SPECIAL ENVOY STERN: I would like to say a few words before taking your questions. I'm very pleased to be here in Bonn representing the U.S. in my capacity as the Special Envoy of the President for Climate Change. I am glad to have Jonathan Pershing with me and our whole team here. I look forward to joining the opening plenary session this afternoon and to making the first intervention on behalf of the United States.
My team and I came here determined to make up for lost time. America is now once again strongly committed to developing a global response to climate change. We do not doubt the science, we do not doubt the urgency, and we do not doubt the enormity of the challenge before us. President Obama and his Administration are fully committed to action, both at home – where that action is well underway already – and abroad. During the past two days in Bonn, we have had productive discussions with representatives from many countries, both developed and developing.
Let me say, in the course of our conversations here and in the course of conversations that I have had over the past six weeks -- we have been doing a lot of listening, a lot of sharing of ideas with many of my counterparts -- I am more convinced than ever that it is important that we be guided in these negotiations by a combination of science and pragmatism. Our job in these negotiations is to define a path forward that will be supported by the people that we serve so that our agreements can actually take effect with all countries participating, and can then start to make a difference.
The task in these negotiations is quite difficult, but if we can, all of us, open our minds and think creatively, I think we can and will succeed. What has been particularly heartening and encouraging in the consultations that I have been having the last number of weeks is hearing about -- and being able to focus on a bit -- the impressive and innovative things that people are doing, countries are doing, all around the world, [including] countries in the developed and developing world. The transformation of the global economy from a high carbon to a low carbon base is ultimately going to have to happen at the national level and indeed at the local level in some cases, so it is important that we have international agreement that is designed to support and bolster those efforts.
Let me also just say a quick word about the economic situation that we are in. This bears on the work that we are doing here on energy and climate. The path to a low carbon economy is also the path of long term, robust sustainable growth, which is why President Obama is extremely focused in shaping and forming the stimulus package and having a large clean energy, green component of that plan-- some $80 billion in funding and loans for clean energy development that he included in his plan -- that he was extremely focused on putting in there. That is also why he is committed to more than tripling the traditional level, the current level of U.S. investment in R&D for energy to a level of $15 billion per year over ten years. That's what his plan is. As you know, the current level is in the three to four billion dollar range.
We think it is imperative that other countries seize this opportunity as well. I would note that China has, much like the United States, taken an important step by having a significant clean energy component of its stimulus package, but more can and must be done to pursue the path of low-carbon development. Many other countries -- South Africa, India, Brazil, and others have also designed projects and have plans for clean energy transformation that are quite important, and they are going to help them get on the path to sustainable development. It is vital in general that the global community support the efforts of developing countries to leap frog the carbon-intensive fossil fuel stage of development that industrialized countries have followed.
Let me just add one last word, before I take your questions, on the major economies process -- the Major Economies Forum on Energy and Climate that we are going to pick up on. Some invitations went out several days ago to the presidents and prime ministers of various countries. The leaders' session will happen in the aftermath of the G-8 in Italy. We anticipate that there will probably be three preparatory sessions before that. The first one will be April 27-28; we are going to host it in Washington. We expect that the next two, probably one in May, one in June, will be hosted someplace else, but that has not been determined yet. This isn't a negotiating forum but we hope that it will be an opportunity to have the kind of discussion among leaders and their representatives in the course of the preparatory sessions that can hopefully facilitate agreement in Copenhagen. And it will also be a forum for other kinds of discussions to pursue clean energy partnerships and the like; an important place I would hope to help move discussions along for Copenhagen, but obviously not to replace the Copenhagen discussions. With that, I will be happy to take questions.
QUESTION: Has America not left it too late for Copenhagen, to have a meaningful settlement? And are you going to be unveiling any fresh proposals over the next two weeks?
SPECIAL ENVOY STERN: America hasn't done anything about leaving it too late. The Bali Action Plan set the timeframe of the end of 2009, which gave the rest of the world two years – and basically gives us nine months. But we accept that. We are going to work within that timeframe. And we are committed to getting a good, strong, robust deal done in Copenhagen. So we are certainly intending to go forward but I don't think it would be accurate to say that the United States has been dawdling here. The new administration just got in.
We will be working with all of our counterparts to try and fashion an agreement that includes what we all know to be the critical elements, which would involve mitigation and financing, technology, adaptation, and the like. We are working quite intensively at home to develop what will be our approach, and that we will then certainly start discussing with other Parties. I would say that probably at some point later in April -- again we have been in place a short time; I have been at the State Department probably six or seven weeks at this point -- and so we have a quite intensive, quite high octane process going to develop policy.
In addition to having gotten there recently, we didn't want to just walk in and come up with our own policy in a vacuum. I have probably met at this point with 20 or 25 countries in the course of the time that I have been there. And we quite deliberately wanted to reach out, consult, hear what others had to say, in the developed world, in the developing world, in Asia, in Europe, in South America, all over the place. And actually I am looking forward tonight to a dinner we are having with representatives of a number of the more vulnerable countries and states from Africa, which also have an important voice. So we are trying to listen to everybody, think about our own ideas, and in the relatively near term, I think we will be having some ideas that we will look to share with you.
QUESTION: There is very high expectation with this new American delegation coming here and joining the process. I think you know that. Maybe you have something to say about it. At the same time, there are already some concerns, actually two concerns. The one is the level of ambition announced by President Obama that sounds a little low for what is demanded by the scientists.
SPECIAL ENVOY STERN: We don't actually agree that what President Obama has talked about is low at all. It's important to understand what he has proposed and also to pause maybe for a moment on the issue that goes under the general heading in these negotiations of comparability. President Obama is proposing to reduce U.S. emissions by something in the order of about 16-17 percent from where we are right now, about 15 percent from 2005 levels, and about 80 plus percent by 2050. That is a significant reduction. I am well aware that there is a historical affection for the year 1990; and that in 1990 terms, the President has proposed to be at that level, the 1990 level, by 2020. But it is a 16 or 17 percent reduction from where we are right now. So the notion that this is sort of a zero level of stabilization is, we think, not accurate.
It depends on how you look at comparability. If you look at that 1990 level baseline, then you appear to have this 25 percent gap between what the EU, for example, is proposing and what the President has proposed. There are a lot of different ways to look at this. If you look at what the reduction against the “business as usual” level would be for the United States between now and 2020, it would be about 30 percent, probably just about what the European reduction would be. If you look at what the cost would be to the United States, in terms of what the likely prices of allowances would be, as against European, probably about the same. If you look, like I said, against a 2005 baseline, the 25 percent gap shrinks to about 10 percent. So it really does depend on how you look at this thing.
And the last point I would make, is we really do not think, and we don't think that science thinks, that the best way to look at this is simply by focusing on the 2020 year. What the President is talking about is a pathway that would go all the way to 2050, with a very significant reduction, as I said, at 80 plus percent levels. And we think that that is not low at all, [rather] quite robust and actually quite consistent with what other, [including] the most ambitious countries are also talking about.
QUESTION: The second concern was about Congress, how far the Congress will be ready to go by the end of the year and the fear that you may have a disconnection between the administration and the Congress, and reproduce the mistake of Kyoto that was signed abroad and never ratified at home. So how will you manage to make sure that the Congress will be ready in December for an international agreement in Copenhagen?
SPECIAL ENVOY STERN: Well, I can't guarantee when Congress is going to be ready. I am hopeful… The centerpiece of the President's domestic program is the so-called cap and trade legislation. I am hopeful that legislation can get done this year before Copenhagen but I have no idea whether it will… Maybe yes; maybe no. It is extremely far-reaching and ambitious legislation, so it's impossible for me to predict.
If it isn't ready by the time of Copenhagen, then we'll have to try and structure the agreement to accommodate that fact. I mean the one thing that is a working assumption for us, and it connects to the point that you just made about Kyoto, is that we need to be guided in the international setting by what the ultimate legislation, domestic legislation, that Congress and the President are able to arrive at. If you follow this at all in the U.S. press, you will know that this is going to be a very challenging, very difficult exercise to get this legislation done. I am confident that we will get it done but it's not going to be easy. It's going to take a lot of effort.
There is going to be a lot of negotiation, among a lot of different parties. It is not just partisan, by the way. It is regional as much as it is partisan, because there are all sorts of different interests and concerns that come into play. But at the end of that negotiating effort domestically, there will be a bill and there will be a number. And I do not think that it is realistic to believe that we will then be able to go into an international setting and get a higher number than that -- and take it back to the same Congress, and get even more votes than we got for the domestic [legislation]. I don't think that's going to happen. So if it's not done by December, then there will have to be ways that we structure the agreement to accommodate that fact. I don't want to negotiate the agreement in this setting. There are different ways to think about doing that but it is absolutely one of the challenging aspects of this exercise for the United States.
QUESTION: I haven't – this could be my fault of course – but I haven't seen a lot said about financing an international deal. Is there any thought on the part of the administration to reserve part of the revenue from the cap and trade for international costs?
TODD STERN: You haven't seen it publicly because we have been diligently working on this privately. In all seriousness, the financing issue is extremely important in our judgment. I think that it is extremely important in the discussions that you will see going on here and throughout the course of the year. So, yes, we are very focused on it. There are a number of different aspects of the financing question that are interesting and complicated. Those include: what the ultimate amount of money is; where is it going to come from; is it going to come from appropriated funds; is it going to come from carbon markets; is it going to come from some element of using allowances that are distributed, whether internationally or domestically; is it going to come from the use of policy measures, like loan guarantees that might help unlock private sector funding? There are a lot of different ways and places it could come from.
There are a variety of different kinds of institutional arrangements that could be involved. You could be talking about a centralized fund. You could be talking about using the existing different kinds of resources that are lodged in different institutions. And there are important issues that have to do with governance. Developing countries have a very legitimate interest in wanting to have a say and some influence on how resources are used, and I think a very legitimate interest in there being transparency and not too much bureaucracy in the way funds are able to flow. And developed countries, the donor side if you will, has a very legitimate interest in there being accountability and in making sure that when funds are provided they get used to best advantage.
All of those issues are I think going to be the subject of a very significant negotiation. We have been working quite actively internally, in Treasury, the State Department, the White House, etc., to put together our notion of a proposal. And we are in the middle of doing that. I think we will start discussing that with other countries, probably pretty soon.
QUESTION: I am curious what you think is the most essential and critical issue that will be discussed here in Bonn and what you think, at the end of the ten days or so, will make this particular session a success. Can you come out and say, what's been successful, what was done well, how are we moving forward in the process?
SPECIAL ENVOY STERN: Contextually in the Bonn discussions? Well, I'll make a stab at that. I think to some extent my answer is broader than Bonn but liable to be true in Bonn also. Jonathan may have some other thoughts.
I think that the most fundamental issues in this negotiation in general have to do with how to think about, capture and express the actions and the level of the undertakings to be taken by major developing countries as well as the developed countries. We already know the developed countries have already traditionally been in the mode of making commitments and undertakings. Now we are obviously adding the United States to that package. And I think we also need to add, in a different way, in a differentiated way to be sure, the major developing countries. And again I say that in a way that harkens back to my comments in my prepared remarks about the centrality of science here. I am fond of saying, if you do the math you simply cannot be anywhere near where science tells us we need to be… You cannot directionally be where you need to go on the science if you don't have China above all, but also other major developing countries taking real steps. I think how that is captured, how that is understood and expressed, quantified, committed to, etcetera is going to be extremely important.
The other thing that I think is very related to that is the question that the gentleman from AP just asked about financing. I think that those two things go hand in glove. Certainly developing countries understand and are seized by the importance of the financing and inter-related technology questions. I think those are in my mind the most important, and the trickiest, most difficult issues in the negotiation.
As to Bonn in particular, Jonathan, I don't know whether you have [comments]?
MR. PERSHING: Let me say just two words about this particular negotiation. The first point is that we are now in the middle of a two-year process that was launched in Bali, with the Bali Action Plan. And beginning with this meeting and going forward through the remainder of this year, the intent is to develop a set of recommendations that emerge in the form of a text. This is the first meeting where that's been as specific as that. And so we are looking forward, as the U.S. delegation, to examining ideas in that form and beginning to make our contributions although, as Mr. Stern said, we are still very much in the listening mode and collecting ideas. A success from this meeting will therefore be an outline of what we think will go forward over the remainder of the year, the beginning of the framework that sets us on that course. This is not a meeting where we will resolve particular questions. This is a meeting to explore options and issues. And a success will be if those are on the table in an open and transparent way for consideration.
QUESTION: It seems to me there are quite high expectations towards the new U.S. administration. I am just wondering how are you going to meet these expectations? Are you confident that you can meet these expectations?
SPECIAL ENVOY STERN: I think that there are high expectations for President Obama in a whole variety of areas. That flows, I think, in part from the extraordinary figure that he is, and going back to his campaign, and the extraordinarily difficult times that we find ourselves in, with respect to climate change and many other issues – the economy and any number of foreign policy issues… Yes, I am confident that we can have a success here if we use our heads properly. Yes, the United States is going to be powerfully and fervently engaged in this process. But that doesn't mean that anybody should be thinking, and I don't think people do, but this is sort of part of your question, that the United States can ride in on a white horse and make it all work. Because we can't.
What we can do is return to the table with energy and commitment -- with a commitment to science and a commitment to pragmatism in the sense of trying to get a deal done that will be doable, that will allow the international community to have all major players – including the United States – part of an ongoing deal and an ongoing process. And I think that we absolutely can do that… The natural inclination, which is often true in broad negotiations like this or any other, is to kind of lock in on your entrenched positions, re-state the orthodoxies, stick to your talking points, and not try to collectively get to yes. I think that's the kind of thing that can de-rail us but I think if we can work together, the United States is going to be a partner. We mean to be a partner to developed countries and we mean to be a partner to developing countries. But we are all going to have to do this together. We don't have a magic wand.