Melinda L. Kimble, Acting Assistant Secretary for Oceans and International Environmental and Scientific Affairs, U.S. Department of State, Briefing on Global Climate Change at USIA Foreign Press Center, Washington, DC, October 14, 1998

"Climate Change"

ASSISTANT SECRETARY KIMBLE: Thank you very much, and it's a
pleasure to be here today to try to underscore what's happening
on the greatest environmental challenge of the 21st century. It's
particularly difficult to try to do this in a day where so much
immediate news is taking place in Washington, like budget

I would like to say that a year ago -- less than a year ago
actually -- in December 1997 in Kyoto, Japan, the international
community reached consensus on a seminal agreement in the
environmental area. And that was the Kyoto Protocol on addressing
climate change.

Many people believe that this agreement's import is based on the
fact that developed countries assume binding targets on
greenhouse gas emissions. But while important, that's not what
makes Kyoto historic. What makes Kyoto historic, is the agreement
of the international community to establish flexibility
mechanisms that permit us to use the power of the market to
achieve environmental objectives. For the United States, as I
said here roughly a year ago today, this is the most important
feature of the Kyoto agreement: the opportunity to achieve
environmental objectives over a sustained period of time, through
creative and innovative use of market mechanisms.

And the two mechanisms that the Kyoto agreement put in place,
were, first and foremost, the opportunity to have an
international emissions trading regime, and secondly, to have
what we call a Clean Development Mechanism, which is designed to
create new opportunities and new incentives for investment in
clean environmental technology, in the developing world. This is
the first time in any environmental agreement, we have created a
mechanism that has the potential to harness the power of foreign
direct long-term investment in the developing countries. It can
make a major contribution, we believe, to sustainable
development, and it can ensure that there is global participation
in solving what is clearly a global problem. As we look toward
Buenos Aires, the next conference of parties for the U.N.
Framework Convention on Climate Change, I think it's important to
realize that it's almost impossible for the international
community to take big leaps forward every year, after such a
major effort in Kyoto.

What we learned at the one inter-sessional meeting that we've
held for all the countries who are parties to the framework
convention in June, is many countries are still absorbing what
Kyoto put on paper. Many countries are trying to understand the
flexibility mechanisms and what they mean. Many countries
recognize, too, that Kyoto is a work in progress -- and not just
because it doesn't include commitments, binding commitments by
all countries. But perhaps more importantly, because we didn't
complete all the design of the flexibility mechanisms.

We will have to set up national reporting systems, and
requirements for ensuring the credibility of these mechanisms.
And beyond that, it's very important to decide how we're going to
ensure compliance.

So there is much to be discussed at Buenos Aires. But the biggest
thing I think that will occur there, is a kind of sorting- out
and identification of how to organize our work for the next year.
And we have been talking to a number of countries about this.

What we believe can happen at Buenos Aires is an incremental but
credible step forward, on a multi-decade agenda called "Climate
Change." And we must realize that addressing a problem which
occurred after 150 to 200 years of industrial development in the
world, is going to take roughly 100 to 150 years to solve.

We're not going to solve it quickly. We have to work with the
realities such as the need for economic growth, the need for
jobs, and the need for environmental protection in all countries.
So, when going forward, I think it's important to realize that
when a conference of parties meets, we have an opportunity --
each meeting -- to take a few more steps on a long-term agenda.
What is truly important, however, is that at Kyoto we laid a firm
foundation for this agenda, and we pointed a direction that holds
promise for allowing the globe to work on this problem for the
next century.

And so, I look forward to taking your questions.

MS. MARJORIE RANSOM: Please identify yourself.

QUESTION: I'm (name inaudible) with (EPA, the General Crusaders
?). What do you consider the main obstacles to agreeing to that
multi-year agenda that you are expecting to get some incremental
progress in Buenos Aires? What are the main obstacles now?

ASSISTANT SECRETARY KIMBLE: Well, actually, what countries have
been discussing, involves the climate convention meetings, of
which there was one meeting in June, and some off-line meetings
sponsored by individual countries, such as Japan and Canada,
along with Argentina and Brazil, are identifying where we have
agreement, so that we can reach quick agreement on that, and
identify areas where we need more work. One area where we already
identified that we need more work, is in the area of sinks (ph),
or Carbon Sequestration Processes. that go on in forests and
through certain types of land-use practices, such as no-till
agriculture. We have asked the Intergovernmental Panel on Climate
Change for a series of reports on this, and we expect a
comprehensive report on the sinks (ph) provisions in the Kyoto
Protocol, around I think the spring of the year 2000, which means
we would have to wait beyond the next conference of parties, for
that report to be completed. But what we're trying to do, is to
identify areas where we can agree. I think everybody knows that
we need to, for instance, set up a project list quickly, of what
projects are clearly eligible for clean development and
investment. And that's something I hope we can begin discussing
at Buenos Aires. I think, for the longer term, we have to look at
what a number of countries are saying. I think compliance is
something that will take some time to work out.


QUESTION: I'm Kyosei Ando (ph) with Nikkei newspaper. The United
States have finally not signed the Kyoto Protocol, because the
Congress is now almost over. And will that have any negative
effect in the coming conference, as to the leadership of the U.S.
government? And I think you are repeatedly saying that
"meaningful participation" by the developing nations is what is
necessary to signing that protocol. But to me it's still not very
clear what that "meaningful" really means, and whether there has
been any improvement, whether there are now more meaningful, or
little more meaningful things which have happened since the last

ASSISTANT SECRETARY KIMBLE: Well, let me say the United States
made very clear in January, that we would sign the protocols
during the time -- the year the protocol is open for signature.
That lasts through mid-March of 1999. And to my knowledge, the
administration has taken no further decision. So, I think we've
said we're going to sign. We haven't set a firm timetable for
that. And, you know, I don't expect it will have much impact, one
way or the other, on the conference in Buenos Aires.

In fact, a number of countries have yet to sign. So, that's not a
very big issues, although countries are beginning to start the
process of signing. and no country has ratified. So this is a
long- term process. "Meaningful participation" is meant to convey
our belief that all countries have contributions, specific
contributions that can be made to the climate change agenda. And
we wouldn't prescribe it for any country, any more than we would
permit the whole framework design at Kyoto to be prescriptive for
the United States. We believe countries have to determine where
they're going on this agenda, consistent with their sustainable
development plans, their human capacity, their resources and
certainly the contribution they make to the problem of greenhouse
gas emissions.

So, our goal is to have discussions with countries to make them
understand the potential of the flexibility mechanism, because we
believe that the flexibility mechanisms are the key to ensuring
global participation. And, as I indicated before, we learned very
early on in the year, that many countries have to absorb the
results of Kyoto. And there is a great education process needed
on the flexibility mechanisms. And that's just begun. So, I
expect not to see rapid progress on this, until after we get past
Buenos Aires. But I hope we will begin to see signs of our
discussions and other countries' discussions, with a number of
developing countries.

QUESTION: I'm Selena Belassi (ph) with WorldNet TV. Last year in
Kyoto, there was not yet the economic crisis that seems to be all
over the place right now, and it's coming it seems like very
strong for Latin America. Do you expect any serious trouble? How
much does it affect the conference, and the compliance of
countries, or the compromise of countries, with the environment,
with the economic crisis now?

ASSISTANT SECRETARY KIMBLE: Well, I think that first of all, it's
always hard to focus on the long term when you're in a crisis,
and you want to focus on solving short-term problems. But one of
the things I think that's important for countries to realize, is
that much of the financial crisis that's affecting a lot of
developing countries right now, is leading to restructuring,
leading to different kinds of decision- making, leading countries
to slow their investment planning process. And since they're
already underway -- reassessing where they're going for all sorts
of immediate reasons -- it's also an opportunity long- term, to
look at particularly the Clean Development Mechanism, and see how
that could factor in their future development plans. You know,
it's not necessarily a silver lining by any means in a financial
crisis. But I think if we start understanding the fact that we
now have a mechanism globally, that can contribute both to
greenhouse gas emissions reduction in the developed world for
meeting the targets undertaken in Kyoto, and clean growth in the
developing world, we can start to create a win-win situation that
will have great potential, and hopefully help, at least in a
small way, in restoring confidence in these economies, and
growing them out of the financial crises they're now in.

So, I think there are opportunities here, although I think it
will be hard to get decision-makers to focus long-term.

MS. RANSOM: Any other questions?

QUESTION: Whatever happened to the expectations of the developing
world, that the industrialized countries pay for most of the
effort that has been proposed in Kyoto?

ASSISTANT SECRETARY KIMBLE: Well, I'm not exactly sure what
expectations there were in the developing world about that. In
fact, the Kyoto commitments are only for the developed world. And
if we say "Okay, these commitments are only to be undertaken
within Annex 1," that actually is negative to the developing
world, because it means that all the investment, all the efforts,
and all the restructuring will occur within Annex 1. And I would
say really, truly, the developing world should want partnership,
not exclusivity, in this work on climate change.

If, for instance, a utility in the United States, which is
willing to invest in a clean technology, or renewable energy
somewhere in Latin America, and earn perhaps 10 percent of its
emission offsets from that investment, why would you want to stop
that? Because you ensure for the long-term, that the emissions
coming out of Latin America will be much cleaner. And you set up
a better and more efficient capital base there, and at the same
time, you set in motion a capital stock turnover, that's
consistent with business cycles in the United States, meaning
that the utility isn't disenfranchised in the United States

And that's the whole idea behind these mechanisms, to give people
choices of where to take reductions. Another example might be
sinks (ph). One of the things that some of our utilities have
been working on, is investing in protecting forests in Central
America, in return for small amounts of offsets against forecast
emissions in the United States. These are not major transfers of
emissions credit permitting what some people have called
loopholes. These are ways of ensuring you get capital stock
turnover at an appropriate rate, while you do everything you can,
using both sources and sinks (ph), to address the problem of
greenhouse gas emissions. So, I think truly, while the developed
world never promised to pay anything at Kyoto, Kyoto is the first
time we've started to try to harness investment decision-making,
the incentive power of the market, in a kind of broad
incentivized approach to dealing with greenhouse emissions in a
way that could have truly important gains for developing
countries in sustainable development.

QUESTION: What would it take for the U.S. to call the Buenos
Aires meeting a success?

ASSISTANT SECRETARY KIMBLE: Well, I think a success at Buenos
Aires would be a workplan and timetable, detailing when we will
finalize our work on the flexibility mechanism. That would be a
good step forward.

QUESTION: What do you think are the chances to get that?

ASSISTANT SECRETARY KIMBLE: Oh, I think they're very good. I
think many countries see that, you know, a lot can be
accomplished there.

MS. RANSOM: Yes? Please identify yourself.

QUESTION: Kyosei Ando (ph), with Nikkei newspaper again. When you
discuss emissions trading at Buenos Aires, are you planning to
have specific talks about emissions trading with Russia, which
will maybe in one way support their financial -- economic
condition, by buying a lot of emissions from them? They say it
will be almost a one-way trading with Russia. Do you think that
will be the case?

ASSISTANT SECRETARY KIMBLE: Well, I certainly wouldn't expect us
to come to any great conclusions, vis-a-vis the United States or
Russia at Buenos Aires. But I would say that what we call the
Umbrella Group, which are the countries that comprise Japan,
United States, Canada, Australia, Norway and New Zealand, Russia,
Ukraine, Iceland, sometimes Switzerland -- I don't know if I've
got them all. Korea occasionally participates, but not as an
Umbrella Group partner, but in some of the discussions.

The Umbrella Group countries recognize that Russia and Ukraine
are likely to have a significant amount of emissions to sell,
given the targets they took at Kyoto, which were zero emissions
or 1990 level emissions. But Russia cannot sell these, or Ukraine
cannot sell these until we set up a national registry system, and
a monitoring verification system to understand that we are
actually getting reductions, or that they are not emitting these
emissions, but they are actually going down in their emissions
level. We expect that will be the case, but we have to monitor it
and verify it.

I think it will take some time to design this system. And it's
not a deal for Russia or Ukraine, because as you know, their
economies have taken a major hit. They have suffered a lot of
economic decline, because of, first of all, the collapse of the
former Soviet Union, and now the current economic crisis gong on

But I believe if we design this correctly, we will be able,
again, to use the power of both international emissions trading,
which can lead to hard currency returns to these countries, and
certainly what we call under the Protocol, "joint
implementation," which are the same kinds of investments I was
talking about in developing countries, which can certainly
stimulate growth and also clean growth in these countries that
very much need it. So, this is an ongoing conversation. It's not
a bilateral conversation by any means, but a multilateral
conversation. And the fact that there are emissions that
potentially could liquefy, if you will, or provide liquidity to
the trading market in Russia and Ukraine, is a very important way
of making this work. But it is certainly neither a loophole nor a
game that we are playing. The whole objective is to ensure clean
growth, and reduce greenhouse gas emissions.

QUESTION: According to this workplan, that whole thing would
hopefully start you said next spring?

ASSISTANT SECRETARY KIMBLE: Well, let me say. The workplan is
what we will design in Buenos Aires. The International Emissions
Trading Regime, would very likely not be actually activated until
2008, 2012, the first compliance period. But if we also agree on
a mechanism for early crediting, you may see some trades in
advance of that period, once the protocol looks like it will come
into force. So, I think this is several years off.

QUESTION: There is a growing initiative on mostly the private
sector, about environment, that is joining the biggest companies
around the world. Is there any special initiative for them, any
incentives for this growing movement?

ASSISTANT SECRETARY KIMBLE: Well, let me say, I think it's
important to realize, this problem will not be solved without the
active cooperation of the private sector. Any environmental
problem that we've addressed, has required the private sector to
be in there and help us with figuring out the solution. And so
it's very encouraging to me, that private industry is so active
in discussing this, and active in taking a lot of initiatives on
this front. In fact, I would say there are international
businesses contributing -- not providing all the money, but
contributing a certain amount of money to the conference that was
held in Dakar, Senegal last weekend on the Clean Development
Mechanism. Why? Because these firms and these institutions --
UNCTAD, the U.N. Framework Convention Secretariat and other
institutions -- wanted very much to explain to African states,
the potential of the Clean Development Mechanism, in their
countries, to promote investment.

And so, I think that it's encouraging that the private sector is
involved. And one of the things we hope to see in Buenos Aires,
is a roundtable between the ministers, private sector CEOs, and
non- governmental organizations, to talk about how you ensure the
credibility -- environmental credibility, as well as fiscal and
financial credibility -- of the flexibility mechanisms that we
agreed to in Kyoto.

MS. RANSOM: Any other questions? Thank you very much, Ms. Kimble,
for coming today. We enjoyed this.

ASSISTANT SECRETARY KIMBLE: Thank you. And I hope some of you
will be in Buenos Aires, and if not, I'll give you a readout when
I get back. (Laughter.)

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