December 12 Press Conference by the U.S. Delegation

Under Secretary Dobriansky: Thank you. Good afternoon and thanks for joining us today.

This meeting represents a critical juncture in the development of a global response to climate change. The Government of Indonesia is to be commended for its groundbreaking efforts. It has not only convened energy and environment ministers for these talks, but for the first time it has also invited finance and trade ministers to join in parallel sessions with the Conference of the Parties.

Global climate change requires a comprehensive approach that spans environmental, financial, trade, economic, social and political portfolios.

The Nobel Prize winning Intergovernmental Panel on Climate Change has underscored for all of us that climate change is a serious challenge. Here in Bali, we must respond to that challenge and open a new chapter in climate diplomacy.

The international community needs to establish a Bali roadmap for advancing negotiations toward a post-2012 arrangement that addresses climate change and increases our energy security. This roadmap should conclude in 2009.

A post-2012 arrangement must be environmentally effective and economically sustainable as it addresses the core issues of mitigation, adaptation, financing, and technology. It also must be flexible. Emissions are global and the solution, to be effective, will need to be global. We want the world’s largest economies, including the United States, to be part of a global arrangement. An approach in which only some are committed to acting cannot be environmentally effective.

We also seek an approach that accommodates a diverse range of national circumstances. This flexibility will be essential to attracting global participation.

We have brought one of our most senior delegations ever for this Conference of the Parties. I am joined by James Connaughton, Chairman of the White House Council on Environmental Quality and President Bush’s personal representative to the Major Economies Process. United States Trade Representative Susan Schwab, a member of President Bush’s cabinet, attended the trade ministerial. Under Secretary of Treasury for International Affairs David McCormick attended the finance ministerial. Claudia McMurray, Assistant Secretary of State for Oceans, Environment and Science, joined us to discuss the work we’re doing on forests. Andy Karsner, Assistant Secretary of Energy for Energy Efficiency and Renewable Energy, is working on technology research, development and deployment. Our Ambassadors are also engaged here. We are joined by Cameron Hume, the United States Ambassador to Indonesia and C. Boyden Gray, the United States Ambassador to the European Union. And, as you know, Senior Climate Negotiator Dr. Harlan Watson has been here throughout, serving as my alternate head of delegation.

We’re very committed to working toward a successful outcome here in Bali. We want to launch a process that is open and does not predetermine or preclude options. We have been listening carefully to the perspectives of others and will continue to do so in the days ahead. We hope to identify a way forward that will bridge our differences and bring us together in common pursuit of our shared goal of addressing climate change.

Thank you very much.

Chairman Connaughton: Good afternoon everybody. I am delighted to be here and join the delegation for the high-level portion of the meeting. I particularly enjoyed the remarks this morning and particularly enjoyed the simplicity of President Yudhoyono’s prescription for how we take urgent action on climate change. I believe he said, “Less emissions, more forests.” This is really the essential of the discussion and the Bali roadmap is going to give us a pathway to work out the strategies that allow us to achieve that outcome.

President Bush in recent remarks made very clear that he thinks that the challenges of confronting climate change and improving the world’s energy security are two of the greatest challenges of our time. To that end, he has committed us here in Bali to advancing negotiations. He’s committed us here in Bali to working through a Bali roadmap that addresses the key building blocks. And he has committed us to a rapid conclusion of negotiations at the end of 2009. So we are dedicated to the effort that is being so ably led by the UN Secretariat Yvo de Boer.

As we are approaching this, we approach this issue in a very practical way. The biggest increases in emissions in the future come from three main categories of activity -- coal, cars, and forests. They account for most of the future rise of emissions. We need to find a pathway to lower carbon production of electricity, using coal. We need to find a pathway to alternatives to gasoline as we provide for transportation, personal transportation. And we need to stop deforestation with the variety of mechanisms that are being discussed here in Bali as well as others that people are considering. In addition, we can take significant and aggressive action with technologies and practices we have today in the areas of efficiency, more use of renewables, and nuclear power generation -- which is a zero emission source. So we are dedicated to a practical program of action.

We are looking forward to both globally-shared efforts in advancing key technologies as well as national commitments, especially from those countries who produce the most emissions. That is backed up by U.S. domestic commitments on the order of $37 billion of direct spending over the last several years. Backed up by tens of billion of dollars, I think $13 billion just over the last two years, in government-backed guarantees for new clean energy technologies as well as direct incentives to our farmers and our agricultural interests to do a better job of conservation on their lands, that will help sequester carbon. Many things are here to discuss this week and in the two years to come, and with that we look forward to taking your questions.

Question: Secretary Dobriansky, as you know, first of all, Prime Minister Rudd of Australia this morning asked that all Annex I countries embrace a further set of binding targets, as he put it. And also as you know the draft decision before the conference at this point, at last look anyway, recognizes the indicative range of reductions of 25 to 40% below 1990 levels by 2020. Will the United States delegation accept that language, and if not, why not? And secondly, if not at this point, is it possible and not to preclude – not to prejudge – that outcome but is it possible that the major emitters process could produce such binding targets?

Under Secretary Dobriansky: In posing your question, you in fact stated one of the points that we’ve made. We don’t want to be prejudging outcomes here. We don’t want to predetermine where we come out of this process, and right now I think the very positive aspect about this is that we are in discussion with other countries. We’re hearing their views. In fact many countries have also registered the point of view that they don’t want to have a prejudgment made here. Having said that, I think that we’re in the midst of trying to get a definition. We have put forward, I think you know, a desire to have a long-term global goal. We do think that there is a need to have targets defined. And that is part of the discussion that’s taking place right now. It’s a fluid process, we are at the beginning of the process, we have to see where it goes.

Chairman Connaughton: Let me just zero in. We are committed to reaching an agreement through this negotiating process to a long-term global goal that all nations share. We also believe there should be national commitments in particular, by the countries who have the most emissions; produce the most emissions. Within those national commitments, we think there will likely be a portfolio, a range of commitments that include mid-term targets as well as programs for carrying them out, and those will take different forms. They will include regulation, they will include technology incentives, they will likely include partnerships, building on what we’re already seeing in the major developed countries. So we think actually there is a broad category of outcomes that are available to us as we carry out the negotiation over the next two years. And that’s good; that’s a very positive platform on which we can expect some substantial progress.

Question: I’d like to ask because there are a number of options, aren’t there, for how to carry on with negotiations here and would you like to see, I know you said you’d like to see a Bali roadmap, but would you like to see the launch of formal negotiations that will go on to 2009 here, and if so, will they bring together the negotiations under the Kyoto Protocol and the Convention or will they remain separate?

Under Secretary Dobriansky: If I can answer, absolutely, we do want to see the launch of negotiations. We’ve stated that very clearly. In fact, one of the outcomes that we would like is not only a Bali roadmap, but a Bali roadmap that here, in Bali, advances negotiations. In terms of what shape and form that takes, I’ll share with you at least what the discussion is and where we come out. I think most are looking at this time at a two track approach. This is something that we support and the reason is because it is in existence. You have an Ad hoc Working Group which represents countries of the Kyoto Protocol. You also have discussions under the Convention. I think what needs to happen in the time ahead here is how we move forward and how we also bridge. And that’s what I think is going to be an important aspect in the time ahead of looking at how you go forward, how you build on what’s already been achieved, but at the same time to bridge those efforts. There are a number of options that have been put on the table about how to do that and the United States right now is engaged in discussing very practically what makes sense in terms of having global participation and having a consensus on a way forward. That’s what we want to achieve. And then the key areas are the areas that we’ve identified: mitigation, adaptation, financing and technology.

Chairman Connaughton: There is a constructive shift in the discussion that we hope will further unfold in the next couple of days. We’re more focused now on talking about what we need to do, and in which categories we need to do it, and then from that we can design the mechanisms for how we will achieve it. And that’s very important, and that ends up being very constructive because it allows countries that are in different procedural positions to work on a common set of discussions, and then we can work out the procedural outcomes as a result of that.

Question: My question is for both, or I guess mainly for Mr. Connaughton. I found it useful the way you characterized the three main challenges being coal, cars and forests. But right now it’s cheaper to drive fossil fuel cars than hybrid or plug-in cars. It’s cheaper to burn dirty coal and it’s cheaper to cut down trees rather than to preserve them. This morning the Chairman of the IPCC said, among other measures, it will be absolutely crucial to put a price on carbon if we’re going to do anything about climate change. My question is, will the U.S. put a price on carbon or will we have to wait until the next Administration?

Chairman Connaughton: The U.S. actually has a variety of mechanisms currently that put a price on carbon and there are other proposals that will continue to evolve. But let me go to the core of your question before giving you the examples. One of the challenges we face when it comes to producing power from coal with low emissions and producing transportation with low emissions is that currently the technologies are very expensive. And so, your traditional emission trading mechanism does not produce the price signal that would incentivize the switch to those very expensive technologies. So what we have to do in the interim, we have to move as aggressively as we can to advance the research and deployment of low carbon, coal power, coal-electricity generation technology and we have to spend significantly on proving up second generation biofuels, in particular, that have a very low greenhouse gas profile and find a way to introduce those cost effectively into the market. At that point, then some of these pricing mechanisms can begin to have an effect, but they won’t work until the technology is established and we’ve found a way to scale it up so we can bring the cost down.

Now, examples on carbon pricing. First of all, in America at least, and this is true I think mainly around the world, the market itself has put in place the most significant increase in fossil pricing through the highest levels of the price of coal, unprecedented levels of the price of gasoline, and as well as very high and increasingly fluctuating prices of natural gas so all three carbon sources, the pricing is dramatically higher today than it was even in 2001. In addition, we have new vehicle fuel economy regulations that our legislature is currently debating, that the President has called for, that will require the expenditure of many tens of billions of dollars on new vehicle technologies and that translates into actually fairly high price of carbon when you do the math on that. And the President’s goal on alternative fuels also requires multiple tens of billions of dollars to comply with that new mandate. The new mandate the President seeks would replace our use of gasoline by 20 percent within 10 years. That is the most ambitious proposal of any leader today and it will have a significant effect on stopping the growth of greenhouse gases from our transportation sector.

Question: I guess my question is to Dr. Watson, following up on the very first question with regard to the 25-40% reduction. I understand that this range is only for the Kyoto Protocol and Annex I countries, which obviously the United States is not a part of, why oppose this? And also to Chairman Connaughton, can you confirm that the next Major Economies Meeting will be held in Hawaii on January 29, 30, 31?

Senior Climate Negotiator Watson: Thank you for the question. I was hoping to get out of here without having to answer one today. Well, again, it’s the same issue. The reality is in this business that once numbers appear in text, it predetermines outcomes and it will tend to drive the negotiations in one direction. Once again, we want to be sure that the text we have before us is going to be neutral, that will leave all options on the table, and will not prejudge outcomes which should be something to come at the end of a two-year process.

Chairman Connaughton: Yes, we are intending to have the next Major Economies Meeting at the end of January, I think the 30^th and the 31^st, and what we’ll seek to do is take on board the results of the Bali meeting and have a conversation about how we can help support the UN process in rapidly reaching agreement on a new set of arrangements for after 2012. So what would be the main focus of the meeting is really taking the guidance that we receive from Bali and seeing how we can help support that outcome.

Question: Why do you think that this flexibility you’re talking about, and you don’t want to determine the outcome, why is that going to not lead to a less ambitious agreement than if you had binding targets? And secondly, why is it important to you that you have a new agreement in Copenhagen in 2009?

Under Secretary Dobriansky: If I may just begin. First, I think that right now you have a number of countries that have taken stock of what they’ve done over these last years, so coming into Bali we are at a critical juncture because you’re looking at all of us, United States included, what we’ve done and how we’re faring, number one. Secondly, we had the IPCC report which just came out, which also presented some very significant findings and an affirmation of climatic change that needs to be addressed. So there’s that element. Thirdly, as we come around the table, there is a strong desire expressed by many to have a global agreement here, and one in which there is responsibility by all, so toward that end, there has to be some flexibility in terms of looking at what are the most effective approaches, how to proceed. One of the elements also that’s very much out there is how do you take into account the diverse characteristics of different countries. We want to have consensus and consensus does require having flexibility, approaching this in a way in which you’re looking at the paths proposed by different countries. And how do you, as I said, go forward commonly towards a common goal and a common objective. In terms of Denmark, we think that, as we’ve indicated, we’d like to see a timetable here and we have to have an end to the negotiations and to the discussion and a focus. And 2009, of course, by mandate also provides us with a focus here in terms of the next steps.

Chairman Connaughton: The Kyoto Protocol ends in 2012 and so if you want a reasonable time to plan for post-2012, it would be very helpful to conclude negotiations by 2009. Also, I think in your question I think there’s still a misperception. The U.S. has committed itself to targets and timetables in our climate policies. We have a national goal of improving our greenhouse gas intensity by 18% by 2012. I’m pleased to say that we are currently ahead of meeting that goal and last year alone we had a 1.5% absolute reduction in our emissions and in our industrial sector it was a 1.8% absolute reduction in emissions and that meant our intensity improved by 4.5%. We have not had an intensity improvement that strong in recent history so we are now analyzing what went into that that occurred for reasons both very positive and also some reasons that give us some concern, but we are committed in our regulatory programs to a series of targets. One of them is this goal of replacing gasoline use by 20% by 2017 and that’s through two good old-fashioned mandatory programs that use market-based mechanisms to achieve them so we just like to break it into its parts because it’s more practical to do it that way.

Question: My question is also the 25-40% targets. This text is not a binding target. It’s seems that that simple description of the fact. I want to know how do you think that this predetermine the outcome the conference?

Under Secretary Dobriansky: You know, one of the issues here is if you look at what came out of the IPCC report, I believe that there were six sectors and some 177 scenarios. So, in this, obviously there needs to be some discussion here. And in that sense, different countries are looking at how does this have ramifications for them. So, specifically, when you look at that backdrop, by having numbers, there is a prejudgment rather than having a consensus around what is the best way to go forward here and that’s what we’re really trying to achieve. We want everybody involved in determining what is the best type of preambular language that all can agree to.

Chairman Connaughton: Could I just add one last piece on that. We’re seeking an approach that brings more countries together on common action, recognizing differentiated content to that action and so, as proposed, this particular item would actually seek to divide the countries further, and that’s an issue. But secondly, as we look to agreement, which the United States supports on a long-term global goal and as we look to national commitments on mid-term goals, they need to be informed by the science, and this one proposal is the science; they need to be informed by technological feasibility and commercial viability of that technology; it needs to be informed by environmental effectiveness; and it needs to be informed by the very pressing needs of sustainable development, especially in the developing countries. So we have to look at all of these factors in reaching agreement on both our long-term objectives as well as on our mid-term objectives. And then we have high confidence that we’ll come out with a constructive outcome.

Thank you.