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Melinda Kimble, Head of Delegation/Acting Assistant Secretary of State, Bureau of Oceans and International Environmental and Scientific Affairs and Ambassador Mark Hambley, Special Negotiator for Climate Change U.S. Delegation to the UNFCCC Conference of the Parties-4 Press Briefing Buenos Aires, Argentina, November 4, 1998 (Link to Spanish version.)

RADIO CANADA: I would like to know what are the points under bilateral discussions. I know there are some problems with some people in the European Community don't want the permit to go through, there is this thing with China, what are the main areas you are discussing right now?

MS. KIMBLE: Well, I think there are a number of categories of discussion. First of all there is discussion on the implementation of commitments under the Convention. This is taking place to some extent under the Subsidiary Bodies on Implementation where they are looking at Article 4 under the Convention and discussing issues from 4.2 (a) and (b) which is Review of Adequacy of Commitments, to 4.8 and 4.9 which looks at issues of how to help least developed countries and how to help other countries with adaptation and mitigation problems due to climate change. So this is one set of discussions going on. There is another set of discussions going on through an Ad Hoc Contact Group dealing with flexible mechanisms, which is actually working I think very constructively to take a step-by-step approach to setting up or elaborating the flexible mechanisms.

It's important to realize the Kyoto Protocol establishes four flexible mechanisms. Some people don't realize that because the fourth mechanism only applies to the European Union. But, the first mechanism, of course, is international emissions trading which is discussed in Article 17. The next mechanism is Joint Implementation, Article 6, and finally, the Clean Development Mechanism which permits investments in non-Annex I countries for certified emission reduction units to be earned by the parties to the investment; and that permits the activities to go forward in a very big way in developing countries if we structure this mechanism correctly. All these mechanisms are under discussion right now, but actually Ambassador Hambley may have more to add.

AMB. HAMBLEY: Thank you, Melinda. Let me just say that this morning's discussion in the Joint Session of SBSTA (Subsidiary Body for Scientific and Technological Advice) and the SBI (Subsidiary Body for Implementation) dealt with the emissions trading and the other flexibility mechanisms. I think if you were in the room, I think you probably heard ad infinitum a whole list of countries who gave their positions on these various mechanisms. I think there was a very fruitful discussion, one in which various new ideas were thrown out, some of them rather controversial, such as a proposal on the part of several African countries to somehow make adaptation available not only in CDM but also available in the mechanisms of joint implementation and emissions trading as well. But in addition to that, it gave us an opportunity, the United States, to enforce our long-standing views on the necessity to have these mechanisms as fully open as possible, transparent and without limitations. It also gave the possibility for the European Union to make a similar presentation in their view that you must have emissions limited by quantitative and qualitative measurements, and also spoke in terms of some kind of concrete ceiling. That said, both the European Union and the United States also emphasized that we wanted to make sure that this meeting was one where there was productive dialogue. Both the European Union and the United States, as well as other countries, pointed out that we recognize that our differences in approach to these mechanisms, and we did not want to use this meeting as one in which we engaged in combat over those particular aspects. We wanted, in turn, to focus on those areas of convergence and to try and find ways of building on those areas of convergence where we can move forward and establish some progress from this meeting.

QUESTION: (Inaudible....) In your opinion, Ambassador Hambley, because by not being an Annex member they could then be a receiving participant of the CDM and the credits attached to CDMs?

AMB. HAMBLEY: Certainly it is in the interest of all parties to this Convention to have Turkey enter into the Convention as a full participant, as a full party. And it is certainly a goal of the United States to find a way that Turkey can indeed join the Convention. I must say Turkey has since 1992, since it was entered into Annex I/Annex II, at its own request I might add......early on it took the position that in fact it should not be a member of Annex I/Annex II, and it has indeed endeavored under the Convention process to try and find a way in which it could withdraw from those Annexes in order for it to present the Convention to its parliament for ratification. That has not been possible. I think it was indicated in the floor debate on this item today that several countries frankly came out very strongly against allowing -- I think two countries actually came out against allowing Turkey to withdraw from those Annexes. I think the European Union and the United States both believe it's necessary to give Turkey more time to try and find a way which will allow for a peaceful resolution of this item, and I believe a proposal will be made this evening in the SBI to permit that. What we would want to do is give Turkey as much time as it needs in order to permit it frankly to find a way to join this Convention as a full fledged member.

VOICE OF THE MEDITERRANEAN RADIO/MALTA: At a seminar organized by the electricity industry yesterday evening, there was great support from that industry for including the building of nuclear power stations in developing countries as one possible thing that you could do through the CDM or under JI. My second question is a repeat of the question I asked Vice President Gore in Kyoto -- are you discussing with other donor countries to the World Bank that major funders, the reorientation of World Bank lending policies away from the overwhelming emphasis at present on fossil fuel-based energy production.

MS. KIMBLE: Well first of all I think we are at very preliminary discussions of what projects are going to be eligible for CDM credits. I think from an objective point of view we have to look very carefully about the issue of nuclear power because it produces no greenhouse gases. But nuclear power has other issues connected to it that are both environmental and safety related and so it is not necessarily good to take one option and then find yourself with another kind of problem. So I don't think we've made a complete judgement on that but we do recognize the contribution certain nuclear power generation facilities can make to reducing greenhouse gas emissions in the electricity area.

We have been working actually with a number of major shareholders in the World Bank to develop an approach on reducing investment in fossil fuel use. And the World Bank is also looking at how you invest in clean fossil fuel projects. Clearly in many areas, coal is an investment that is going to continue to be made, people are going to exploit coal fired plants in the near and medium term. So if they are going to build these plants, we have to find a way to make them clean and we are working very closely with the World Bank on these issues. Mark?

AMB. HAMBLEY: I think that's a good answer.

AUSTRALIAN MEDIA: There is, I believe, a joint paper being prepared under the Umbrella Group on the flexible mechanisms. I don't know if it's finished yet or if it's still being completed, but whatever. Are you able to present the highlights of that paper?

AMB. HAMBLEY: The Umbrella Group of countries, an informal grouping established at Kyoto which consists of Japan, the United States, New Zealand, Australia, Canada, Iceland, Norway, Ukraine and the Russian Federation, has indeed worked very, very hard over the past few days to try and develop a paper which we hope will help further our discussions overall on the flexibility mechanisms. We have completed this paper. It's going to be released this evening at the Contact Group on the Flexible Mechanisms. We earlier today briefed it with the European Union in terms of what we call a Common Interest Group, which is an informal gathering of all the countries of Annex I for various discussions about aspects of these negotiations. I think that the general reaction which we have received thus far is that it is a helpful document. Certainly from our viewpoint it does crystalize a lot of our thinking in terms of what we would like to see in terms of the steps for joint implementation, the international emissions trading, and the Clean Development Mechanism, certain aspects we would like to see formulated in terms of a decision to move our process forward as we move on beyond COP-4.

NPR/LIVING ON EARTH: Can you tell me if you are having bilateral negotiations with the OPEC nations over the issue of compensation, and if you are, can you say a little bit about that?

MS. KIMBLE: Well certainly we are not having bilateral negotiations on this issue. This issue is coming into discussion under the rubric of Articles 4.8 and 4.9 which talk about mitigation, adaptation, to the effects of climate change and also talk about dealing with problems that may arise from countries that lose export revenues due to what we call response measures. We have a very strong opinion that the latter is much harder to delineate than the former. Many of our Annex I or Common Interest Group Partners share these views, and there certainly is no real scope I would say for a bilateral negotiation because we believe that this issue is not clearly spelled out as one that needs immediate decision.

AMB. HAMBLEY: If I may just add a brief note on that. There is a Contact Group, as you know, which has been established to monitor this aspect of our discussions, and in fact, to come up with a decision. It was created in Bonn last June and has been resuscitated at this session. It is under the co-chair of Iranian Ambassador (SOLOMAT/phonetic) as well as the Swedish Ambassador to the Environment (BOLSHELLANE/Phonetic), a very distinguished and able negotiator in the Environment....they had a long session yesterday and they will meet again sometime later this week.

REUTERS: I was just wondering if it would be possible for wording in the Protocol to be structured in such a way that developing countries that accepted projects under the CDM whether the wording would make it such that the countries accepting these are making a commitment to the Protocol. In other words, if country X accepted a project, their very acceptance would under the Protocol represent their commitment to the Protocol and thus circumvent all kinds of issues that we've been talking about.

MS. KIMBLE: You can join our negotiating team. (Laughter)

AMB. HAMBLEY: I think in terms of adding language to the Protocol that's not possible without amending the Protocol. The Protocol has been negotiated. In terms of decision, which is I think probably where your question is directed -- decision which might be worked out regarding the CDM, anything is possible but that, of course, will take consensus from the group of 165 countries who are negotiating. And I think that at the present time that would probably be unlikely that that kind of a phrase would be possible. Certainly something to keep in mind, however.

MS. KIMBLE: I think though it is important to add that for countries to participate in CDM, it is quite clear they need more capacity. They need capacity in project design, they need capacity in understanding the measurement, monitoring and verification issues that are related to how you earn certified emission reduction units under the CDM. I think there's a lot of work to be done in this area and so, in a sense, there has to be a partnering between developed and developing countries before you can even begin.

NHK JAPAN BROADCASTING: I understand that meeting, well what they call informal consultations, has started today among developing nations and how did the U.S. get involved in this process and is there any possibility that they are going to have an informal consultation as a whole, as a group? Are they going to have any kind of group meeting in the near future?

MS. KIMBLE: I think you are much better informed than we are. There was a lot of bilateral discussion today about many, many subjects. And I think it is clear that the President of the Conference has made clear to everyone her intent to hold informal consultations, but we have not been consulted on those.

QUESTION: I am hearing that there would be a proposed, or accepted a 3% tax on the value of the CER as such, so that we would have some effect on the Clean Development Mechanism as one of those three flexibility tools. Are you hearing other.....for the purpose of going into an adaptation fund, a global kind of insurance program for populations as such to adapt. Are you hearing other talk about other taxation modes for the other flexibility mechanisms like the JIs and the emissions trading?

MS. KIMBLE: Well first of all, I think it's very, very unlikely that we are going to see any kind of global tax. I think it was very clear in the negotiations of the Clean Development Mechanism that the idea was the certified emission reduction units would be shared, and a share of the proceeds -- in other words, maybe 2% of the certified emission reduction units available in a project, would be banked in a fund for adaptation and mitigation. So, a very simple way of thinking about it -- let's say there are 600 tons in this project and the parties decide they will share 300 to each party, the investor and the country involved. And they would take maybe 10 of those tons and bank them toward use by countries working on mitigation and adaptation problems. Then the Executive Board of the Clean Development Mechanism would market in effect these certified emission reduction units to realize funds so that they could invest in project activities. But there's no tax involved. It's all integral to the savings generated by the Clean Development investment. Mark?

AMB. HAMBLEY: I would just add that at this morning's session of the joint SBI and SBSTA, there was a delegation speaking on behalf of a group of countries which did suggest that there should be a way found in which proceeds for adaptation will be not only available through the CDM, but would also be available through joint implementation and emissions trading. It was just a proposal made in an intervention, something that would have to be brought up later on in negotiating session. I think we are quite a long ways before we are really get the details of that proposal, but it is something which has been mentioned, it is something in the corridors you hear a little bit about.

MS. POVENMIRE: Thank you. I would like to close with one administrative note for your planning purposes. The U.S. Delegation will be conducting a press briefing every evening of this session of the COP in this room at 7 p.m. Thank you.

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