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


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.


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