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Frank E. Loy Under Secretary for Global Affairs U.S. Department of State Keynote Speech to the 10th Annual Energy Efficiency Forum Washington, DC, June 9, 1999

INTRODUCTION

Good afternoon. I don't often get a chance to talk to an audience that represents as many different interests and points of view as this one does, so I'm grateful to the Forum sponsors for inviting me.

I want to talk to you today about two subjects, the second of which flows from the first.

The first is the Kyoto Protocol on climate change and our progress in moving it through the process toward eventual ratification.

Climate change is, obviously, a global problem. So, if we're to solve it, nothing less than a coordinated and aggressive global effort will suffice. And, if we hope to persuade others to clean up their houses, so to speak, we absolutely must have a dynamic and vibrant energy-efficiency strategy here in our own house.

I know that many of you here are intimately involved in the good work of making our federal buildings and facilities more energy-efficient. So, as my second topic, I'll briefly summarize some steps we've taken in that regard at the State Department. A brief disclaimer if I may: this is not a part of my portfolio as Under Secretary, so I'll be giving you information I've collected from others in the Department.

KYOTO

This is an especially propitious time to talk about the Kyoto Protocol, because there is a good bit of news to report, albeit not all of it good. I know that my colleague, Under Secretary Stuart Eizenstat, and then-Secretary of Energy Federico Pena spoke to the Forum last year on climate change, so I'll confine my remarks to developments of the last 12 months.

Unfortunately, the empirical evidence of a steadily warming climate continues to mount:

• Last week, NASA published a study that said average winter temperatures in the Northern Hemisphere rose by nine degrees Fahrenheit during the last three decades -- as opposed to 0.9 degrees worldwide during the same period. NASA scientists believe that increased greenhouse gas production in the northern industrialized countries is a likely culprit.

• Also last week, the highly respected Scripps Institution of Oceanography in San Diego reported that aquatic species that inhabit the deepest parts of the oceans appeared to be dying off because of an increasing scarcity of foods. The Scripps scientists said rising sea surface temperatures were probably to blame.

This squares with a study the State Department published recently. Scientists working in our Bureau of Oceans and Environmental Science reported that coral reefs around the world suffered unprecedented bleaching and mortality last year. Again, an increase in sea surface temperatures -- an increase brought on by climate change -- was the apparent cause.

Certainly, none of these studies proves conclusively that greenhouse gas emissions are warming the Earth's climate. But what they show is entirely consistent with what one would expect in a world where anthropogenic warming is occurring.

On the diplomatic front, we've had something of a setback recently. On May 17, the European Union proposed strict limits on the use of market-based mechanisms for reducing greenhouse gas emissions. These mechanisms, such as emissions-trading, were negotiated at great length in Kyoto, were accepted by all parties and represent an integral part of the Protocol.

The U.S. Government strongly favors the unrestricted use of market mechanisms as a way of easing the impact that a concerted greenhouse gas-reduction effort would have on our economy and our competitiveness.

The European view is that letting countries -- and companies within them -- trade emissions credits freely among themselves would allow them to wiggle out of making serious emissions-reduction efforts at home. And this, the Europeans believe, will set a poor example for developing countries, which we hope will follow the lead of the developed world and commit to serious emissions reductions.

There are several problems with this philosophy, not the least of which is that limiting emissions-trading and other flexibility mechanisms would make treaty compliance a much more expensive proposition. And that, in turn, would make ratification by the United States highly unlikely.

Secondly, the view that we have to make painful sacrifices in order to set an example for developing countries is exclusively an EU view. In none of my myriad climate change discussions with developing country diplomats has any of them said to me that we'll have to limit our use of market-based mechanisms in order for their countries to get on board.

In short, we find no merit in the EU proposal and we are vigorously opposing it. Acting Assistant Secretary of State Melinda Kimble and a team of negotiators are in Bonn, Germany this week meeting with their EU counterparts. They are there to work through some outstanding technical issues in the Kyoto Protocol, such as how to enforce compliance with it. We hope they'll also make progress in chipping away at this unfortunate proposal.

ENERGY EFFICIENCY

As I assume most of you know, President Clinton issued an executive order last week requiring all federal agencies to reduce greenhouse gas emissions from their buildings and facilities to 30 percent below 1990 levels by 2010.

The President well understands the United States' obligation to lead by example -- to put our money where our mouth is.

To that end, Secretary Albright in 1997 issued this goal for the State Department: "The Department of State shall be the model of energy efficiency and high technology for the U.S. Government."

And we were well on our way to achieving that goal even before the President issued the executive order. Here are some recent steps we've taken:

• We have committed to achieving a 30% reduction in energy consumption at all our overseas posts by 2005, and we're already more than half-way there. Through an Energy Efficiency Action Plan that we are still in the process of implementing, we have cut overseas energy usage by 16 percent. And we expect to cut our annual costs in this area by $20 million by 2005.

• We are working toward making similar inroads at all our domestic facilities, also by 2005. From fiscal 1996 to 1997 the Department reduced energy consumption by 13 percent in the Main State building and by 11 percent at its other domestic buildings.

• The Department finished a lighting retrofit project at Main State in 1997. As a result, we've reduced our energy consumption by 13 percent and saved more than $500,000 per year on lighting costs. The contract for this project was, by the way, the largest the Federal Government has ever awarded to a minority-owned or disadvantaged firm.

These initiatives and others like them are crucial if we are to be taken seriously as the world leader in climate change amelioration and sustainable development policies. But in and of themselves, they represent only a small part of what's needed to arrest the continued warming of the atmosphere.

The United States is the world's largest producer of greenhouse gases. But more than three-quarters of global emissions come from elsewhere. And as developing countries such as China and India continue to grow economically, their emissions will become an increasingly large portion of the global total. China, in fact, is expected to overtake the United States and become the largest producer of greenhouse gases.

This administration is engaged in a massive diplomatic effort with more than 160 nations to reduce global emissions. President Clinton and Vice President Gore have raised climate change in their meetings with the leaders of China, Korea, and countries in Europe, Latin America and Africa. Secretary Albright has also taken advantage of every opportunity in many of these and other countries to urge other nations to support our positions on the use of market-based mechanisms and on securing meaningful participation by key developing countries.

And our efforts here have borne fruit. We have seen throughout the developing world a growing awareness of the enormity of the problem and that no single country or bloc of countries can solve it.

Late last year, two developing countries -- Argentina and Kazakhstan -- agreed to take on binding emissions reduction targets.

And last week, Colombia expressed a strong interest in the Protocol's market-based mechanisms and a willingness to lobby other developing countries to consider them as well. We are also seeing some encouraging developments here at home. A growing number of leading U.S. corporations now acknowledge that the threat of climate change is real. Many see opportunities where once they saw only new costs. Creative companies are now working to turn the promise of Kyoto into a reality, exploring new ways to use energy better and smarter. Some have even pledged to voluntarily reduce their emissions below the Kyoto targets.

So we're making progress while bearing in mind that the Kyoto Protocol is a long-term project. We have no illusions about the challenges we face as we work toward the ultimate goal of ratification. The developing world is not going to change some of its long-held opinions and attitudes overnight. Moreover, there remains serious resistance to the Kyoto goals on Capitol Hill. Changing these facts will require effort and time. We are committed to staying with it for as long as it takes.

Thank you for listening. Now I'd be happy to take any questions.

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