Melinda L. Kimble, Acting Assistant Secretary for Oceans and International Environmental and Scientific Affairs, U.S. Department of State, Testimony Before the House Commerce Committee, Subcommittee on Energy and Power, "Buenos Aires Climate Change Meeting: Status of Negotiations," Washington, DC, October 6, 1998

"Buenos Aires Climate Change Meeting: Status of Negotiations"


Thank you, Mr. Chairman and members of the subcommittee.

I am pleased to be with you today to discuss the current status
of negotiations leading to the next meeting of the Conference of
the Parties to the UN Framework Convention on Climate Change
(UNFCCC) to be held in Buenos Aires, Argentina this November. I
will also highlight our ongoing, intensive diplomatic efforts in
this regard. Almost one year ago, the world community took an
historic step forward in its efforts to address climate change in
adopting the Kyoto Protocol to the UNFCCC. I will not go into
detail regarding its many substantial elements with which I'm
sure you are familiar -- five-year commitment periods, the
flexibility mechanisms (i.e., emissions trading, joint
implementation and the Clean Development Mechanism), and
inclusion of all six major greenhouse gases and sinks. Suffice to
say that we believe the Protocol represents an important
milestone on the path toward putting in place a credible global
response to this significant environmental problem.

That said, the Protocol is a "work in progress."  We still need
to elaborate the Protocol's provisions for flexibility mechanisms
to assure that they are cost-effective tools and are not unduly
burdened with bureaucratic structure or artificial constraints,
and we continue to pursue securing meaningful participation by
key developing countries. The Clean Development Mechanism (CDM)
will likely be pivotal to encouraging developing countries to
engage in the global response to climate change. The CDM will do
so by example and incentive -- by showing how actions to limit,
reduce or sequester greenhouse gas emissions also bring
significant benefits in promoting technology transfer, increasing
the availability of financial resources and promoting sustainable
development. Moreover, there is much we can do bilaterally to
build capacity in developing countries to address this challenge.

We recognize that we have not yet achieved the meaningful
participation by key developing countries to which the President
is committed. I would like to reiterate our intention to obtain
such participation prior to submitting this agreement to the
Senate for its advice and consent.

U.S. Commitments Under the UN Framework Convention on Climate

As we look to Buenos Aires, our goal is to make progress on our
climate change agenda. We must not lose sight of the instrument
that is in force -- the 1992 UN Framework Convention on Climate
Change (UNFCCC). There are commitments under this treaty that
will be reviewed in Buenos Aires and subsequent Conferences of
the Parties to the UNFCCC -- and the more we progress on meeting
these commitments, the better prepared Parties will be to address
the goals of the Kyoto Protocol when it is complete and in force.
Since 1992, when the United States was the fourth nation in the
world and the first developed nation to ratify, 175 countries
have become Parties to this Convention to combat global warming.

>From the beginning, the United States spearheaded the
international effort to address climate change. Ten years ago,
the Reagan Administration supported the establishment of the
Intergovernmental Panel on Climate Change (IPCC), which just held
its fourteenth meeting and launched its Third Assessment Report
on climate change. The initial work of the IPCC prompted the Bush
Administration to join the international call to establish a
negotiating body to deal with this issue. In 1991, the U.S.
hosted the first meeting of the Intergovernmental Negotiating
Committee (INC), whose hard work culminated in the adoption of
the Convention in May 1992. The INC met six times over two years
to craft an historic agreement. President Bush signed the
Convention at Rio in June 1992 and promptly submitted it for the
Senate's advice and consent. Later that year, in bipartisan
fashion, the Senate gave its support to the treaty without
opposition. The Convention entered into force in March 1994.

Let me briefly review the commitments that the United States
undertook in becoming a Party to the Convention. The ultimate
objective of the UNFCCC is to stabilize greenhouse gas
concentrations in the atmosphere at a level that would prevent
dangerous, human interference with the climate system. To this
end, the UNFCCC established implementation and technical bodies,
set forth binding commitments for all Parties, and called for
periodic review and updating of obligations. All Parties,
including developing countries, are obligated, among other
things, to:

-- Prepare national inventories of greenhouse gas (GHG) sources
and sinks;
-- Formulate and implement national programs containing measures
to mitigate climate change;
-- Report information related to the implementation of
obligations; and
-- Promote and cooperate in education, training and public
awareness related to climate change.

Furthermore, Parties listed in Annex I, including the United
States, agreed to:

-- A continuing obligation to adopt policies and measures and
take corresponding measures to address climate change through
both limitation of emissions and enhancement of sinks;
-- Enhanced reporting obligations; and
-- A non-binding "aim" of returning their net GHG emissions to
1990 levels by the year 2000.

U.S. Fulfillment of Its UNFCCC Obligations and Aim: Climate
Change Action Plan and October 1997 Initiative

All of our existing and proposed domestic climate change
initiatives further the fulfillment of U.S. obligations under the
Climate Convention to adopt policies and take corresponding
measures to limit greenhouse gas emissions. These are in no way
an attempt to implement the Kyoto Protocol before it is ratified.
Rather, these actions are consistent with our existing treaty
obligations. The United States is, thus, taking steps to
implement existing commitments while it continues to complete
work on the Protocol. Because the United States is the biggest
emitter in the world, the level of our commitment to address
climate change sends a clear signal to all nations. To the extent
that the United States can demonstrate continued leadership
through serious domestic action, the U.S. position is
strengthened in the international negotiations. Without such
dedication, it would be difficult to sustain U.S. leadership on
the climate change issue.

Climate Change Action Plan

The Climate Change Action Plan (the Action Plan), announced by
President Clinton and Vice President Gore in October 1993, is
designed to promote environmentally sound economic growth in the
United States into the next century -- and help mitigate the
threat of climate change. The Action Plan is also designed to
generate sustainable emission reductions that increase over time,
providing larger benefits in later years.

The Action Plan consists of over 40 programs that combine efforts
of the public sector (federal, state, and local governments) and
the private sector through a number of different approaches.
These programs reduce emissions while stimulating greater energy
efficiency, and commercializing renewable energy technologies.
Through the Action Plan programs, the United States is:

-- Preserving the Environment: The Action Plan comprehensively
addresses all major greenhouse gases in all sectors of the
economy. It provides additional environmental co-benefits,
including preventing ozone and particulate air pollution and
reducing solid and hazardous wastes.

-- Contributing to Economic Growth: The Action Plan contributes
to improving productivity and economic growth, and generates
employment opportunities by promoting the use of advanced
technologies and eliminating unnecessary energy expenditures.

-- Building Partnerships: The Action Plan relies largely on
successful voluntary approaches to engage U.S. businesses in
achieving greenhouse gas reductions.

-- Involving the Public: Federal agencies solicited outside views
when developing the Action Plan and this evaluation -- and the
public contributes continually to the development and improvement
of Action Plan programs.

-- Encouraging International Emission Reductions: Recognizing the
significant potential for cost-effective emission reductions in
other countries, the Action Plan established the U.S. Initiative
for Joint Implementation and the U.S. Country Studies Program.
Many of the Action Plan programs are assisting other countries in
achieving cost-effective emission reductions.

Many Action Plan programs have been highly successful. The Action
Plan has over 5,000 organizations participating from around the
country. As recognized in the Action Plan, it will take most of
the programs three to five years to begin to achieve substantial
carbon reduction benefits based on the strong foundations and
partnerships that have been built. Here are some of its many

-- Thousands of efficient ENERGY STAR-labeled products are widely
-- Over 2,300 partners in the ENERGY STAR Buildings and Green
Lights programs have invested over $1 billion in energy-efficient
improvements, saving over $250 million on their energy bills in
1996 alone.
-- Rebuild America is reducing the $6.5 billion energy bill at
colleges and universities across the country.
-- USDA programs have led to the planting of trees on 54,000
hectares of land.
-- In 1996, partners in EPA's Natural Gas STAR program reduced
methane leakage from natural gas pipelines by over 1.0 million
metric tons of carbon equivalent.

October 1997 Initiative

In October 1997, well before Kyoto, President Clinton outlined an
environmentally and economically sound plan for reducing U.S.
greenhouse gas emissions, which is fully consistent with U.S.
obligations under the UNFCCC and designed to meet the voluntary
"aim" and other ongoing commitments. The plan encompasses ground-
breaking initiatives designed to cut emissions by increasing
energy efficiency; developing and encouraging diffusion of new,
cleaner energy technologies; working with industry and others to
promote sensible solutions to the climate change problem; and
employing market-based mechanisms to ensure cost-effective
reductions. By promoting technology development and diffusion
now, we will be increasing our competitiveness and we will be
making a down payment that can help us avoid potentially costly
actions in the future.

Specifically, the President's plan includes the Climate Change
Technology Initiative -- an ambitious program of tax cuts and
funding for research and development aimed at improving energy
efficiency and spurring the use of renewable energy sources.
Included in the President's FY 1999 budget, the package amounts
to $6.3 billion over five years, $3.6 billion in tax cuts and
$2.7 billion in new investment. Electricity restructuring and
efforts to improve energy use and procurement practices by the
federal government will also help reduce emissions. On a longer
time horizon, a domestic emissions trading system will be
developed and in place by 2008.

An important component involves building partnerships with key
energy-intensive industries to develop sector-by-sector
initiatives to cut emissions. These partnerships will identify
opportunities for working together to remove barriers to the
development and widespread use of energy efficient technologies
and practices. One example is the Partnership for Advancing
Technology in Housing (PATH) which will also play an important
role in achieving the goals of the President's plan. As part of
its consultations, the Administration will discuss ways to ensure
credit for businesses that act early. High-level Administration
officials have already met with CEOs from the steel, aluminum,
cement, publicly owned and investor-owned electric utilities,
forest products and gas pipelines industries.

Expectations for Buenos Aires

In the context of six years since the Framework Convention on
Climate Change was opened for signature and the recently
negotiated Kyoto Protocol, the fourth meeting of the Conference
of the Parties to the UNFCCC (COP-4) provides an opportunity to
continue momentum on both of these historic agreements.
Breakthrough accomplishments and headline-making events, however,
are not likely, given the early stage of international
understanding of how the flexibility mechanisms in the Protocol
can work. We are focused on achieving "maximum progress" as we
seek to advance the ultimate objective of the Convention and to
elaborate upon the unfinished business of Kyoto.

We believe all countries, both developed and developing, should
reiterate the need for concerted, cooperative action to address
this global problem. We intend to renew our commitment to taking
actions in the context of the Framework Convention, which
recognizes the need for a global effort. And, we hope others will
do the same.

The problem of climate change emerged over decades and solving it
is a "marathon" not a "sprint."  We view COP-4 as a stepping
stone to future efforts on climate change, and as such, it must
yield incremental, but credible progress.

Flexibility Mechanisms

Our assessment three weeks before the international community
convenes in Buenos Aires is that there is a solid basis for
making progress on elaborating the Kyoto Protocol's flexibility
mechanisms -- emissions trading, joint implementation, and the
Clean Development Mechanism (CDM). Securing agreement on rules
and guidelines is essential to protect U.S. interests and achieve
the objectives of Kyoto. The U.S. was able to agree to the
Protocol, in large part, because these mechanisms were included.
Moving "the ball forward" at Buenos Aires on verification,
measurement and reporting rules and guidelines would be a welcome
development. Our goal is to engage in frank discussions on the
areas of shared interest, to develop a consensus on next steps,
and to avoid unproductive arguments on issues than cannot be
resolved at COP-4.

Essentially, there is agreement on the need to strike a balance
between ensuring the integrity of the international emissions
trading system through strong rules, and maximizing its ability
to generate emissions reductions worldwide by making it simple,
credible and transparent. Trading is a complex issue and
countries have different views on precisely how it should work.
We are working with other nations to improve decision makers'
understanding of the mechanics as well as their comprehension of
our positions. Above all, we need to ensure that emissions
trading, as well as the other flexibility mechanisms, are cost-
effective and environmentally sound. Progress on this front with
the European Union at the recent informal Ministerial in Tokyo
seems to have reduced the likelihood that this issue of the
flexibility mechanisms will be divisive at COP-4.

The Clean Development Mechanism, or CDM, shows real promise as a
bridge between the developed and developing countries in their
efforts to address the global problem of climate change. As with
the other mechanisms, familiarity with the fundamentals of the
CDM is moving us closer to agreement on next steps. More Parties
accept that the projects to be covered by the CDM can create
emissions reductions that translate into global environmental
benefits, ensuring that investments in developing countries
further sustainable development, while helping developed
countries meet their Kyoto goals, cost-effectively, through
applying project-generated credits against their targets.

One positive outcome of COP-4 would be a work plan and timetable
for further elaboration of the rules, modalities and guidelines
for all of the flexibility mechanisms. Such a plan would signal
that we are moving forward, and that we understand the need for
greater certainty among our public and private sectors about how
the Kyoto mechanisms and processes will work. We have been
engaging in efforts to seek input from financial experts and U.S.
industry on aspects of emissions trading and other market
mechanisms to inform our policy formation on such issues as
allocation of risk and institutional structures, and we will
continue to do so as these issues will need further refinement
after Buenos Aires.

COP-4 offers an opportunity to share perspectives on how to
proceed and build consensus on concrete steps that can be taken
to reduce the growth in greenhouse gas emissions without
jeopardizing economic growth. We plan to share experiences gained
through the "Activities Implemented Jointly" pilot phase, as well
as highlight successful domestic policies and measures that may
have lessons for others.

Engaging Developing Countries

We continue to make clear, at every opportunity, that developing
countries must be part of the solution to the climate change
problem. Meaningful participation by key developing countries is
essential. In evaluating what constitutes this level of
participation, it is important to keep in mind the substantial
differences that exist among developing countries in terms of
their emissions profiles, levels of development, capacity for
effective action, and economic and political conditions. We have
not established a fixed standard or set of criteria. Instead, we
want to convey that key developing countries must commit to
serious steps to limit their greenhouse gas emissions and help in
the international effort to control global warming. This could
effectively be accomplished through developing countries' taking
on their own emissions targets, consistent with economic growth,
which would enable them to participate in international emissions
trading. At the same time, we do not believe that it makes good
sense to rule out other potential ideas for accomplishing the
desired result, namely that key developing countries take serious
steps to limit their emissions. We also believe that active
participation in the Clean Development Mechanism could be a
factor in determining meaningful participation.

At COP-4, we anticipate that the issue of developing country
participation will be extensively discussed. COP-4 will provide
an opportunity to advance the ongoing dialogue on the need for
greater developing country involvement and the meaningful
participation of key nations. We also expect important
discussions on the Clean Development Mechanism, as noted earlier,
and on ways that non-Annex I Parties can more fully achieve their
existing Climate Convention commitments.

Technical Issues

Meeting only once a year, the COP must take up a number of
technical issues that often do not receive as much attention as
the others I have mentioned. An example of this is land use
change and forestry, more commonly referred to as "sinks."
Because of the linkages to the Kyoto Protocol, the COP will seek
to continue to increase understanding of the concepts found in
Article 3, including those recently addressed at a joint workshop
sponsored by the Intergovernmental Panel on Climate Change (IPCC)
and the Subsidiary Body for Scientific and Technological Advice
(SBSTA) under the Convention -- afforestation, reforestation and
deforestation. The outcomes of the workshop -- an outline for an
IPCC Special Report on land use change and forestry and
suggestions for authors -- were forwarded to the full IPCC
Plenary which met a few days ago in Vienna and agreed on a final
outline for this Special Report that should be available in early
2000. A second workshop will be held in the United States early
next year to consider the additional categories of sinks in
Article 3.4 of the Protocol.

A second important "technical" issue is that of reporting
obligations under the UNFCCC. The Parties will consider how Annex
I Parties are to begin preparing for the submission of their
third national communications by addressing timing and guideline
questions. Because these reports will contain emissions inventory
data as well as description of policies and measures, they will
be critical indicators of progress in the post-2000 period. The
Parties will also agree upon the process for considering the
first communications from non-Annex I Parties. Such a process
will enable all Parties to determine how these Parties are
fulfilling their Convention obligations, to what extent they are
taking measures to mitigate climate change, and what further
assistance they may need.

Bilateral and Multilateral Activities: Advancing U.S. Climate
Change Diplomacy

Since Kyoto, the State Department and other U.S. government
agencies have been hard at work to further U.S. objectives
through a "full court" diplomatic press in a variety of
multilateral and bilateral discussions. At the highest levels,
President Clinton and Vice President Gore have raised climate
change in their meetings with the leaders of China, Korea, and
other countries in Europe, Latin America and Africa. Secretary
Albright has also taken advantage of every opportunity in many of
these and other countries to urge other nations to support our
positions on the flexibility mechanisms and securing meaningful
participation by key developing countries.

Under Secretary of State Stuart E. Eizenstat led our delegation
to an informal Ministerial on Climate Change held in Tokyo on
September 17-18. Among the approximately twenty countries invited
to attend, there was a strong spirit of cooperation and shared
commitment to continue the progress on climate change begun in
Kyoto last December. The Ministerial focused on the critical COP-
4 issues that I have outlined, especially emissions trading. One
week later, I led the U.S. delegation to a ministerial on the
Clean Development Mechanism, co-hosted by the Canadian, Brazilian
and Argentine governments. The meeting sought to inform ministers
and other high-level officials on technical issues of the CDM and
its potential to facilitate the transfer of technology and
investment opportunities in developing countries. I believe it
also enhanced the cooperative spirit between developed and
developing countries on this important flexibility mechanism.
Both meetings, and others, provided excellent occasions to have
bilateral discussions with a number of delegations including
those from Argentina, Brazil, China, and Samoa.

Most recently, I was in London last Friday meeting with my G-8
counterparts to discuss our respective views on the flexibility
mechanisms, developing country participation, and other issues
that will arise in Buenos Aires. A great deal of effort centered
on convincing our European partners of the necessity of an
unfettered emissions trading system, built on a foundation of
credible reporting, measurement and verification. We are awaiting
developments in Luxembourg this week as the EU Environment
Ministers formulate positions for COP-4.

Within the last month, I have also traveled to China, Korea,
Japan and Canada to advance our climate change goals. In early
September, I led an interagency delegation to China, in
fulfillment of an agreement reached at the Clinton-Jiang
Presidential Summit. We had very productive discussions with a
number of ministries to identify areas of cooperation between our
nations. We were encouraged by the positive atmosphere of the
talks and their usefulness in sharing views and perspectives. In
Seoul, we met with Korean government officials and explored how
to advance full acceptance of the flexibility mechanisms and
offered technical bilateral cooperation on energy efficiency and
conservation, assessment of reduced reliance on fossil fuels, and
other related environmental issues, including the identification
and evaluation of ancillary health benefits. In virtually every
instance, we have explored how developing countries could assume
commitments consistent with their economic and environmental
objectives, particularly in light of the flexibility mechanisms.

In addition to these extremely useful sessions, the "Umbrella"
group (a group of countries with common views on many of the
flexibility mechanisms, and including the U.S., Japan, Canada,
Australia, New Zealand, Norway, Iceland, the Russian Federation,
and Ukraine) held meetings in Wellington, New Zealand, September
7-8. Participants from eight of the nine Umbrella partners
(Ukraine was not able to attend) met to discuss issues related to
emissions trading including allocation of risk in transactions
and institutional structures. In addition to agreement to
continue our close, collaborative efforts, the Umbrella group
reached consensus on responses to questions on the flexibility
mechanisms posed by the developing countries at the June meetings
of the UNFCCC Subsidiary Bodies. Ukraine's concurrence to the
responses was gained through off-line conversations at the
meeting of the OECD/IEA Annex I Experts Group in Paris, which
immediately followed the Umbrella session. At that meeting, we
had an opportunity to discuss international emissions trading at
some length. We understand that papers informed by the discussion
at the Paris meeting are being prepared by the OECD for COP-4.
With regard to Ukraine, a State Department-led delegation is
meeting with officials in Kiev this week to enhance their
understanding of emissions trading through a workshop and to
conduct general climate change bilaterals.

Next Steps: Three Weeks to COP-4

In the coming weeks, the Administration, the Department and other
agencies will be fine-tuning our negotiating position for Buenos
Aires and working to build alliances with partners on the whole
suite of issues. We intend to utilize every opportunity to convey
our position and seek support for our views on the flexibility
mechanisms, developing countries, and the technical issues. We
look forward to your participation in the Buenos Aires meeting,
and to working with you as we seek to address this critical

Mr. Chairman, members of the subcommittee, thank you for your
attention. I would be pleased to respond to any questions that
you might have.

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