November 20, 2000

Mr. Frank E. Loy, Under Secretary of State for Global Affairs, and Head of the U.S. Delegation and Mr. David B. Sandalow, Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs (OES) and Ambassador Mark Hambley, U.S. Special Negotiator on Climate Change and Mr. Roger Ballentine, Deputy Assistant to the President for Environmental Initiatives

Undersecretary of State Frank E. Loy makes a statement November 20. Photo courtesy of IISD/ENB-Leila Mead

FRANK E. LOY: First of all, thank you for being here and let me apologize for our being late. We were actually on the floor and in the midst of a statement there, so we could not be here on time, and I apologize. This is my first chance to talk from this dais, but actually, I have been here for about two days now and I might just mention a couple of things that I have learned in my conversations with ministers and other delegates here. First, I think the tone and the substance of our discussions have been really quite good. We obviously know about our differences and we have illuminated those in our discussions. And occasionally, there is a public statement that sounds a bit harsh, but the fact is when you have serious conversations with the delegates here, those conversations evidence a quite purposeful intent to try to bridge the differences between us. We certainly have come here, to the Hague, fully committed to having a successful COP 6.

We arrive here, I am happy to say, able to report that we are beginning to make and we are making steady and significant progress in our effort to reduce greenhouse gas emissions at home, even at a time of unprecedented long economic growth. In each of the last two years, while our gross domestic product grew by over four percent, the greenhouse gases grew by under one percent. That is a significant change in the relationship from that that we knew in the 1980s and in the earlier part of the 1990s. New initiatives that we launched over the last year promise even greater progress in the years ahead.

Our goal here is to make real progress toward an environmentally sound and cost-effective treaty that can be ratified. Our priorities include strong rules that will ensure real emission reductions and no restrictions on the use of the flexibility mechanisms. We look for an airtight accounting system; a prompt start to the Clean Development Mechanisms; binding legal consequences for failure to meet targets; and appropriate credit for forest and agricultural sinks.

Let me elaborate on that last point. Any fair and thorough appraisal of our climate system and our efforts to protect our climate system simply must recognize the physical reality that forests and farmland play a critical role, both as a potential emitter of carbons and as potential sequestration of carbons. It is absolutely in the interest of our environment that we provide incentives to decrease emissions from these terrestrial sources and increase sequestration. And that concept was explicitly recognized three years ago in Kyoto when the Parties negotiated the Protocol and agreed that sinks be taken into account in meeting our ambitious emissions reduction targets.

The United States has long advocated an accounting system for sinks that is broad-based, comprehensive, balanced, rigorous, and that produces strong incentives for additional action. There is, from my conversations, I sense, a growing consensus around the full inclusion of agricultural and grazing lands as part of that, in part because they are more easily monitored and because the scale of credit is more modest.

While there is also broad recognition of the central role of forests in our climate system, there is less consensus on how to account for them in the Protocol. The Unites States, Canada, and Japan have proposed a three-part structure to account for the contribution of forests in Annex I countries. In order to move our negotiations forward, and to ensure all Parties of our full commitments to the environmental integrity of this Protocol, I want to clarify one aspect of our proposal. Our intent is for all countries to fully count as a first interval not more than 20 million metric tons of annual carbon sequestration in managed forests. In addition, currently projected sequestration beyond that level would be discounted by two-thirds. That approach is designed to preserve the nature of the Kyoto bargain. I recognize that this is not totally simple and I have promised President Pronk that we would provide a paper detailing this perhaps somewhat more fully by tomorrow. But the essence of it is this: We are only talking about reductions of real tons. We are talking about sequestration of real carbon tons. We are prepared, because of the expressions of concern of some other parties, to take credit for less than the full amount of those tons that are sequestered. And the formula that I have suggested is intended to achieve that result. We intend to discuss that with our colleagues. We have already discussed it with a number of them. We intend to discuss it further and we believe that we have in this approach, which involves on our part taking a substantially smaller fraction of the total that is actually sequestered by our forests. We intend in that fashion to try to come closer to an agreement on the way sinks are to be counted in the Kyoto Protocol. It is one of the important issues before this body and it is, I hope, closer to resolution than it was before.

Let me talk for just a moment about one other issue that has arisen and that arose in a number of my conversations and I think that we ought to just put it to rest. And the question was this: does the uncertainty of the U.S. election outcome in any way affect the ability of this delegation to carry on its duties and to come to an agreement. The answer is very clear: No. This delegation has a mandate from the President of the United States. The mandate is to negotiate seriously and constructively and try to arrive at an agreement. The President is enormously concerned about climate change. He raises the issue with every head of state and head of government that comes into his office. He understands it and he cares about it and he has instructed us to do our best to get an agreement. That is totally unaffected by the election issue before us. We intend to carry that out faithfully. We very much hope that we will be successful and be able to come back with an agreement. Let me stop there and we will take your questions.

ANDY REVKIN, NEW YORK TIMES: I just want to do the arithmetic. Is that 20 million tons per year retroactive to 1990? In other words, when would that start?

LOY: It is in the budget period.

REVKIN, NEW YORK TIMES: Okay, so now they are counting for any? All right, thank you.

RAY MOSELY, CHICAGO TRIBUNE: Have you had any initial reaction from the European Union delegations, specifically from the French Presidency to this change in the position on sinks?

LOY: We have not specifically discussed what I described here today here with the French Presidency. We have discussed with the European Union numerous times our feeling about the need to include sinks broadly in this agreement and we have discussed with them the scientific underpinnings of that and we intend to discuss this further as we elaborate the proposal.

NICK NUTTALL, THE TIMES OF LONDON: We understand that Prime Minister Tony Blair has flown out to Russia today and it has been made clear that he is going to be talking about climate change with Putin. Do you know anything about this, Mr. Loy, and do you know whether it concerns anything to do with Russia's hot air?

LOY: I do not know about that. We are the United States delegation here. So I am sorry I do not know the answer to that.

MICHAEL MCCARTHY, THE INDEPENDENT OF LONDON: Could we just get the arithmetic right then. Is it right that what you wanted to include in the Protocol as allowance against the United States target previously was about 300 million tons of carbons, which was the amount that the terrestrial bio systems of the earth are thought to sequester. And you are cutting this 300 million tons to 20 million tons annually. So this is a cut of more 90%. Is that right?

LOY: Not quite.

MCCARTHY: Could you tell me what is right then, please?

LOY: I don't know if we ever used the terms that we were claiming 300 million tons or the like. I don't think we said that. What I did say is that we would claim the first 20 million tons�� Let us start at a different place: What we said is we assumed -- and there did not seem to be much controversy about this -- that all agricultural lands would be included in the sequestration accounting. The questions, and if you will, some degree of controversy, arose over the way we manage forests. And what we said with respect to those is that we would propose to have all countries have the right to claim 100% credit for the first 20 million metric tons. With respect to the amount above that we would take what is the actual sequestration as we project it, and discount that by two-thirds. If you calculate that -- I am soon going to be in trouble here -- but if you calculate that I would say with respect to the calculation I just described, you end up in the neighborhood of a total credit from sequestration of approximately 125 million metric tons.

MCCARTHY: For the U.S.?

LOY: For the U.S., yes. And different amounts for different countries.

MCCARTHY: And what was the previous position for�� (inaudible)?

LOY: What we said previously is in principle, since carbon sequestration is a reality and since sinks are suppose to account for carbon sequestration, we could take the whole amount that is actually sequestered. I think if you calculate that, that whole amount is in the neighborhood of 290 million tons or something like that.

SANDALOW: 310.

LOY: 310. I always underestimate everything by about 10 percent.

MCCARTHY: Inaudible

LOY: By about two-thirds.

MCCARTHY: So you have reduced by about two-thirds the carbon that you want to have taken out by sinks.

BETTY HEILMAN, CHEMICAL AND ENGINEERING NEWS: When you compute the total sequestration, are you counting the amount that the forests would re-grow anyway even if we made no efforts to expand the forests or save forests?

LOY: We are counting all what we call managed forests. Forests that exist that are in managed lands and that in fact sequester carbon.

MAAIKE VAN HOUTEN, DUTCH DAILY TROUW: Mr. Loy, I would like to ask you whether the United States is willing to offer some extra money for capacity building and adaptation in developing countries and if so, how much it is?

LOY: We have always believed that developing countries need assistance if they are going to address climate change aggressively and effectively. I might say in passing that we have over the years made very substantial contributions to developing countries for that purpose. We have, for example, provided the country studies that permit developing countries to understand their carbon sequestration; their carbon emissions and their carbon picture, and develop regimes for measuring it and monitoring it. We have funded and provided country studies of that sort in 55 developing countries. I think we have over the last years spent something in the neighborhood of 1.3 or 1.4 billion dollars in climate-related direct-assistance to developing countries. Let us make clear that we recognize both that we have an obligation under the Framework Convention but more importantly that it is clear that developing countries need assistance. We have also said that we are willing to try to find new ways to finance additional efforts of developing countries to address this issue, that we don't close a door on any solution that would go in that direction. We have not made any more specific proposal than that.

NICK NUTTALL, TIMES OF LONDON: Is this deal that you are offering to reduce the carbon sequestration that you wanted, is it contingent on the farmland being in the deal. In other words, you have got to have the farmland in to make it okay to cut back on the forests. And the second slight question is: It has been put to us that most of the forests in the United States that are actually absorbing carbon were planted on the land measurement practices prior to 1990, which is a crucial date. Should you be able to count your forests in the first place?

LOY: On the first question: We do think farmlands ought to be included. We think farmlands ought to be included because in fact you can change farming practices that make a big difference in terms of the carbon emissions, or carbon sequestration. We have not had very much discussion about that because we did not feel that there was a substantial controversy about that. Maybe I am wrong about that. With respect the second question, if I understood it correctly: We are talking about things that happened in the commitment period and they really happened. That is there is either carbon being emitted or carbon being sequestered. And in some ways you could say that is a product of earlier practices like planting trees. But everything that happens in the commitment periods is a product of earlier practices. Industrial emissions are the product of earlier practices. I might say that the collapse of an economy in parts of the world including the Federal Republic of Germany is a product of earlier practices, some of them pre-1990; some of them post-1990. So that our sense is the question is what happens in the commitment period.

HERVE KEMPF, LE MONDE: This morning Mr. President Chirac directly questioned the United States for the consuming of energy and emission of greenhouse gases. I wanted to know your reaction to this direct question from the President.

LOY: I had the opportunity at lunch today to actually give my reaction to President Chirac. It was essentially this: We fully understand -- this is not a secret -- that the United States is the largest emitter of carbon and we also would agree that we are frequently not as efficient a user of energy and that we have far to go in making ours a truly energy efficient, clean, industrial state. But also, we are doing a lot, and I think quite frankly President Chirac did not know that. We are doing a lot and we would be happy to comment on that in some detail or even in generalities here today, but I did at lunchtime talk about what we are doing and I commented on the results we are having, some of which I mentioned earlier, the decoupling of the growth in our economy and the growth in our emissions. Then I said one more thing I said I don't believe it is useful to try to determine who is the cleanest of us all. What is important is that we help each other reduce our emissions and reduce concentrations. And that in my opinion takes an attitude and a spirit that I see in many parts of this hall and that I am counting on to bring us to a successful conclusion.

Thank you very much.