November 16, 2000

Mr. David B. Sandalow, Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs (OES) and Ambassador Mark G. Hambley, U.S. Special Negotiator on Climate Change and David Gardiner, Executive Director of the White House Climate Change Task Force

DAVID SANDALOW: This is the fourth day of negotiations. We are nearing the end of the first week, and negotiators are working hard across a broad range of issues to prepare for the arrival of ministers this weekend. Our minister, Frank Loy, will arrive here tomorrow in preparation for meetings Saturday and Sunday and into next week.

I would like to say a few words tonight about United States assistance to developing countries in the fight against climate change. The United States spends billions of dollars a year combating climate change in cooperation with developing countries. U.S. assistance spans the full range of Convention obligations. We assist in the development of national communications, we facilitate the transfer of technology, and we help developing countries adapt to the impacts of climate change. In fact, U.S. assistance goes well beyond the very narrow obligations under the Framework Convention on Climate Change to include disaster relief, capacity building, economic diversification assistance, national communications, vulnerability assessments and identification of mitigation options.

U.S. investment in research, development, and deployment of clean energy technologies helps developing countries secure technology to address sustainable development and emissions reduction goals. Since 1997, the United States has increased research and development funding for clean energy technologies in key sectors-an increase of more than US$3 billion.

U.S. assistance to developing countries, in concert with our Congress and our appropriations process, takes many forms and is channeled through many organizations. Let me give you a small flavor of what we are engaged in:

Since 1993, the U.S. Agency for International Development has spent over US$1.4 billion for climate-related mitigation activities. USAID is currently implementing a five-year Climate Change Initiative in over 50 developing countries to promote sustainable development that minimizes growth in greenhouse gas emissions and reduces vulnerability to climate change.

In addition, under the U.S. Country Studies Program, the U.S. has supported 55 developing countries in shaping national communications, developing inventories and building capacity to fight climate change.

Much of the U.S. Global Change Research Program's roughly US$1.7 billion allocation on programs to enhance our ability to understand the extent and impacts of climate change is conducted in cooperation with other countries.

Finally, U.S. assistance for disaster relief is massive. For example, the U.S. committed over US$600 million and a dozen federal agencies to assist the victims of Hurricane Mitch in Central America.

AMBASSADOR MARK HAMBLEY: Thank you. Let me make a brief comment on the course of the negotiations. They continue very much as they did yesterday. Things are moving slowly, but they are moving forward in most areas. In mechanisms, many of the more technical issues are now being handled in small off-line groups, which then report to the contact group itself. That is a positive development, I believe. They are moving particularly through the CDM text. On compliance, there has been a new text introduced by the G-77 that will be considered. That, of course, could slow things down, if that is considered. We are hopeful that will also be resolved. In Land-use, Land-use Change and Forestry, they have had some very good discussions. We have also had some very good off-line discussions as well on that issue. Tomorrow, we understand, that group will also begin to move in to off-line groups to address some of the particular issues and points of interest. Tonight there will be a discussion in the sinks group by the climate representative on the issue of permanence in the CDM, CDM and sinks being the topics of the hour. On technology transfer, that group is moving along quite well actually. Many brackets have been removed on the one category with deals with needs assessments, enabling environments, and technological assessments. That is a very positive development, I believe. In the second group, which deals with issues of technology transfer and the mechanisms needed to avail countries of that transfer, there is also starting to make some progress, so we hope that that will be resolved in the near future.

Capacity building is also an issue, which has good days and bad days. We had a very good day today. Again, the brackets, which are the key by which we are monitoring progress on these negotiations, have been removed on that text as well. So we hope that text continues to develop as we move forward in this process.

On Convention Articles 4.8 and 4.9, dealing with adaptation and vulnerability, there we have actually made some progress as well in the adaptation portion of that text. We are now into some difficult discussions regarding the most contentious issues regarding the vulnerability aspects, particularly the aspects of 3.14, which is on adverse impacts of measures on climate change. That is pretty much where the state of the negotiations stands. In following up to Assistant Secretary Sandalow's statement, I would like to just note that in the back of the room, we have several copies of the publication called, "United States Government Support for Climate Technology Cooperation," which gives a country by country list of the types of projects we are engaged in around the world. I would recommend it all to you. It talks about such things as in, for instance, the Russian Federation we have collaboration on renewable energy. We have emissions inventories and methane recovery programs. Looking at India, we have a bay-gas cogeneration project and we have a climate change initiative for stable development. There are several other projects in India we are engaged in. In Tanzania, we have solar energy and economic development initiatives. In Zambia, we have a project on integrating renewable energy considerations in the Zambian electricity reform sector. I think that this is a very good book and it shows the breadth of activities which we are engaged in throughout the world under the Climate Change Convention. We have obligations there in terms of our obligations to assist countries in both capacity building and in technology transfer. This is a very good indication of how the United States is responding to those two obligations. Thank you.

DAVID GARDINER: Just one further item to supplement what both Ambassador Hambley and Assistant Secretary Sandalow have said: the United States is hosting an event tomorrow evening between 18:00-20:00 to allow people to hear from businesses in the United States and U.S. Government representatives, as well as representatives from developing countries, about the Technology Cooperation Agreement Pilot Project, a U.S. Government effort to promote transfer of technologies. This pilot project is a model of what is being discussed now for how we might move forward with technology transfer more extensively under the Kyoto Protocol. It is a process in which we engage all stakeholders in these developing countries to set priorities for investments in key technologies and develop a plan to first remove barriers to those investments and technologies, and second to attract investment for those technologies. It has been highly successful and it is a good opportunity to learn more about it tomorrow evening.

ANDY REVKIN, NEW YORK TIMES: I just listened to the bracket elimination process. It is pretty amazing. It is so microscopic, but still here after a week, the main points that I hear floating around here of contention are very macroscopic. Have any of those been addressed in any meaningful way yet? Is that something that really only can be left to the ministerial level or is there any kind of advanced work that could ever be done on anything other than the bracketed minutia? I think we all know what we are talking about-nuclear power dams, forests-and minor details like that.

SANDALOW: It would be typical in negotiations such as this for major political issues to be left to the ministers. That is what is happening in these two weeks. There are a wide-range of critically important technical issues that are being addressed by negotiators this week. Issues are being framed for discussion by ministers as well. Some discussion on more political topics is underway, but of course, final deals will not be cut until the end.

QUESTION: I have one question about the G-77 position on compliance. You yourself said that new texts have been introduced and might slow down things, if I understood you correctly. Could you expand a bit on the American reaction to this proposal of the G-77?

HAMBLEY: We have only just received this proposal this afternoon. We have not studied it in any great detail, but as I gather, it offers a very differing approach than the approach which we have been engaged in in negotiating for the past several months. So we will have to take a look at it and see what our reaction will be. I think that the process which we have been engaged in up to now has been a good process. It has been a process in which the G-77, the European Union, and the Umbrella Group as well as the Environmental Integrity Group, the main categories of countries, AOSIS and others, have been very and deeply monitoring, following and cooperating. I hope we will move back towards that text.

SANDALOW: Let me just add a word about the U.S. position on compliance in these negotiations. The U.S. strongly supports binding legal consequences for non-compliance. Indeed, we were early supporters of binding legal consequences for non-compliance in these negotiations. We believe that is critical to achieving the environmental results under this agreement. We have proposed for countries that fail to meet emission targets under this agreement, that there would be an obligation to reduce emissions in the next budget period to restore the emissions overage to make the atmosphere whole. We believe this is the best result for the environment and will help ensure we achieve long-term objectives of the Convention.

ALEXANDER WEISSINK, DUTCH FINANCIAL DAILY: The European Union demands a fifty-percent cap on flexible mechanisms. I understand that the United States, or that the Umbrella Group as a whole, has not responded to this idea at all so far. Is my understanding correct and if not, what kind of movement has there been?

SANDALOW: Your understanding is not correct. The United States and the Umbrella Group as a whole are strongly opposed to a fifty percent cap on the mechanisms, or indeed to any cap on the mechanisms. We oppose that because emissions trading is too powerful of a tool to restrict. We ought to use market-base mechanisms such as emissions trading to promote innovation and reduce cost in the fight against climate change.

DUTCH FINANCIAL DAILY: So there has been no meeting of the minds on that so far?

SANDALOW: That is correct.

JOHN STANTON, INSIDE EPA: You all mentioned a number of projects that the U.S. is pursuing with developing nations. I was curious to know if this is part of the Clinton Administration's efforts to bring about some kind of binding agreements, for instance with developing nations, to pursue reductions in greenhouse gasses sort of along the lines of the Senate resolution?

SANDALOW: Thank you for asking. These programs are long-standing and precede by many many years the particular resolution you refer to. In fact, some of them grow in part from the Rio agreement that was signed by President George Bush in 1992 and then ratified by the U.S. Senate.

ROBIN POMEROY, REUTERS: We had a briefing today from some NGOs about sinks in the Clean Development Mechanism, which I believe will be discussed later this evening. I would just like your comments on their comments, which are that sinks should not be allowed because, well, you know the reasons. What is your response to that?

SANDALOW: We strongly support including sink activities under the Clean Development Mechanism. We do it for a number of reasons. We believe that this can be an important tool in fighting global warming. There are tremendous opportunities for sequestering carbon in forests and farmlands in the developing world. The Clean Development Mechanism can help channel resources into those efforts. Furthermore, including sinks in the CDM can help fight poverty and promote economic growth in the developing world. It can be especially helpful in fighting desertification in many places, and finally, sink activities will provide collateral environmental benefits such as protecting biodiversity and water quality as well.

GARDINER: If I could just add one thing as well. There are a number of projects which have been initiated by companies within the United States in developing countries already. In part, many of them have occurred under the United States Initiative for Joint Implementation, which are forest protection projects of a variety of sorts. These have been projects which have engaged many stake-holders, including environmental organizations within the United States, and they have been an important tool to help to demonstrate that these types of activities, sinks projects, paid for in large part by developed country businesses, can help to achieve environmental benefits in developing countries and for the atmosphere as a whole.

AUSTRIAN RADIO: What is your comment on the EU rejection of the joint U.S., Canadian, and Japanese proposal for phasing-in Article 3.4 activities? There is an EU draft paper that strictly rejects your proposal. It was just circulated in this room.

SANDALOW: We look forward to seeing it and I think our comments would be more informed after we have seen it. Thank you for bringing it to our attention.

QUESTION: My question was actually related because I think the Associated Press yesterday quoted an European Union official saying that they quite fully backed the United States proposal on sinks so now we just got this, but to your understanding did the EU yesterday have a stand in any way?

HAMBLEY: It was my understanding from talking to our negotiators this afternoon, maybe about an hour and half ago, that the European Union had very favorable reaction to our proposal, which they do not necessarily 100 % endorse, but they thought it did answer some of the questions that they had. I certainly would not presume to put words in the mouth of any EU negotiator, but my understanding from our negotiators was that we are working very cooperatively on the effort of sinks in general, and on this topic in particular, and we have been quite pleased with the degree of understanding which we believe we have generated in the past few days. If that has shifted and things do shift in negotiations, I have not been informed of that and so tomorrow you can raise the question again and I will be glad to try to clarify the issue.

FABRICE NODE-LANGLOIS, LE FIGARO: I want to go back to compliance. You just mentioned the proposal, but I want to know whether the U.S. is opposed to any financial penalties of any kind.

SANDALOW: We are strongly opposed to mandatory financial penalties. We believe the best approach is to require countries to make the atmosphere whole; to restore any tons emitted by reducing emissions in a subsequent budget period.

GARDINER: If I could just add, I want to be clear that the United States' position also includes a penalty but that penalty, as Mr. Sandalow indicated, would be paid in the form of tons.

MARK HORSTMANN, 3CR COMMUNITY RADIO AUSTRALIA: Mr. Sandalow, Australia's Minister for the Environment, Senator Robert Hill, has said on several occasions this week in the Australian media, that it is very difficult to see how the United States is going to negotiate at the moment in the circumstances under the current electoral deadlock in the United States. Why do you think he is making a point of this and how would you respond to him if he was here right now?

SANDALOW: I would not speculate why my good friend, Senator Hill, may or may not be saying anything, but let me just respond to the notion that you suggest. We have one President in the United States through January 20 and this delegation takes its instructions from Bill Clinton.

STEVE KURWOOD, NATIONAL PUBLIC RADIO: Just to follow up on the compliance question, it is a persuasive argument to use future periods to force people to make the reductions. But what enforcement mechanism applies to this borrowing? At what point does a nation's borrowing become bankrupt? Won't you cash that check in and what mechanism would you use enforce that accounting?

SANDALOW: This is an international agreement among sovereign nations. We are talking right now about the binding consequence that would be imposed under this international agreement. There would be institutions created, both to facilitate compliance and then to determine whether countries are in compliance.

QUESTION: I have not seen this report, so I am not entirely sure if this is accurate, but the Department of Energy reportedly released a study saying that the United States could reduce its carbon emissions by 75% with no net detriment to the economy. That having been said, if that is accurate, why does the United States continue to pursue a policy of full flexibility? Why not accept the cap on emissions credit trading, for example?

SANDALOW: I haven't seen this report either, although, I did read several news reports about it, including one by Mr. Revkin, who is sitting right in front of you. But as I said before, the United States is carrying on a wide-range of activities to promote renewable energy and energy efficiency. Those are getting results. In the past two years in the United States, we have seen eight-percent economic growth. Growth in emissions of greenhouse gases has only been one- percent. So we are starting to prove that economic growth and emissions growth can be decoupled. We advance the positions we do in this negotiation in order to help meet our goals in the most environmentally effective and economically sound way.

QUESTION: The G-77 has always said that Annex I countries are not meeting their obligations under the Convention, especially their financial obligations. Are you delivering this introductory statement to prove that the United States for it part has met all its Convention obligations? Is that what you are asserting now?

SANDALOW: We are meeting our obligations with respect to funding under the Convention and the activities that we have described today are examples of that. Thank you very much.