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Melinda Kimble, Head of Delegation/Assistant Secretary of State, Ambassador Mark Hambley, Special Negotiator for Climate Change, and Dirk Forrister, Chairman of the White House Task Force on Climate Change
U.S. Delegation to the UNFCCC Conference of the Parties-4 Press Briefing
Buenos Aires, Argentina, November 6, 1998
(Link to Spanish version.)

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OPENING STATEMENT BY MS. KIMBLE: Well, I'd just like to say that today has been a day of a lot of hard work. There have been a lot of Contact Groups going on. In fact, as we started this evening a key contact group for the elaboration of the Kyoto Protocol, the Contact Group on Flexible Mechanisms, began working. We think there are a lot of interesting ideas out on the table. A number of countries have begun to submit papers or possible draft decisions. And, in general, we are beginning to see very concrete movement in this process. And I might ask my colleague Mark Hambley to add his perspective to that comment.

AMB. HAMBLEY: Thank you, Melinda. Let me just note that I think as these negotiations go, I think many of you have probably covered similar conferences in the past, you go through sort of a cycle where you have all sorts of enthusiasm at the beginning with an opening plenary, some good news stories come out of that. Then you go through a period where the various parties get involved in the details of negotiation. And there for many hours, you don't really get much sense of what is happening -- the information you get is sometimes very garbled -- and I think people sort of get a sense that there is not much movement. Well, there is movement. It is slow, but there is indeed some progress being made in multiple areas.

These areas include the question of sinks; the question of Activities Implemented Jointly; the questions of some of the reporting issues which are important to us -- non-Annex I communications, Annex I communications -- in addition to some of these more complicated areas, including the review of adequacy of commitments. This is one that is a little harder to resolve. Also the area of impacts of climate change, also an area which there is some very interesting but very difficult questions which have to be answered if we are to move towards decisions by next week. In addition, of course, you also have the question of flexibility instruments which Melinda just mentioned which is back in session this evening.

Out of some of these we are seeing some texts which are now being negotiated. I am confident we will have decisions on all these sometime next week. I would doubt that we will get all of them done by the deadline imposed of November 10th, but that's always the case. But, in any case, I think we are now sort of getting to a period of, or sometimes you get into the doldrums -- people are sort of anxious, they are not really sure of what's going to happen. But, the next week with the ministerial coming I think you'll find again another burst of enthusiasm as we move forward to conclusions. We hope those conclusions indeed will be....we will be able to define those as progress from Kyoto next Friday. Thank you.

MS. KIMBLE: And now I'd like to turn to our colleague from the White House Task Force, Mr. Forrister, who is going to outline briefly our perspective, particularly from a U.S. domestic perspective, of why we have concerns about restrictions on the flexibility mechanisms.

MR. FORRISTER: Thank you, Melinda. Our interest in this, we thought, maybe given the fact that this evening we are going to be moving into another session on the flexible mechanisms, it would be good to give you a sense of how we have analyzed this at home. And first of all, the concern that we have about any restrictions on these flexibility mechanisms drives from the fundamental point that we see no environmental gain from imposing restrictions on flexibility mechanisms. We have agreed upon the targets in Kyoto -- the tons are done. This is just a question of where the economic benefits are going to fall out. A ton is going to be a ton no matter where it is used on the globe, how it is used efficiently across the global market whether it's in New York or whether it's in Berlin.

We've spent nearly 50 years in this world knocking down barriers to trade and promoting free markets and investments. This has been the greatest source of economic vitality for the entire world during this period. Some here want to build up a new trade barrier in this area. We think this would be counter to free markets and distortionary economically. We think that inefficiencies would be created that in the end would drive up economic costs to our people.

We are also concerned about this in part because of the phenomenal experience we have had using market mechanisms in our domestic acid rain program. And for those of you who are not familiar with it, it offers free and open competition among reduction technologies to be used across our system however the companies see fit. In particular we have seen this market driving economic benefits by allowing free market competition to take place in a very simple way. A utility manager simply has the opportunity to compete various compliance options off against each other. In an acid rain {system} it works like this: they can take a bid from a scrubber manufacturer and weigh that off against a bid from a natural gas supplier, and weigh that off against a bid from an energy efficiency company, or some other advanced technology -- perhaps a renewable technology that can back out sulphur or back out coal use -- and all of these mechanisms get to play out against each other. So the utility manager can say to the scrubber manufacturer 'I got to tell you what the deal is the gas guys are giving me.' It will help bring down the scrubber price, and it helps bring down the gas price, and it helps bring down everybody's prices and gets us the most economically efficient result.

We think that because of this free market orientation in our acid rain system, we have delivered the best economic and environmental performance possible. And in fact it's proving itself out in the market place right now. We are 30% ahead of schedule in achieving the reductions at less than half the cost that was predicted originally. We also think that an unrestricted trading system and flexibility system would promote compliance with the Convention. It creates the market framework that decreases the chances of parties falling out of compliance. It enhances the monitoring reporting and accountability measures that are going to be needed for all nations to comply. Finally we are convinced that an open system of trading, and joint implementation, and the Clean Development Mechanism would promote investment more in sustainable energy technologies in the developing countries, something none of us want to limit. And that's the end of my remarks about why trading restrictions are not a good idea.

JAPANESE NEWSPAPER YOMIURI SHIMBUN: Maybe this issue has nothing to do directly with the American delegation, but do you have any information about how much advanced is the informal contact among developing nations, who are supposed to be discussing their own voluntary commitment of the reduction of the emission of greenhouse effect gases....We understand this point is, domestically speaking, it's the United States Congress that is asking [your delegation to achieve.]

MS. KIMBLE: I think the simple answer is no. The informal consultations are being conducted by Argentina to the extent they are going on, but I think it is important to realize that they are still in a very -- I would say from what I understand, they are not in a very active process right now.

LIVING ON EARTH: Some of the environmentalists say that there have to be restrictions on flexibility because of the so-called "hot air" problem, that if there's complete....if there aren't any restrictions, that the U.S. commitment for 7% won't end up being a 7% cut because of all of the extra credits that the Russian Federation has. And so, contrary to what, Dirk, you were saying, that actually it's not just an issue of efficiency. There's also an issue of how much actual cutback we end up getting. Is the United States concerned about that and is it trying to deal with the hot air problem, or does it think there's a problem?

MS. KIMBLE: Let me be very clear. It's very important to read the Kyoto Protocol. The Kyoto Protocol, Annex B, the countries that are involved in that Annex, undertook to reduce emissions 5.2% below 1990 levels by 2012 over the period, a budget period or compliance period, 2008 to 2012. This doesn't include hot air. All the assigned amounts are within that envelope. There is no hot air in Kyoto. This is a target everyone took on, and maybe Dirk would like expand on that.

MR. FORRISTER: Just to amplify and actually I will refer you for further reading on this topic to an op-ed that Ambassador Eizenstat and our EPA Administrator Carol Browner wrote in the "Financial Times," I guess last week I think it was, that was much more eloquent than I. The bottom line message of it is -- just reinforcing what Melinda said -- ideas about restricting the amounts of trading are in essence an effort to try to open up a part of the Kyoto Protocol that no one wants to open up, and that is what the targets are that everyone agreed to, and those are good solid targets. Now it's just a question of how the economic spread is going to work out. And I hope -- you actually gave me the chance to go back to point number one -- there is no environmental gain in offering restrictions on trading and I think Melinda hit the point squarely.

AMB. HAMBLEY: If I could just follow up in a wee amplification after my two colleagues....Whatever trades are done with the Russian Federation or with any other country will be done in a way in which there is full monitoring, verification, reporting, and assessment of those trades to make sure that in fact they are legitimate.

MR. FORRISTER: There is one more....we'll actually address your whole question before this is over with. But the one other item that you touched on that I want to take the opportunity to respond to is, and we spent some time on this together last night, I think the concerns about whether or not there is going to be action taken domestically in the United States are way overblown. We are already seeing tremendous activity. I walked through with you all last night the specific areas of work that we have underway, but we're convinced there's going to be significant reduction made in the United States.

VOZ DE GALICIA: Do you believe that Spain's needing a higher emission limit in order to achieve growth could become a liability for the overall position of the European Union?

MS. KIMBLE: Well, I think the fact that Spain needed a growth target is a very important illustration of what the United States has said since the opening of the Kyoto negotiations last December in Japan. Every single country involved in working on this problem is going to have to look at its target in terms of its current economic capacity, its future need for growth, its capacity to reduce emissions, and a number of other things. The European Union dealt with the problem of Spanish growth requirements and other countries' ability to reduce emissions by giving Spain a higher target. Clearly if the ability of those countries who took on reduction targets to allow Spain to grow is somehow changed by different decisions, maybe some countries find that they have to close down nuclear plants faster or something, the overall European Union target may be affected. But I would not say that Spain's growth target in and of itself is the liability. It's merely a recognition of needed Spanish growth, given the state of the Spanish economy at this time. Mark?

AMB. HAMBLEY: I would just note that Spain is not the only member of the European Union which will have a growth target under the current burden sharing proposal. There are several others as well.

DAILY ENVIRONMENT REPORT: Ambassador Hambley, you said that whatever trades take place will include full reporting, verification and monitoring. I don't know if you could talk about how that might be associated with the question of liability that's come up?

AMB. HAMBLEY: Well, certainly there's an interrelationship there, but I just note that indeed these are questions which we still have got to work out the arrangements for in terms of our negotiations. They are very key to our negotiations, but before we engage in any type of a process in which emissions trading is approved, we'll ensure that we have these particular requirements in place.

BBC WORLD SERIES: Is there any room for give on flexibility mechanisms despite your objections to giving in, in any way?

MS. KIMBLE: Well, I'm not exactly sure what you mean by that question. I think I'll accept that what you are trying to get at is can we compromise with the European Union. But let me say Kyoto was a compromise. And a compromise on emissions trading was emissions trading shall be supplemental to domestic action. As my colleague, Dirk Forrister, explained, it is very clear there will be plenty of U.S. domestic action. In fact much of U.S. domestic action will take place under our own internal trading system and we believe much of that trading will take place even on a firm to firm basis, and some trading internal to firms. So there will be a lot of complexity in this system, but we are committed to ensuring that it is verifiable and credible. And that's the key to this whole process.

I think in terms of what compromises might be worked out here in Buenos Aires, let me say that given the time we have spent in this process since the Kyoto decisions were taken, we have not accomplished much in terms of outlining how we are going to elaborate these mechanisms. So what's most possible here is a work plan and a timetable for further work. So I don't see a need for a compromise here. I think Kyoto itself spelled out where we are going. But I think we do have to make a decision on how we are going to shape our further work and I think over this day we began to see delegations working very actively on that.

MR. FORRISTER: I will just add....part of that grand bargain that was achieved in Kyoto grew from our understanding that there was no way that the European Union would be able to achieve an 8% reduction and a full basket of six gases without the ability to bubble their emissions. And their understanding that our ability to reach a 7% reduction was not going to be possible unless we had a full free flexibility and where those reductions could be achieved. In other words, giving us the same types of flexibility that different nations had within the European Union. So you can understand why we get concerned when someone tries to start taking away one piece of that deal without addressing the other pieces of that deal. In fact we don't think we ought to change that deal. And the other thing that I will say is that as a general matter and you will find this I think through the rest of these press briefings, interesting questions like that we never want to negotiate in these sessions. We actually negotiate in other rooms.

NHK JAPAN BROADCASTING: I would like to ask you about emissions trading discussion. There's a rumor going on that U.S. and EU have reached some kind of an agreement to put this dispute aside to the upcoming COP-5 meeting. So I don't know whether it's true or not, but first can I ask whether it's true or not, and then I'd like to ask you how far are you going to discuss this issue in COP-4 meeting?

AMB. HAMBLEY: In a spirit of cooperation and camaraderie with which we came to Buenos Aires, both the European Union in its opening statement and the United States in our statement which followed, indicated our interest in focusing on those areas where we have a certain amount of convergence. And there are many areas within the flexibility mechanisms where we believe we have convergence. We also recognize there are areas in which we do have stark differences. And both of us did emphasize that area of the restrictions on mechanisms was one of those areas. That said, thus far we do not have an agreement, we haven't signed any agreement, we haven't really had any agreement with the European Union as to how we are going to proceed from here on out. We have reiterated to them today in a meeting that it was our view that we should focus once more on these other areas, to try and find ways in which we can come together and perhaps propose even some text if that would be possible. We haven't yet been able to do that. We certainly remain very open, prepared to engage with the European partners in an effort to try and move this process forward in that way. But the door is open to them. We wait for them to come through it.

[end of document]

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