and saving money while saving at home today that will reduce emissions while our 1993 with our began with which began - which efficient The Administration plans to pursue these initiatives 1993 We ahead years and montlui wcc k s the in vigor increased with Plan Climate Change Action Plan — vigor in the weeks months and years ahead We forward move forward we move as we the Congress as of the support of look forward to the support international an international implementing an of implementing way of just aa way Program just Change Program Isn't the domestic Climate Change Isn’t first policy first the policy to the agreement without securing Congressional Congressional agreement agreement to address to address initiative to billion initiative $6 billion President's recent announcement of a new S6 Absolutely not The President’s D R new in billion 7 $2 and credits tax in climate change which includes $3 6 S3 6 billion tax and $2 7 billion in new R D such before such emissions before reduce emissions to intended path a on country the place to seeks spending spending now process this start to necessary is It reductions become binding if the Protocol is ratified is to start this process now to avoid the much greater costs of starting later The intent is to build upon the accomplishments commitments of the U S Climate Change Action Plan launched in 1993 to meet the voluntary commitments to expected to not expected is not Plan is the Plan Although the Clim ate Change Although under the UN Framework Convention on Climate it 2000 year the by levels 1990 their to achieve its stated objective of returning U S emissions to their 1990 levels by the year 2000 it the after the and after in 1993 case in the case was the As was effective As can be effective has demonstrated that voluntary actions can 1993 and influence possible widest the to have the widest possible influence new initiative will require Congressional support to NATIONAL National SSECURITY ecurity national our national compromise our could compromise limits could emissions limits Protocol's binding emissions Is it true that the Kyoto Protocol’s military certain in participate to capability our limiting by way security interests in some way by limiting our capability to participate in certain military activities activities • protect to protect necessary to as necessary outlined as Defense outlined of Defense No In Kyoto we got everything that the Department Department of bunker of treatment the with deal objectives military operations and our national security These treatment of bunker Charter UN Charter fuels and with emissions related to multilateral operations pursuant to the UN of one-half of than less to amount military U S the Moreover emissions of greenhouse gases by one percent of total U S greenhouse gas emissions Even if these were to increase modestly make would make increase would an increase such an that such because of unilateral military actions it is simply untrue that the within l'OOm ample have We difficult more military military actions politically or Or diplomatically diplomatically more difficult We have ample room within the emissions military emissions U S military accommodate U S to accommodate Kyoto to to in emissions reductions commitments agreed agreed to in Kyoto actions military wrilateral result from might result that might including any that from unilateral military actions 11 FEB-05-1998 FEE-05-1998 11 29 11 29 OES EGC □ES EGC 202 202 647 647 0191 0191 P 13 25 P 13 25 Background Background More specifically the Protocol exempts from emission limits those emissions from “bunker” bunker fuels for international maritime or aviation use emissions from multilateral operations operations pursuant to the the United United Nations Charter Charter i e i e • not not only only multilateral multilateral operations operations expressly expressly authorized by the UN Security Council such as Desert Storm Bosnia Somalia but also multilateral operations not expressly authorized that are nonetheless pursuant to the UN Charter Gren a Countries may also also decide among themselves how how to account for emissions such as Grenada relating to multilateral operations for example U S training in another NATO country This provision avoids the need to use emissions trading to allocate such emissions End Background Background Why don't don’t you just exempt the military rather than use this complex formula for bunker fuels in fuels In the the Protocol Protocol and and the the decision decision of of the the Parties Parties to to exempt exempt certain certain well-defined well-defined military military operations operations We We have have ample ample room room within within the the emissions emissions rcductiom reductions commitments commitments agreed agreed in in Kyoto Kyoto to to accommodate U S military emissions including any that might result from wrilatcral military accommodate U S military emissions including any that might result from iinilatcral military actions Emissions of greenhouse gases by the U S military amount to less than one-half of one percent percent of of total total U S U S greenhouse greenhouse gas gas emissions emissions To To exempt exempt the the military military would would overlook overlook opportunities for the Federal government to make its own operations more energy opportunities for the Federal government to make its own operations more energy efficient efficient thereby saving taxpayers' taxpayers’ dollars DoD has already made significant strides in this area reducing their logistical burden of procuring fuel fuel '· • EMISSIONS Emissions TRADING Trading Isn't Isn’t it true that your own analysis showed that reducing greenhouse gas emissions would slow economic growth and raise gasoline prices at least $0 26 per gallon The projections of The findings findings to to which which you you refer refer are are projections of the the Interagency Interagency Analytical Analytical Team's Team’s draft draft analysis completed in June of 1997 Since this did not take into account the specifics analysis completed in June of 1997 Since this did not take into account the specifics of of the the Kyoto Protocol or the elements of the President's domestic plan the Administration is Kyoto Protocol or the elements of the President’s domestic plan the Administration is currently currently completing completing aa new economic economic analysis analysis Prcliminary Prcliminaiy findings findings of of the the new intcragency interagency analytical analytical effort effort How How can can the the Administration Administration set set up up a a verifiable verifiable trading trading regime regime anyway anyway The Administration will build upon its experience with the S0 SO32 emissions trading program in developing verifiable domestic and international trading regimes This coming Novemb’ November CT in Buenos Aires the Parties to the FCCC will continue their worlc work on emissions trading to define the relevant principles modalities rules and guidelines for the “relevant principles modalities rules and guidelines” for verification verification and and monitoring monitoring of of emissions trading emissions trading 12 FEB-05-1998 FEB-05-1998 11 30 11 30 OES EGC □ES EGC 0191 647 0191 202 647 202 P 14 25 P 14 25 will have the Protocol to the party to that every the Con ress Can you assure the Congress that every other other party Protocol will have equivalent equivalent trading emissions trading for emissions monitorin2 and verification procedures for monitoring the with the to comply have to will have Parties participating in the international emissions trading regime will comply with Parties the of meetings future in agreed be to procedures monitoring and verification procedures to be agreed in future meetings of the Parties equivalent that equivalent ensure that help ensure will help developed will be developed to be also to mechanisms also Compliance procedures and mechanisms parties trading all by maintained are procedures verification and monitoring and procedures are maintained by all trading parties us money will save trading will be so yon be How can can yon so sure sure trading save us money to trading to emissions trading domestic emissions with domestic experience with own experience our own as our well as as well studies as number of economic studies A number substantially to potential the has the potential to substantially trading has emissions trading international emissions that international indicate that combat acid rain indicate targets emissions with complying of costs the lower lower the costs of complying with emissions targets the for the Russia for pay Russia we pay that we premise that the premise on the constructed on is constmeted regime is trading regime the trading that the It seems that taken have taken they have because they not because economy not their economy of their collapse of the collapse to the doe to occurred dne that occurred reductions that reductions sensible this Is emissions Is this sensible gas emissions greenhouse gas any action action to reduce reduce greenhouse • with The international emissions trading scheme agreed to at Kyoto will be open to all countries with the can sell targets Countries whose actual emissions are below their allocated emissions can sell the can country can A country reductions A more economical emissions reductions difference to other countries seeking more the in the as or reductions domestic at efficient more is it because credits emissions enjoy excess “credits” efficient at domestic reductions or as in to due Europe due to aa coun1ries of the Former Soviet Union and Eastern Europe Germany or several countries case of Gennany major economic transition Allowing these countries to sell some of these credits can both help with lower domestic costs of greenhouse gas reductions in the U S and provide those countries with as possible as technologies possible the resources that will allow them to invest in the most climate-friendly technologies recover economies recover their economies their that with no tnmsfer of Aren't we giving Russia a potentially sizable Aren’t sizable transfer of resources resources with no guarantee guarantee that these with policiCl I Russian on leverage no have also will We wisely it use Russia will wisely We will also have no leverage on Russian policies with these money taxpayer money of taxpayer giveaway of a giveaway this a Isn't this funds Isn’t and renewable and of renewable use of increased use for increased In funding additional energy research and creating incentives for at aimed at is aimed plan is implementation plan Administration's domestic implementation alternative energy sources the Administration’s However creating the domestic capacity to reduce greenhouse gas gas emissions emissions cost-effectively cost-effectively However international emissions purchase to choose also may government U S - not the U S films firms purchases with any market transaction purchases obligations As wilh credits in order to meet their emissions obhgations the same At the requirements At regulatory requirements legal and U S legal with all will have to comply with of these credits will all U S and regulatory same most the in invest to generated revenue the use to incentives significant have will time Russia generated to invest in the most to continues to it continues recovers it economy recovers its economy as its that as climate-friendly plants and equipment so that modem climate-fiiendly markets international markets that it produce emissions credits credits that it can can sell sell on on international 13 1998 FEB-05FEB-05-1998 11 30 11 30 0191 547 0191 202 647 OES EGC □ES EGC P 15 25 P 15 25 Comment sustainable path in its use of energy Initial on a more sustainable will be on Federati on will Russian Federation The Russian nt The Comme projections Department Information Administration indicate that the tion Administration ent of Energy Energy Informa by Departm projections by countries of the former Soviet Union and Eastern Europe may have up to 800 million metric tons countries of the former Soviet Union and comment of emissions available for sale in 2010 End comment emissions credits available of much of you base much achieve ment and yon You claim that getting emission emissionss trading was a great achievement that getting You claim the But the trading But - on trading your economic case -- that that this agreem agreement won't be too costly ent won’t ic case your econom your in your princip les in trading without the principles includess only the most general concept of trading protocol protoco l include 1997 proposal January leverage by signing onto a binding target and Haven' t we lost our leverage proposa l Haven’t January 1997 trading ns trading timetable speciflcss on emissio emissions achieving the speciffc timetab le without achieving for procedu res for appropriate rules and procedures ing appropriate Clearly addition additional establishing work needs to be done in establish al work Clearly er Novemb the until nity opportu emissionss trading trading Wc will use use evety November multilateral and bilateral opportunity every multilateral We will emission of e structur of consensus on the structure Conference Argentina to develop a consensus in Buenos Aires Argentina Parties in the Parties of the Conference of Protocol locks in the right to trade an However let me be clear The Protocol regime However tradin3 regime emissio ns trading an emissions negotiation red at any future negotiation emissions is not a right that will be surrende surrendered this is and this s and emission adminis tered do you You monitor ed verified or administered tradin2 will be monitored how trading know how don't know You don’t The and procedures for the international emissionss trading regime are to be defined at the onal emission the internati procedures for rules and The rules November Fourth Confere Conference of the the Parties Parties COP-4 COP-4 in Buenos Aires Argentina Argentina this coming November nce of Fourth emission an of Until COP-4 COP-4 we we will work hard to build a consensus emissionss trading consensus on the structure will work Until domestic regime flexibility for our private sector and domestic provides the greatest flexibility regime which provides implementation implementation trading as is domesti c trading Can you you explain explain how countries have domestic it some countries wlll work if system will the system bow the Can with trade ies compan anticipated and others such as the EU do not Will U S companies here and anticipa ted here governm ent foreign Will our trades have to be made through the government countri es WUl foreign countries their will choose to design their governments wiU At this time it is is premature speculatee on how foreign governments prematu re to spoculat tiroe it At this sector private the however perspective however own domesti domesticc emissio emissions programs private sector li From our perspective reduction program ns reduction own as pro as c progT domesti ting participa will play a critical role we envision U S firms actively participating in our domestic will play a critical role similar a structure to seek buyers sellers -- and and intermediaries - of emission emissionss trading We will intermediaries -buyers sellers role for the private sector in the international trading regime One could envision a U S onal internati role for the private sector eventually counterparts or eventually company for instance purchasing emissions company for instance purchasing emissions permits from foreign counterparts from program or dealing directly with a managed program of aa private sector managesd case of the case in the brokers in private brokers from private d4'ect state-run office in a foreign country that chooses to maintain more direct trading office emissions trading state-run emissions government need-be the USG will be prepared to facilitate trades involvement Of course if need-be government involvement the envision the programs but we do not envision managed programs where foreign governments institute public sector managed where foreign governments USG funding trades directly UMBRE LLA UMBRELLA 14 1998 FEB-05FEB-05-1998 31 11 11 31 OES EGC □ES EGC 202 547 0191 2026470191 P 15 25 P 16 25 an EU - an You’ve talked a bout about 1etting setting up a potential trading block of countries outside the EU You've to intend umbrellat to to counter counter their bubble How would the umbrella work Would you to umbrells such up setting think you Do legal that Is limit trading trading to to countries countries within the umbrella umbrella up such limit ve perspecti aa block that excluded EU good from a broader foreign policy perspective sense eood makes EU the block that excluded umbrella group -We have have proposed proposed a meeting of the prospecti prospective - including ve members of an “umbrella” We to -- to others among Russia and Zealand representatives Australia New — representatives from Canada Japan Australia to forum as aa forum to discuss the function function s s that the group may have The umbrella group will serve as discuss involving design of develop consensu consensuss among the member cmmtries countries on important issues mvolvlng of an an develop Aires 1n ce Conferen Fourth emissions trading regime up Conference of the Parties in Buenos Aires the to leading emissions rotes of the umbrella group with this coming coming November Argentinaa this November We will be reviewing other roles Argentin compatib le our partners partners during this meeting Whatever function the umbrella serves will be fully compatible our objectives with applicabl applicablee trade agreemen agreements WTO MAI etc and our broader foreign policy objectives ts WTO with THE BUBBLE Eizensta t Under Secretar ent gives the EU an advantag If the bubble “bubble” arrangem arrangement advantage as as Under Secretaryy Eizenstat to it s why did the U S agree ional observer congressional observers agree to it admitted to congress • agreement with the EU on Acceptingg the the European European Bubble arrangem arrangement on ent was essential in reaching agreement Acceptin nal number of of elements elements of the the Kyoto Protocol which were key to the US including internatio international aa number g countries developin s emissions trading joint implementation and project-based reductions in developing project-based reduction emissions trading joint implementation we under the Clean Developm Development Mechanism m While we ultimately accepted their proposal we ent Mechanis under succeededd in in scaling scaling down the benefits of the bubble by excluding new members to the EU from fi-om succeede · the ent commitm bubble allocation arrangements commitment period and defining the ongoing an during arrangements bubble liance non-comp responsibility individuall members in case of non-compliance ility of the EU and individua responsib led and sadd bubble and air under their bubble ns free iihot Haven’t we just given the Europea Europeans “hot air” saddled Haven't ourselves with paying for for it it EU agreement with the EU Agreeing to to the European Bubble arrangem arrangement ent was essential in reaching agreement the European Agreeing emissions international emissions on aa nwnber number of of element5 elements of the Kyoto Protocol key to the U S including international on the under the developin g countries under reductions in developing ased reductions trading joint implemen implementation project-based tation and project-b · trading EU-wide “Clean Developm Development Meohanism ” Dependingg upon how the EU decides to allocate EU-widc m Dependin ent Mechanis Clean reduction s from reductions emissionss to to its members members several European countries could stand to benefit fi'om emission generated by the the UK UK and and Germany Germany Germany as the UK These reduction reductions however came only at il'eat great effort by the UK and Germany s however These Germany's taxpayers funded virtually shut shut down down its coal industry and shifted to natural gas and Germany’s virtually Germany In ents in the fonner East Germany industrial restructur restructuring in rovements ing and expensive efficiency improvem industrial Greece and Greece Spain Portugal in allowing their their reduction to be used to subsidize emissions growth allowing these as themselves with paying for it as these it is is the German and UK taxpayers who have saddled “saddled” themselves it emissions of emissions buyers of or other potential buyers U S the by tons wilt will no longer be available for purchase tons 15 FEB-05-1998 FEB-05-1998 11 31 11 31 OES EGC 0191 647 0191 202 647 202 P 17 25 P 17 25 credits in an international emissions trading market At the same time those same countries will likely be accepting more stringent internal reduction targets which will also have their costs COUNTRIES DEVELOPING D eveloping C ountries key rrom key What exactly does President Clinton mean by meaningful “‘meaningfal participation from developing countries countries” Climate change is a global problem that requires a global solution Current projections show that sooner or sooner 2030 or by 2030 developing country emissions will swpass surpass those from industrialized countries by measures take measures climate change cannot be solved unless developing countries countries take The problem of cUmatc thcmsclvc s to limit greenhouse gas emissions themselves The U S will be working bilaterally regionally and multilaterally in the coming months and their emissions We will years to promote more active efforts by developing countries to limit tiieir the economic growth and with concentrate on key countries and on approaches that are consistent the environmental objectives We will not submit the development of these countries and with other environmental have we feel we Kyoto Protocol to the Senate for advice and consent to ratification until achieved meaningful participation from key players in the developing world • country'' encompasses a wide range of nations We must also recognize that the term “developing country” tenn developing contribute differently to global emissions and on which are at various stages of industrializati industrialization emissions country one-size-fits-all approach to measuring developing country Accordingly there is no one-size-fits-all of participation Clearly a country with high GNP or one that emits a proportionally large share of are global emissions should be expected to do more than one that is poor or whose emissions are negligible targea under the Kyoto Protocol Can developing countries assume binding targets Yes they can Developing countries seeking access to the benefits of international emissions Protocol the Protocol trading may voluntarily assume binding targets through amendment to the annex of the that lists countries with targets They may choose to do so to gain access to the financial benefits of international emissions trading Despite our efforts and the support of some developing countries the Kyoto Protocol does not include a separate article for developing nations to assume voluntarily targets Did developing countries agree to do anything in Kyoto participation of Yes The Kyoto Protocol makes a down payment on the meaningful participation of developing developing countries countries • 16 FEB-05-1 998 FEB-05-199S 11 31 11 31 OES EGC OES EGC 0191 647 0191 202 647 P 18 25 P 18 25 mechanism through First development mechanism countries agreed to the creation of a clean development developing countries First developing the in the partnerships to cut emissions in which developing countries can establish partnerships industrialized and developing which industrialized of a construction of - such as construction developing g world to the benefit of both parties Specific projects developin sector private sector the private participation from the - can include direct participation high-tech low-emitting power plant high-tech low-emitting emissjons certified use to able be will Industrialized emissions countries finns within those countries Industrialized countries and firms gas greenhouse gas compliance with greenhouse reductions fi-om such projects to contribut contributee to their compliance reductions earned from more cleaner for need they y technolog reduction targets while developing cleaner more developing countries get the technology development sustainable development sustainable implemen tation of their existing Second developin developing countries also agreed to advance the implementation g cowitrfo s Second commitm ents The11e comrmtments Change These Conventi on on Climate Change Framewo rk Convention commitments wider the 1992 Framework commitm ents under requirem ents on actions which particular more specific reporting requirements to all Parties include in particular apply to which apply the includin g the sectors tion of specific taken emissionss and al110 also call for the identifica identification including reduce emission to reduce taken to management in forestry and waste management energy agriculture forestry industry sectors as well as agriculture transport and industry energy transport which developing national programs to combat climate change considered in developing actions should be considered which actions developing countries Why did the U S auee agree to delete a key provision on developing from Protocol • pennitting voluntary free-standing provision permitting Although we would have preferred a free-standing preserving succeeded in preserving still we countries g developing countries succeeded adoption of emissions targets by developin in participate in may participate Developing countries may this option in the emissions trading article Developing emissions emissions trading provided they take on a quantified emissions limitation or reduction B Annex B commitment under Annex commitment nations developing nations Why did the U S agree to a Protocol which exempts developing the of the 10 of The developin g nations from action In fact Article 10 Protocol does not exempt developing The Protocol ly specifical parties specifically ents of all parties Protocol commitments obligatio ns to advance the commitm includes obligations Protocol includes t national programs implemen are including developing countries All parties obligated to implement including developin g that industrial and other sectors to mitigate transportation industrial energy transportation actions in the energy consider actions that consider participate in emissions climate developing countries to participate Protocol also permits developing The Protocol change The climate change trading trading provided they adopt legally binding emissions targets under Annex B We are developing countries as planning further efforts to secure more meaningful participation by developing meaningful participation planning further Convention on Framework Convention we we continue efforts to address global warming under the Framework Climate Change binding·· new binding counttles to add new permi developin Isn’t developingg countries Isn't it true that the Protocol will permit meetings limitations future climate change meetings at fUtnre U S by a simple 3 4 vote at the U S on the limitatio ns on 17 FEB-05- 1998 FEB-05-1998 11 32 11 32 P 19 25 P 19 25 202 647 0191 OES EGC OES EGC apply would apply that would limitatio ns that No contrary we would need to agree on new binding limitations the contrary On the No On before to agreeme nt would also require Senate advice and consent before any such agreement and any U S and the U S to the ratify it to ratify were to President were the President it to countries to developed countries resources from developed Why “mechanisms” nisms to transfer resources we need mecha do we Why do so protoco the obligations under developing countries protocoll so countries are exempt from obligations s These countries developing countrie es to them why transfer resourc resources them important two important the two accomplish the transfers They will accomplish mechanisms isms are not simple resource transfers These mechan concentrations greenhouse gas concentrations objectives countries in reducing global greenhouse developing countries involving developing objectives of involving cost lower cost at lower reductions at ies to achieve emission and allowing U S compan compames emissionss reductions global in global reductio ns in real reductions will produce real projects they wiU First supporting Clean Develop Development ment projects ng Clean First by supporti countric develop ing countries rations in use concent greenho greenhouse concentrations in developing their offset their compan ies will be able to partially offset Second by COM U S compames particip ating in the CDM by participating Second ns reductio n obligatio ns reduction emissio emissions obligations the let the complet ely let Mandat e which completely The fatal fatal error error in in this this negotia negotiation tion was the Berlin Mandate The and fail and process fail 't we have just let this Kyoto process developing Shouldn’t countri es off the hook Shouldn develop ing countries be must that problem started over that must be over on aa sounder footing As you have said this is a stsarted foot wrona the on goin2 decades so why aet get going the wrong foot resolved over decades now can now and can requirements of the Berlin Mandate and In fact fact by by agreeing in Kyoto we satisfied the requirements In us put it behind us confidence international confidence protocol not only would international Had Conference nce failed to produce a protocol the Kyoto Confere Had the unfulfill ed an unfulfilled in our our ability ability to achieve an agreeme agreement nt have been eroded we would still be left with an in action take to refuse developing world to Berlin Mandate as an excuse for some in the developing to take action Berlin their of their limits of tough limits to tough to agree to es now have to ing countri What developing countries incentiv e do develop What real inceutlve own own analyses most analyses - most wannin g Developing incentiv e to address global warming countrie s have plenty of incentive Develop ing countries its and its change and climatic change indicate countrie s that will suffer the most from climatic develop ing countries is developing indicate that it is ed effects associat associated effects een -J1 betw mechanisms flexibility mechanisms attractive flexibility Within Jl between economically attractive Protocol itself the most economically Within the Protocol have available to those Parties that have Annex II countries - are only available emissions trading countries and emissions Annex limits quantified emissio undertak en quantified undertaken emissionn limits 18 FEB-05- 1398 FEB-05-1998 11 32 11 32 0191 202 647 0191 OES EGC P 20 25 P 20 25 more participate more to participate countries to developine countries What doing to get developing itrategy doing Administration's strategy the Administration’s is the What is l fully in the Protoco Protocol regional ly as well We are currentl currentlyy engaging bilaterally and regionally countrie s both bilateraUy develop ing countries key developing with key engagin g with We are obligations existing as obligations multilat eral fora to discuss the ways in which they will fulfill their in multilateral as in the Protocol such as through the under strengthened ened by the Kyoto Protocol Conven tion and strength Framework Convention the Framework under the pilot AJJ Jointly ented Implem U S Country Studies Studies Program and the Conven Convention’s Jointly” AIJ pilot Activit ies Implemented tion's Activities Program and U S Country phase Develop ment operatin g rules for the Clean Development We discussi ng with them how to set the operating be discussing also be will also We will the in the possible as participa te as fully possible m SO that they can participate Mechanism Protocol so the Kyoto Protocol under the Mechan ism under COM CDM to agree to formula tions by which they could agree Through continue to explore formulations we will continue discussi ons wc these discussions Through these emission s upper limits on their future emissions developing regardi ne developing expectations regarding You went went into into the conference nce with very low expectations the Kyoto confere You develop ing individ ual developing countries provisionn that would have allowed individual just seeking a provisio es -- just countri denounced countries provision was denounced voluntarily Even that modest provision Protocol voliintarily the Protocol into the opt into to opt countries to othen Brazilians and others Indians Brazilians and defeated Chinese Indians receptio n by the Chinese In light of that reception defeated In and countrie s into the developing countries isn’t it it self del self-delusion you will draw the key developing usion to think that yon isn't Protocoll even in the next fe few yean years Protoco age oflever particip ate and the lack of Given leverage countrie s to participate developing countries incentiv e for developing of incentive lack of the lack Given the to countries to develop ing countries over won't it be years before we can expect enough key developing them won’t over them particip ate participate country dcvc loping country position s of the developing Although moveme nt in the positions clearly was not as much movement there clearly Althoug h there many that many provisio ns that Prote CA l includes provisions blocs have liked the fact that the Kyoto Protocol would have we would as we blocs as joint and trading emissio ns a s emissions developing opposed prior conference -- such as ce — prior to the conferen countrie s opposed ing countries develop exist does ty implementation — $hows shows that negotiating flexibility nc gotiating flexibili ntation -impleme Many bhmtly before Kyoto that they would not discuss governm ents stated bluntly country governments develop ing country Many developing Howeve r commitm ents However limits undertoo k its own commitments develop ed world undertook until the developed emissio ns until their emissions on their limits on - what the U S we an opportu opportunity to lead the global response by our own example nity to have an now have we now world's rth of the world’s one-fou does matters in these these discussi discussions ons both because we emit around one-fourth vitally in matters vitally does creativity in innovation and creativity greenhouse gas emission emissionss and because others look to us for innovation use gas greenho resolving them problems and resolving confi'onting confron ting problems won't countries1 won’t developing countries If it lit does does take take years meaningful participation by key developing f'ul participation years to secure meaning If own your own by your Senate by tbe Senate submitted to the Protocol is ready to be submitted it be years before the Protocol d standar standard 19 FEB-05-1998 FEB-05-1998 11 33 11 33 OES EGC □ES EGC 0191 547 0191 202 647 202 P 21 25 P 21 25 us for us priority for top priority is aa top countries is developing countries key developing participation from meaningful participation Securing Securing more meaningful from key the on is progress more believe we and Kyoto made a down payment on such such participation and we believe more progress is on the that and that progress and in progress work in is aa work Protocol is the Protocol that the clear that made clear has made said the President has horizon That said ratification for ratification it for submit it not submit will not he will involvement he without more developing country involvement have you have target yon the target achieve the to achieve won't it in effect become impossible to And if years do pass won’t period accepted in the 2008-2012 period our accept our not accept did not we did said we That said better That the better Protocol comes the Protocol the sooner Clearly Clearly the sooner the comes into into force force the very a is Protocol Toe force The Protocol is a very into force and entry ratification and immediate ratification premised on target premised target on immediate entry into the from the separate fl-om entirely separate - entirely out worked be to remain details many and docwnent complicated complicated document and many details remain to be worked out question country question developing country developing phased-in offering aa phased-in by offering this by reflects this plan for President's domestic The The President’s domestic plan for cutting cutting emissions emissions reflects reduce that reduce efforts on be will emphasis the years first few the first In the action In approach to taking action few years the emphasis will be on efforts that technologies efficient technologies energy efficient of energy use of and use purchase and the purchase for the emissions through creating incentives for and use and energy use lowering energy pollution lowering reducing pollution by reducing - by right own right their own in their sense in make sense measures make These measures money for saving saving money for consumers consumers and II years and several years of several window of is aa window there is 2008 there period in 2008 Before the beginning of the first budget period for Protocol the submit to need we what accomplish can we am confident that within that time we can accomplish what we need to submit the Protocol for your consideration your consideration MECHANISM DEVELOPMENT CLEAN C lean D evelopment M echanism will How will institution How international institntion another international with another us with to saddle This CDM is clearly a scheme to saddle us Bank World Bank oftbe arm of another arm yet another this yet Is this up Is will it be set this be funded How will set up the World and industrialized and which industrialized through which means through provides aa means Mechanism provides The Clean Development Mechanism the to the world developing the in emissions cut to partnerships establish developing countries can can establish partnerships to cut emissions in the developing world to to not to institutions not existing institutions use of existing benefit of both parties It was designed to make effective usc of certified project certified each project from each proceeds from the proceeds of the share of small share from aa small funded from create a new one It will be funded World the World not the Protocol not the Protocol to the Parties to the Parties of the arm of an arm is an to reduce greenhouse gas emissions It is Bank Bank to countries to resources from developed countries Why do we need mechanisms ‘ mechanisms” to transfer resonrees so protocol the under obligations from exempt are countries These countries developine developing under the protocol so them to them resources to why transfer resources working be working will be U S will the U S and the solution and global solution requires aa global Climate change is a global problem that requires active more active promote more to promote years to and years months and coming months the coming in the multilaterally in and multilatcrally regionally and bilaterally regionally bilaterally partnerships create to is way One emissions their limit to countries developing efforts by by developing countries to limit their emissions One way is to create parmerships countries developing countries As developing emissions As cut emissions technology and through which we can can share share our our technology and cut 20 FEB-05-1 998 FEB-05-199S 11 33 11 33 OES EGC □ES EGC 547 0191 202 647 P 22 25 P 22 25 they economies they compromising their economies understand environment without compromising understan d that they can protect the environment Developing commitments Developing may more inclined to join us in taking on emission reduction commitments be more may be wider targets countries may participate under participate in emissions trading if they adopt binding emissions countries economies and for the global Annex which could provide even greater benefits for their economies B which Annex B environment environment countries developing countries With developing participation with gful participation” How will this advance meanin “meaningful of participation of meaningful participation The CDM CDM and the projects it will generate will advance the meaningful The These manner le sustainab developing cowitries by helping those countries to develop in a more sustainable developing countries show and show technologies and carbon-intensive technologies projects may help them acquire and introduce new less carbon-intensive projects may economy the economy for the ent can also be good for environment them that what is good for the environm take it take How can we make this scheme work What will it With of private industry in the U S and in developed countries around the world cooperati on of the cooperation With the countries developin g countries mitigation efforts of developing the CDM can advancingg the mitigation importan t role in advancin play an important can play the CDM developing developed and developing Ultimately businesses in developed will take the combined efforts of businesses it will Ultimately it procedures reasonable rules and efficient procedures countries governments of both to adopt reasonable as well as the governments countries as CDM to promote the greatest possible number of projects under the CDM as Mechanism as Development Mechanism As trading you are claiming the Clean Development emissions trading in the case of emissions As in once bu once a big success and as a key element in keeping costs down for American business but would again the Protocol only includes the general concept with no clear outline of how it would again the without work Haven't we lost our leverage by signing onto a binding target and timetable work Haven’t lntpleme otadoo joint implementation the spectncs achieVing tbe specifles on Joint achievmg Kyoto the Kyoto of the significant success of represents a significant No No we have not The creation of the CDM represents be would be CDM the how framework for Protocol CDM would currently the Protocol contains only a frameworic Protocol While cuirently the at the elaborated at transparency will be elaborated set up procedures designed to ensure transparency modalitie s and procedures up modalities set ut througho work will U S The Fourth woik throughout Novembe r in Buenos Aires Conferen ce of the Parties in November Fourth Conference the components of the program in its final form are as flexible to ensure that the components year to upcoming year the upcoming possible as as possible Can you describe in detail how the CDM would work help enable help It will enable implementation It Yes The CDM largely embodies our ideas on joint implementation developing countries participate meaningfully in the global response to climate change by developing countries participate meaningfully oflowerdi fftlsion of lowerefficiency the diffiision encouraging encouraging projects in their countries that promote energy efficiency by so by do so will do cmc rgy e renewabl carbon emitting technologies and the use of renewable forms of energy The CDM -mil technologies carbon s emission gas se greenhou in the greenhouse enabling the private sector in iu the dcvclopc developedd world to share emissions enabling active nce conseque a reductions achieved as a result of these projects either directly as a consequence of their active reductions achieved 21 FEB-O5 -1998 FEB-05-1998 11 34 11 34 OES EGC □ES EGC 202 647 0191 P 23 2 5 P 23 25 the emissions purchasing the emissions indirectly by purchasing collaboration and investm investment projects s or indirectly ent in these project ration and collabo these use these reductions achievedd on the open-m open-market arket The private sector will then be able to use ons achieve reducti home commitments at offset greenh greenhouse reductions reduction commitments ouse gas reduction ons to offset reducti The COM The supervi se the CDM Background executi ve board to supervise fonn an executive will form Protocol will the Protocol to the Parties to Background Parties stock institutions such as stock - existing institutions will “operational entities” ional entities multiple operat designate multiple also designate will also emissio ns the emissions certify will certity die - that wiU agencies exchanges development international agencies ment banks or international regiona l develop exchanges regional Participation in the criteria Participation reductions from each each project activity on the basis of agreed criteria project activity resultin g from reducti ons resulting territory its territory within activities CDM 'Will will be provee the project activities its volunta ry and each Party must approv be voluntary CDM benefit s long-te rm benefits measur able and long-term These project activities be designe designedd to achieve real measurable will be es will project activiti These are that are ons reducti ns emissio will achieve emissions reductions that related to the mitigation of climate climate change change and they wUl mitigat ion of to the related additional to any any that that would would occur occur in in the the absenc absencee of these activities activities At their next session in nal to additio elabora ting Conven tion will begin elaborating November this year year we we expect expect that that the Parties to the Convention ber this Novem CDM accoun tability under the CDM modalities and proced procedures to ensure ensure transparency efficiency and accountabiUty transparency efficiency ures to ties and modali es activiti project of verifica tion in particu particular through proced procedures activities auditin g and verification indepen dent auditing ures for independent lar through in admini strative A share of activities will be used to cover admimstrative from these project activities procee ds from the proceeds of the A share to vulnera ble to particu larly vulnerable expenses of the as well as to assist developing countries that are particularly develop ing countries well as CDM as the CDM expens es of n emissio d certifie Import antly certified emission ion costs Importantly the adverse effects effects of of climate climate change to meet adaptat adaptation the adverse beginning of the first reductions obtained during the period from the year 2000 up to the beginning reducti ons obtained during the compli ance in that first commitment 2008-2012 achievi ng compliance 012 can be used to assist in achieving period 2008-2 tment period commi tment period commi commitment throug h the CDM The Protoc Protocol indicates that the part of a nation nation’s 's target that can be met through es that ol indicat The of possib le that the ability of will be be determ determined by aa later later Meeti Meeting Parties So it is possible tbe Parties ng of the ined by will it Isn't it restricted Isn’t our compa companies to use nse the our target will be very restricted the CDM to meet onr nies to our sign to sign foolhardy to ifbe Would n•t if If is very be foolhardy will we walk away from the deal Wouldn’t restric ted will very restricted it is If it be to going is CDM use the the to be restricted our ability to nse before we know how restricted Protocol before the Protocol undefin ed COM is undefined At extent to country’s 's target that can be met through the CDM which aa country to which the extent present the At present regard ity in maxim um flexibil seek maximum flexibility in this this regard Our goal is to seek d financed How will the CDM be finance emissio ns cost-ef fective ssions The Clean Clean Develo Development fundamentally entally a vehicle to allow cost-effective is fundam Mecha nism is pment Mechanism The anticip ate technol ogies Thus we anticipate reductions sector investment inves1ment in clean technologies private sector facilita ting private by facilitating ons by reducti oftrus Most sources that of financing of tlus ftom private sources for the CDM will be from financi ng for majorit y of vast majority the vast that the that ate that anticip es countri ing financing will be channeled directly into investments in developing countries We anticipate develop ents investm financing will be channe led directly While mechan ism While there may administrative associated with using the mechanic transaction costs associated strative transaction minor admini be minor may be there to ments govern for obligat ion for governments to no obligation is no purcha se credits there is governments ments would also be free to purchase govern ute in contrtb contribute in any any way way 22 FEB-05-1998 FEB-05-1993 11 34 11 34 OES EGC □ES EGC 202 647 0191 202 647 0191 P 24 25 P 24 25 with countries with developina countries assisdne developing How big a share of the proceeds will be devoted devoted to assisting Who idea any have really we Do SO% 20% 5% change climate to adaptation adaptation to climate change - 5% 20% 50% Do we really have any idea Who decides the be derived will be be shared to be The Parties Parties will will decide decide We We anticipate anticipate that that the the ••proceeds “proceeds” to shared will derived from from the project underlying the of value the not project a by achieved reductions emissions the of value of the emissions reductions achieved by a project not the value of the underlying project entities the entities to the up to reductions up emissions reductions The Protocol leaves the the distribution distnbution of of the the certified certified emissions collected funds the of terms in range 10% the in be will figure this that anticipate We involved involved We anticipate that this figure will be in the 10% range in terms of the fimds collected Kyoto in Kyoto Parties in Most Parties CDM Most the CDM under the projections of depending depending on on projections of the the volwne volume of of traffic traffic under figure this with comfortable be would they that indicated indicated that they would be comfortable with this figure we that we fund so for a press for the nerve The The OPEC OPEC countries countries actually actually had had the nerve to to press a compensation compensation fund so that from result to likely is that oil of use reduced the for up make to them pay to have would would have to pay them to make up for the reduced use of oil that is likely to result from an an end proceeds these couldn't but deman that opposed We gases greenhouse cot to effort effort to cut greenhouse gases We opposed that demand but couldnH these proceeds end countries up up being being applied applied at at least least in in part part to to pay pay off off OPEC OPEC countries for allows for Mechanism allows Article 12 of the Protocol that that establishes the the Clean Clean Development Mechanism climate of effects adverse the to vulnerable particularly are that Parties to go to proceeds proceeds to go to Parties that “are particularly vulnerable to the adverse effects of climate change climate change ” of climate effects of adverse effects to “adverse change change” to meet the “the costs of adaptation adaptation ” The The reference to makes change makes climate change ” to climate measures to response measures to for as as opposed opposed to for example example adverse “adverse effects effects of of response coastal low-lying wjth nations and states island small benefit to clear that it it is is intended intended to benefit small island states and nations with low-lying coastal areas areas 41 included objective whose fund compensation so-called the from This concept differs differs “compensation” fund - whose objective included to taken by actions taken assistance to nations that would be adversely affected by actions by developed countries countries to mitigate mitigate climate climate change change have not have do not that do countries that developing countries Since Since projects projects under under the the CDM CDM will will be be done done In In developing are project are given project from aa given reductions from the reductions that the verify that will monitor who will eminions emissions budgets budgets who monitor and and verify anyway occurred anyway have occurred wonld have than would more than those redactions will decide Who will real real Who decide that that those redactions are are more that decide they will how and and how will they decide that emission certify emission will certify who will entities who The The Parties Parties to to the the Kyoto Kyoto Protocol Protocol will will establish establish operating operating entities are reductions are emissions reductions resulting emissions the resulting that the reductions from projects This certification will verify that be to be have to rules have the rules Though the anyway Though real and and additional additional to to those those that that would would have have occurred occurred anyway the of the authority of the authority to the subject to be subject will be fleshed out the operating entities and their procedures will Parties of Conference Conference of Parties If credits were given for redactions that would have occurred anyway then the CD CDM could countries could industrialized countries is industrialized it That turn turn into into another another environmental environmental sham sham couldn't couldn’t it That is could were that were reductions for credit getting by requirements reduction tbelr satisfy to allowed be be allowed to satisfy their reduction requirements by getting credit for reductions that countries developing the since and going going to to have have to to occur occur anyway anyway ID in developing developing countries countries and since the developing countries right that right Isn't that budgets Isn’t their budgets of their reduction offsetting no be could there budget no have have no budget there could be no offsetting reduction of 23 FEB-0 5-199 8 - FEB-05-1998 11 35 11 35 OES EGC □ES EGC 0191 202 647 0191 P 25 25 P 25 25 that establishes that clearly establishes No Mechanism clearly Development Mechanism the Clean Development defining the in defining Protocol in Kyoto Protocol The Kyoto No The any to any additional to emissions that are additional CDM reductions in emissions only if there are “reductions certified only be certified projects be CDM projects independently Projects will be mdep dently that activity Projects project activity ” certified project the certified of the absence of the absence in the occur in would occur that would next the next of the additional Over the course of audited reductions are indeed additional emissions reductions the emissions that the verify that to verify audited to efficiency transparency efficiency year procedures to ensure transparency Convention will design procedures the Convention to the Parties to so Parties or so year or processes CDM processes the CDM in the accountability in and accountability international another international How administered istered Are we going to create yet another be admin CDM be the CDM will the How will it control it institution institution Who will control executive small executive The Mechanism with the help of a smaU Development Mechanism Clean Development the Clean oversee the will oversee Parties will The Parties emission project emission board created will certify project designated not “created” entities to be designated” operational entities and “operational board and revisit will revisit - they will Parties reductions elaborated by the Parties details have not been elaborated the details time the this time At this reductions At November 1998 Parties in November these Conference of the Parties Fourth Conference the Fourth at the issues at these issues JI implementation but JI Yon same as our idea for joint implementotion the same effect the in effect is in idea is this idea that this say that Yon say international without new international would company basis without company to company on a company operated on have operated would have bureaucracy right bureaucracies require a new bureaucracy will require while the CDM wiU bureaucracies whUe implementation with the The similar to that of joint implementation effectively very similar is effectively COM is the CDM of the concept of The concept CDM the CDM envision die crediting country We do not envision another country reductions made in another for reductions investments for of investments crediting of ns izatio organ already-existing organizations consult with already-existmg as bureaucracy We plan to consult additional bureaucracy an additional needing an as needing general types of who are likely to be asked to serve as “operational entities” m the CDM CDM Some general who are likely to be asked to serve as operational entities in exchanges orgamzations development banks or stock exchanges regional development would be regional role would this role for this possible for organizations possible 24 P 25 TOTAL P 25 TOTAL