November 21, 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

U.S. delegates Roger Ballentine, Frank E. Loy, and Mark Hambley hold a press briefing November 21.

LOY: Good evening. We are nearly through the second day of the ministerial portion of this conference. By and large, I would say that I am encouraged by the progress we are achieving. We have got behind us some important procedural decisions and are now actually getting down to negotiating what Jan Pronk calls some of the crunch issues.

I am particularly pleased that Minister Pronk is moving forward with his plan to move the negotiations on key issues to the smaller informal groups. That is the only way I would think we can cut through the difficult issues we face. The first of these groups-the one focusing on capacity building and on technology transfer and related issues-was actually launched this afternoon. I am hopeful that we are not constrained in terms of launching the other groups as the evening unfolds.

Those of you who have covered the previous COPs know that we are now entering a difficult and at times somewhat bewildering phase of these negotiations, the period between the opening statements that we have heard today and the final agreement. You can expect, I think, within the next few days that the situation will remain fluid and difficult to follow from moment to moment. At this moment, I would say the most difficult issues are still all before us. I would like to underscore some of the points I made in my address to the Ministerial this afternoon. And maybe I would just limit it to this point: It is time now that we commit ourselves to a really pragmatic and not a dogmatic approach. We are well past the time for rhetoric and harsh rhetoric. We have got to make a deal. But what we need for that deal is a willingness on all sides to engage in genuine give and take.

The United States has shown considerable flexibility in a number of the positions we have taken. Yesterday we outlined a proposal on sinks that deeply discounts the amount of sequestration that could be credited toward our emission target. Today, we described in one of the meetings flexibility on some other issues where there have been differences of view. We have had very strong views about, for example, the composition of the executive board of the CDM. We have indicated some flexibility there, provided that we get decent rules that make the CDM actually work and work well. Further on the CDM, we have made it very clear that we are not happy with the notion of a positive list of the projects that would be eligible for that. We think in large measure those decisions ought to be made by the countries that receive the investment. But we have also said today that we would be willing to look at some notion that would give preference to certain small projects: projects for renewable energy, for energy conservation and the like. And that seemed to us to be possibly a better way to go than a positive list. We stand ready to make additional compromises on other issues provided that others do as well.

I would like to mention an important statement that was made just a very short time ago by the Russian Federation. The Federation committed itself to use the proceeds of trading for clean energy investments. I think that is a very important and very helpful statement. I hope that by addressing an issue that sometimes has concerned people-sometimes it has been labeled the issue of hot air-in this very constructive fashion, that the whole issue is kind of behind us, and in fact I would say that much of the justification for the absolute ceiling on the use of Kyoto mechanism and emission trading should also be behind us with that announcement by the Russian Federation. We welcome it, and we think it is an important step forward. We think that Russia has made some important moves. We think we have made some important moves. We are looking for others.

That is the end of my statement, and we are open for questions.

NICK NUTTALL, THE TIMES OF LONDON: Would Mr. Loy respond to what the French environment minister said today which was that the EU flatly refuses to agree to your suggestion of counting your domestic forests in your calculations?

LOY: I am afraid that I have not studied the comments of Madame Voynet, and so I do not want to be very specific about our reaction to them, because I have not looked at them. I do believe that the reason that we made the proposal is that we need to provide incentives for good forest practices, and we need to find a way to honor the deal that was made at Kyoto-both of those reasons we expressed when we made the proposal on sinks, and I think those are still totally valid.

JOHN DILLON, EARTH TIMES: David Gardiner was quoted in a story saying that what is being discussed here is not ratifiable in the United States Senate, and some Congressman today said essentially the same thing and called this an exercise in futility. I am wondering what your reactions are to that and how can a deal be structured that is ratifiable?

LOY: Well, I hope that this is not an exercise in futility. Obviously, if we can not come to an agreement, our labors will have been quite futile, but I am hoping that is not going to be the case. I think the things that we have been talking about, we did not just make them up. Those are important to the United States, you know the list as well as I do, the importance of the flexible mechanism, the importance of including sinks, the importance of including a workable CDM. I will not go through the whole list, the mechanisms without limitations and without hobbling them. Those are things that are necessary for the United States because we want the bargain we struck, and we want to find a way to achieve the targets we took in a cost effective manner that is at the same time totally environmentally responsible. That is our goal. If we can meet those goals, I think that we have an agreement that the United States Senate will take seriously, will look at carefully, and I would not characterize the effort to get there as an exercise in futility.

EMMA ROSS, ASSOCIATED PRESS: Could you be specific about some of the concessions you have made, and also any concessions on major contentious issues that you might be willing to make to get your sink proposal through? (Laughter)

LOY: Well, I appreciate your invitation to negotiate with you, but I am not actually going to take it up. (Laughter). I do not want to be flippant about it. We have made both before we came and since we came here some concessions and some indications of flexibility. Without going through the whole list, let me just mention a couple of them. You will recall that at Buenos Aires and even at Bonn and subsequent to that, we said that it was very important that developing countries become the heart of the system in a more engaged way than simply being part of the Framework Convention. And we said at that time, we thought that the best way to do that would be for the developing countries to take on growth targets or no-regret targets, targets that would not hurt their economy but would at the same time put them in the picture for helping to reduce carbon emissions, especially those that are big carbon emitters. We have made it clear at this meeting that we are not seeking commitments from those countries at this COP-6, and there is a reason for that. It is largely that many of those countries have said that they are not ready for that, and it is not, it seems to us, useful. That is one very significant modification of a position that we used to take. Secondly, we have said that part of the deal at Kyoto, in Article 3.4, was that we would be able to account for, among other things, our agricultural lands, and our growing forests. Yesterday, we said that we would only do that with respect to the forests in part, and we talked about a substantial discount. The third at Kyoto-when Kyoto was negotiated and when there was a discussion of sinks-there was really only one definition under 3.3, the Article on aforestation, deforestation and reforestation, and that was the definition of reforestation in the FAO. When we made our submission on sinks in August of this year, we looked at the question as to how to think about sinks under 3.3 and we recognized that if we used the FAO definition, we would actually run the risk that we would provide incentives to deforest, or not to reforest. That was not our intent, and so we looked for other definitions that had not been around in Kyoto; in fact, the definitions in the IPCC seem to us to be more sound. We adopted that definition in our submission in August. That change from the FAO definition, which was in our minds in Kyoto, to the IPCC definition under 3.3 costs us about 100 million metric tons in terms of the way forests are counted. That was, I think, on our part a sound idea, but it was in terms of tons a costly idea. I mentioned earlier today several other proposals where we have shown some flexibility on the question of the CDM, where we have said in the past that we ought to have anything that reduces carbon on an equal basis. We now have indicated that we are prepared to show a preference for some of the small projects I mentioned. We have indicated a willingness to discuss the nuclear issue, which we know is very important to a number of countries. Those are all signs of flexibility. As far as the future flexibility is concerned, we will take that up in another forum.

TUKIRT GOMBERT, GREENSPIRATION.DOT.ORG IN CANADA AND NOW MAGAZINE: I have a question about sustainable transportation, and I am hoping that there are mechanisms being worked out that I will get paid for riding my bicycle. I do not know if that is part of the details, but I had a question about the scooters, if the scooters were popular with the team, and the second question is, talking with the youth outside, there is a real concern that it may come down to a choice between big business and the climate. And I am wondering if you have that choice, if it boils down to that, which would you choose?

BALLENTINE: The bicycle part. I think the scooters are made in the U.S. Am I wrong about that? Maybe we should get some credit for the conversion to scooters. (Laughter.) Let me answer your question about big business versus the climate. I think we reject the premise of the question. What we have been able to demonstrate in the United States, and what I think many other countries are experiencing as well, is that our economies now, whether it is a function entirely of the development of the dot com economies or whether it is general technological breakthroughs, we have demonstrated now that economic growth and therefore successful robust businesses creating jobs do not necessarily go hand-in-hand with increases in emissions or other forms of pollution. We think that that decoupling, which has unfortunately yet to set into the mindset-we have been at this since the Industrial Revolution, where this was kind of a given, that in fact we had to choose between the economy and the environment-that we are moving into this really fundamentally new and hopeful paradigm where that is no longer the case. We truly believe that. President Clinton speaks to this quite frequently. So we would reject the premise. We think that at the end of the day, the best treaty we can have here is one that is first and foremost the right treaty for the environment. But it is also going to be one that is cost-effective and in many cases will provide opportunities for business. And that is a good thing, not a bad thing.

ROBIN POMEROY, REUTERS: You say that you are looking this week to get the bargain that you struck to be achievable. But surely if you are requesting that some of these sinks already existed when you accepted a 7 percent cut. You are not actually making that 7 percent cut any more. You won't be achieving 7 percent less emissions than you were emitting in 1990. Do you think that the public will be convinced that you are?

LOY: Let me answer that in two ways. One, as I said a moment ago: When we took the target we took at Kyoto, we anticipated that a substantial part of our carbon abatement efforts would come in the form of sinks. And as I said earlier, the 3.3 sinks that we had, if you will, available for that purpose or were usable for that purpose, were not usable for that purpose by our own decision. In fact, the 3.3 part of the agreement is going to result for us in something like a minus 7 million tons a year-something like that. It is a minus in any event. So first of all, we took Kyoto anticipating that we would use sinks and that is, of course, what we are taking about. But secondly let me try to address the question in a larger sense. Everybody knows that we have grown in our emissions since 1990 rather substantially. It is a reflection of our economy and a reflection of the fact that many of the measures that we have introduced to reduce our emissions have not yet gone into full effect. Many of them are implemented, but the actual effect is only partially visible. I have mentioned in my speech today the decoupling of our growth from our emissions, our economic growth, from our emissions growth. But still we have grown, so that we estimate that by the first budget period, we will be something like maybe 28 percent or so above our 1990 targets. If we add to that the 7 percent reduction that we agreed to at Kyoto, that means that we have to reduce our targets from where we are headed now by 35 percent. The reduction that we are talking about coming from sinks is, I would say, a relatively modest fraction of that. Therefore it becomes clear to us as policymakers in our country, that in order to reduce our emissions by that 35 percent, we need to use all the tools that Kyoto provides. That includes sinks, that includes, of course, our actions at home, which are substantial. We have got some additional thoughts on that. If you are interested we would like to share them with you. And it includes the use of the mechanisms that involve investments in other parts of the world. It seems to us that is quite a sensible approach to a very big job, and what we are trying to do at this conference is to get the tools that help us achieve that job.

MICHAEL MCCARTHY, THE INDEPENDENT (LONDON): I would just like to ask Mr. Loy just a specific question about those figures, which we do indeed appreciate. But the figure that the U.S. Delegation puts on where your economy will be in 2010, your emissions, the greenhouse gases, not just CO2, is 2,190 million tons annually. And the figure that you have to get down to-the 7 percent below 1990-is 1,534 million tons, so that the leap you have to make is a leap of 656 million tons of carbon equivalent. What you said to us yesterday on that platform that what the forests would be even with your reduction was about 125 million tons. By your own admission this is 25 percent of your target, isn't it? Give or take a few percent.

LOY: I think the figures without reference to that last-I cannot do fractions that quickly. But the figures I think are essentially right. We have roughly a 600 million ton reduction that we need to achieve. That is a lot of tons. That is just what I was referring to when I said that it is clear to us that we will need to do very substantial action at home, and we will do so. It is clear to us that we will need to use the mechanisms that are provided in Kyoto and we will do so, and it is clear to us, we will need to use the sinks, which are real reductions that are contemplated in our proposal. And the fraction is whatever the fraction is. It is 20 plus percent.

MCARTHY, THE INDEPENDENT (LONDON): Just on the specific points, I mean you implied that it was not very substantial, but it is in fact a quarter, is it not? More or less. LOY: It is between 20 and 25 percent, and you put whatever adjective you will on that. Is it a lot, is it a little? It leaves, I might just say, some 475 million tons to achieve by other means.

Thank you very much.