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Stuart Eizenstat, Head of U.S. Delegation/Under 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 10, 1998 (Link to Spanish version.)

OPENING STATEMENT BY MR. EIZENSTAT: Thank you very much and thank you for coming. I'm very pleased to be here. Those of you who arrived several days ago have been following closely, I am sure, the developments across a range of issues, and I'd like to start by stepping back and recalling our overriding objective. Many of you, I know, were with us in Kyoto last year and are still around to tell about it, and can recall first-hand that historic achievement. In Kyoto the international community committed itself to meeting the challenge of global warming, and to build a solid architecture for achieving that goal. Our task here is to begin adding, if I can put it this way, the plumbing and the circuitry; that is, to begin transforming the broad promises of Kyoto into a reality. We set ambitious environmental targets in Kyoto, and now we have to ensure that we meet them and meet them in a cost-effective and sensible way, with flexibility mechanisms and a compliance regime that will help us achieve these goals. This is a marathon and not a sprint, and we have a long way to go.

There are encouraging signs, however, here in Buenos Aires. I am particularly pleased to see growing recognition both among the parties and within the business community of the importance of flexibility mechanisms in achieving our goals. The sooner we get progress on these mechanisms and clear policy signals to the private sector, the quicker we will reduce emissions to the benefit of the environment.

Last night I joined the ministerial roundtable on flexibility mechanisms and there for the first time, the business community from Europe, from Latin America, from the United States, was directly represented -- after all they are the ones upon whom the burden of compliance will fall -- and it's important that they are being given a more direct role. We were pleased to see the growing consensus on the importance of bringing the market to bear to help achieve our reduction targets in a way that not only preserves but enhances global economic growth. By harnessing the power of the marketplace, we can encourage countries and companies to reduce emissions even faster to the benefit of both our environment and our economies. As we build these market mechanisms, we must not encumber them with arbitrary limits. The surest way to undermine support for emissions reductions is to impose higher costs by restraining rather than encouraging the emerging market.

I want to talk about a few things that have happened since Kyoto, and that again are happening here. First, in the year since Kyoto, we have made continued progress in a robust domestic program to reduce emissions and we are committed to robust domestic action. The President was able to get one billion dollars from the Congress in appropriations for climate change related activities -- research and development on renewables, and a whole range of other public-private partnerships. That represented in a difficult budget environment a remarkable 25% increase over last year's budget. Just to give you one of many examples, and Dirk is here to elaborate on those, is $270 million that will be provided to our three major automakers who are pledged to work with us to produce the first cars by the middle of the next decade, that will have three times the fuel efficiency of the current fleet. And there are projects across the board -- in commercial buildings and homes and the like.

Also since Kyoto, there has been real progress in a number of U.S. companies, including utilities, who -- rather than trying to block progress on Kyoto -- are trying to make Kyoto happen in a cost-effective and reasonable way, and some are even pledging reductions in their own companies which exceed Kyoto targets.

Third, since the Kyoto Protocol was negotiated, the science has been validated time and time again, by tree ring data, by ice core bores, by sophisticated satellite data, and we are seeing the types of weather patterns that are consistent with climate change.

What I am also seeing in Buenos Aires, that frankly did not exist in Kyoto, is a real engagement, if not yet full agreement, between Annex I countries and developing countries, on a whole range of issues including the three flexibility mechanisms -- emissions trading, joint implementation, and the Clean Development Mechanism. I am encouraged as well by new openness among some parties to explore possible new pathways for developing country commitments. We recognize that developing countries face pressing needs, and we don't need to ask that they take on commitments identical to those of the developing world. But if we are to meet this challenge, it must be a truly global effort, as indeed the Rio Convention itself recognized in talking about common but differentiated responsibilities.

At this stage in the talks, as ministers are now just coming, we are seeing a narrowing of differences on several important issues. Work groups have been meeting around the clock, including tonight, to see if other issues can be resolved before the formal ministerial portion begins tomorrow. We are beginning to see the outlines of what issues will be squarely before us. Those could very well include issues like technology transfer; the impacts of climate change on developing countries; financial mechanisms; the review of the adequacy of commitments by all parties; flexible mechanisms; compliance; and possible new pathways for developing countries to participate.

As we begin this critical next leg, I hope we can all stay focused on just what is at stake. We are here because our leading scientists are warning of grave dangers if we do not act. We are here to heed their warning, to do so in a prudent, reasonable, cost-effective way and to rededicate ourselves to protecting this planet for future generations. Thank you and I'll be glad to take your questions.

THE INDEPENDENT/LONDON: You said we are seeing the types of weather patterns that are consistent with climate change. Would you like to elaborate on that?

MR. EIZENSTAT: Sure. 1997 was the hottest year on record. 1998 is even hotter, and the last 11 years we've had nine of the hottest years. The effects of El Nino with floods, droughts, are consistent with what one can expect if the climate change problem accelerates. And so in those ways, I think people are feeling the effects of what they will feel if climate change really takes hold.

THE TIMES/LONDON: I don't know if you've got any figures right now on what your current greenhouse gas emissions are and if you've got any figures you can tell us what they would be in 2010 under a business-as-usual scenario......

MR. EIZENSTAT: I'll let Mark handle the details, but I can tell you that to achieve the targets that we assumed in Kyoto, which is for the United States minus 7% {from 1990}, given the expected growth in our emissions, it would represent a reduction in emissions of over 30%.

THE TIMES: So, it is over 30%, and yet you believe the U.S......

MR. EIZENSTAT: But, let me just say that, Mark, do you want to give a precise....

AMB HAMBLEY: I don't have any precise figures, I think what you've indicated is the correct analogy to be drawing.

THE TIMES: Because its been put to some of us here that in fact if you look at the CDM and if you were able to get all the hot air in China, rather than tea in China, all the hot air that you could get your hands on in the United States, you'd still have a shortfall in about 2010 of about 700 million tons of carbon dioxide. Have you done those sums yourself or what you think.....

MR. EIZENSTAT: We have, I think, perhaps been the only country that has produced a major economic study by the Council of Economic Advisers on the actual impacts of Kyoto. What that shows is that first of all no country, including the United States, can possibly meet its targets by trading alone. There has to be a robust domestic program and that's why I stressed in my opening remarks the fact that we have such a program, and the President in fiscal year 2000 will be asking for even more budget funds for everything from biomass in the USDA, to additional Department of Energy funding and in many other agencies as well.

Second, that -- without trading -- the costs to Europe, according to Europe's own analyses, would go up dramatically from anywhere from two to three times what would be the cost with trading. So this is not simply something that is beneficial to the United States, it is beneficial to Europe as well, and indeed our figures indicate that the costs without trading would go up more to Europe than they would with the United States.

Third, that if there is full global trading, that is not just among Annex I countries but among key developing countries, that the costs to the United States would be quite modest -- between $14 and $23 a ton, that would work out to around $70 to $100 per family increase by the year 2010. At the same time without trading, those costs go up quite exponentially, not only in the United States but in Europe and Asia, and even more so, in developing countries.

DANISH NEWS AGENCY: You said that no country can meet its goals alone by trading, could you be a bit more specific about the expected ratio of domestic action and the use of flexible mechanisms of the United States.

MR. EIZENSTAT: One of the concerns that we have about trying to put an arithmetic cap on trading or, for that matter, on the Clean Development Mechanism -- which is what some are doing -- if you did it on the Clean Development Mechanism, it would reduce a number of projects that the developing world can take to get clean technology. What conceivable benefit is there to doing that and to deter a maximum number of projects going to the developing world which will enhance technology transfer while providing credits. It is impossible to quantify because what will happen is that countries will take robust domestic action, but they will also wish to trade to the extent that marginal costs for trading are less expensive. At what point that marginal cost occurs is almost impossible to determine and to determine it other than by market forces would be a very serious mistake. What we do know, again, is that because of the ambitious targets that were set at Kyoto, it is simply impossible to trade one's way out, but one ought to encourage the most cost-effective way of doing it. For example, because mature industrial countries will have already gone through a capital cycle for their utilities, not just in the United States and Japan and Australia, and Canada and Europe, they may have to put on scrubber technology which would be very expensive. If on the other hand, they can partner with a utility through the Clean Development Mechanism, for example, in Indonesia which does not have that and they can do that through a clean gas-fired plant, then that gives them a credit. It reduces that same ton of carbon, but it does so in a much more cost effective way.

And the last point -- I can only speak for the United States, I can't speak for other countries -- but to the extent that the Kyoto targets are perceived as unaffordable, to the extent that they impose....particularly at a time when financial markets are roiling and there are concerns about burdens on all countries -- if we appear to be taking the most costly approach to achieve the same objective, it will undercut support badly.

And last, this is not a theoretical concept. We are I think the only country in the world that has actually had real live experience with trading. We are doing it as we speak. In our acid rain program -- the SO2 reduction, sulphur dioxide reductions -- we are obligated to achieve certain targets. We have a national trading system to do so. What has that system accomplished? According to objective estimates, this was even in the "Wall Street Journal" and other places, the costs of compliance with our obligations are 50% less than had been anticipated from a command-and-control system. And we're achieving the reductions 30% faster than was expected. That's what one can expect likewise with international trading, where you have even more players involved.

NORWEGIAN NEWS AGENCY: Mr. Eizenstat, could you now give us a more precise indication on when the U.S. is going to sign the Kyoto Protocol?

MR. EIZENSTAT: Well, we've made clear since the close of the Kyoto conference, and the President has said so repeatedly, that we intend to sign the Protocol during the one year signing period which began in the middle of March of this year and which will end in the middle of March of next year. We're considering the appropriate timing but there's been no final decision as to when we would sign. The advantage of signing some time during this year is that it locks in the gains that were made at Kyoto, for example: differentiated targets by developed countries; a reasonable time period; and a five-year period to do so rather than a one-year target period; the inclusion of six gases; the inclusion of the three flexible market mechanisms rather than being required through burdensome taxes or regulation to achieve those ambitious goals; the inclusion of sinks; sequestration measures. All of this is important. Therefore, whenever we sign -- whenever during that year we will sign -- would reaffirm our commitment and would assure us a place at the table. Kyoto is unfinished work in progress. If we don't sign sometime during this one-year period, then we lose our opportunity to have the kind of influence on achieving the kind of cost-effective market mechanisms and developing country participation that will make this a realistic and environmentally sound agreement. By ceding the playing field to those who prefer to take more burdensome taxes and regulatory routes, we would be undercutting support in our own country. So we want to be part of the process; it's a long-term process, and we look at this as an opportunity to be an influential player.

It does have to be understood, and there is, I know, in Europe and, frankly, in the United States, a misunderstanding about this, that whenever we sign, that signing does not impose an obligation on the United States under our constitutional system to implement. It does not impose legal obligations. Only the United States Senate can do that through the ratification process and the President has said, on numerous occasions, that we will not submit the treaty for ratification to the United States Senate unless and until there is meaningful participation by key developing countries.

ORANGE COUNTY REGISTER: The congressmen here earlier this afternoon, who oppose the treaty, complained that the science was invalid. Some of the reasons are: Why is Christie's satellite data, which I happen to have with me here, showing support for the treaty because it does not show any substantial warming. I've got the graph; I can show you. The IPCC summary says that radio sonds show a cooling trend. Again, this is evidence of immature science, according to the congressmen, because one would think that the weather balloons would show warming. There are many studies showing rural temperature not increasing. The CO2 increase rate.... Can you give me the name of whoever it is that can really give me the science?

MR. EIZENSTAT: ....We'll try to give you a source...The fact is that the science is fairly well established. There's a growing, and I think, if not universal, certainly strong majority consensus among the scientists of the world. The IPCC drew scientists from 50 countries, 2,000 scientists who said that there is, in fact, a build-up of greenhouse gases, there is in fact a warming trend in the world, and that human activity is contributing to it. I have a great respect for Chairman Sensenbrenner and for those who share his views. This is a difficult issue and we respect his views. He didn't say signing was invalid. He said he disagreed with it. Although, again, I have a genuine respect for his seriousness of purpose, we simply disagree on this issue. I think that to go back and try to argue the science on this issue, is not constructive. If we try to debate that ten years from now we will have let these greenhouse gases, which by the way are measurable through ice core borings -- I have a chart that I've used in five hearings that demonstrates the fact that the build-up exceeds anything we've seen in 50,000 years in terms of greenhouse gas emissions, and that's not only from ice samples, but it's also from measurements in Hawaii.

DAILY TELEGRAPH/LONDON: John Prescott rather surprised me this afternoon by telling some British journalists that he thought that the Kyoto agreement was a disgraceful one because it was not equitable, and he felt that in the long run, and possibly even in the short run, there would have to be an agreement for a kind of cap on emissions on a per capita basis. There would have to be some form of convergence. Is that still, is that a view that the U.S. would have, and if not, why not?

MR. EIZENSTAT: Well, first of all, this is one of John's children, so what he wants to say about one of his children that he helped parent I'll leave up to him. But he was as much the father, or to mix metaphors, the midwife as any other person on the face of this earth. We like the baby that came out. We think it needs improvement, and we certainly are not willing to cast it off, and I suspect John isn't either. There obviously is room for elaboration and that's what Buenos Aires is about.

What do we really want to achieve here, I mean, what are our goals? I think they are really twofold. First, we want to try to get greater engagement on the part of developing countries and try to end this sterile debate between developed and developing countries. Everyone has to participate. The level and degree of participation and commitments obviously will differ given stages of development. But everyone has a role to play and I think that there is a growing recognition that this is the case.

Second, we hope we can develop a work plan so that we can try to develop a process by which the real differences that exist on issues like caps, that John mentioned, can be resolved, not by news conferences but by solid work. One of the weaknesses of the process in climate change is that there has not been what I call " connective tissue" between the COP meetings to work on these issues in a serious way. We met with John and his colleagues today, and by the way, John spared me the description of Kyoto during a very lengthy meeting. I'm glad he gave it to you but he certainly spared it for me. What we talked about is trying to develop, with the developing world, some process by which we can grapple with issues like how to make flexibility mechanisms work. To do so, not just here, because we're not going to be able to resolve that here. We're not going to be able to resolve the issue of caps and we know the EU's view and they know ours. We think caps are counterproductive, that they will deter emissions reductions, and that they will add enormously to costs. Again, I would hope that some of the European countries might do the same kind of economic analysis that we've done to ourselves to see what the absence of trading will do to their costs, and how much it will undercut support in their countries. But, we're not going to be able to resolve that issue here.

What we do hope we can do is achieve some sort of a work plan that begins the process between now and COP-5, so that at COP-5 or COP-6 these kinds of issues can really be dealt with in a meaningful way, and that we don't come back a year from now and have the same sterile debate while greenhouse gases all the while are piling up. And I think there the European Union and the U.S. are searching for common ground and I hope we can reach it not just with ourselves and the EU, but with developing countries as well.

Thank you.

[end of document]

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