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FOIA Number: 2017-1095-F
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the William J. Clinton
Presidential Library Staff.
Collection/Record Group:
Clinton Presidential Records
Subgroup/Office of Origin:
Council of Economic Advisers
Series/Staff Member:
Judson Jaffe
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OA/ID Number:
20747
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Climate Change Testimony
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S
20
6
1
3
FEB-18-1998 15:55 TO:18 - CEA
FROM:FITTER, E.
P. 1/20
Total Pages: 20
LRM ID: EHF382
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
Washington, D.C. 20503-0001
Wednesday, February 18, 1998
LEGISLATIVE REFERRAL MEMORANDUM
TO:
Legislative Con Reterson Liaison Oritor See Distribution below
FROM:
Ronald K. Peterson (for) Assistant Director for Legislative Reference
OMB CONTACT:
Robert J. Tuccillo
PHONE: (202)395-5609 FAX: (202)395-5836
SUBJECT:
ADDITIONAL STATE Qs and As on Global Climate Change
DEADLINE:
4:00 PM Friday, February 20, 1998
In accordance with OMB Circular A-19, OMB requests the views of your agency on the above
subject before advising on its relationship to the program of the President. Please advise us If this
Item will affect direct spending or receipts for purposes of the "Pay-As-You-Go" provisions of Title
XIII of the Omnibus Budget Reconciliation Act of 1990.
COMMENTS: These questions complete the set coming out of the 7/15/97 Commerce Committee
Global Climate hearing. Your agency received the first portion on 9/25/97 as LRM EHF265.
Attached are the questions missing from the earlier package.
DISTRIBUTION LIST
AGENCIES:
7-AGRICULTURE - Marvin Shapiro - (202) 720-1516
25-COMMERCE . Michael A. Levitt . (202) 482-3151
18-Council of Economic Advisers - Liaison Officer . (202) 395-5084
19-Council on Environmental Quality - Wesley Warren - (202) 456-5143
29-DEFENSE . Samuel T. Brick Jr. - (703) 697-1305
32-ENERGY - Bob Rabben - (202) 586-6718
33-Environmental Protection Agency - Julie Anderson - (202) 260-5414
61-JUSTICE - Andrew Fois - (202) 514-2141
76-National Economic Council - Sonyie Matthews - (202) 456-6630
95-Office of Science and Technology Policy - Jeff Smith - (202) 456-6047
117 and 340-TRANSPORTATION - Tom Herlihy - (202) 366-4687
118-TREASURY - Richard S. Carro - (202) 622-0650
8-US Agency for International Development - Robert M. Lester - (202) 712-5843
128-US Trade Representative - Fred Montgomery - (202) 395-3475
EOP:
Kathleen A. McGinty
David B Sandalow
Bruce K. Sasser
Joseph J. Minarik
Gene B. Sperling
Michele Jolin
Todd Stern
Dirk Forister
1.
FEB-18-1998 15:55 TO:18 - CEA
FROM:FITTER, E.
P.2/20
LRM ID: EHF382
SUBJECT: ADDITIONAL STATE Qs and As on Global Climate Change
RESPONSE TO
LEGISLATIVE REFERRAL
MEMORANDUM
If your response to this request for views Is short (e.g., concur/no comment), we prefer that you respond by
e-mail or by faxing us this response sheet. If the response is short and you prefer to call, please call the
branch-wide line shown below (NOT the analyst's line) to leave a message with a legislative assistant.
You may also respond by:
(1) calling the analyst/attorney's direct line (you will be connected to voice mail If the analyst does not
answer); or
(2) sending us a memo or letter
Please include the LRM number shown above, and the subject shown below.
TO:
Robert J. Tuccillo Phone: 395-5609 Fax: 395-5836
Office of Management and Budget
Branch-Wide Line (to reach legislative assistant): 395-4586
FROM:
(Date)
(Name)
(Agency)
(Telephone)
The following is the response of our agency to your request for views on the above-captioned subject:
Concur
No Objection
No Comment
See proposed edits on pages
Other:
FAX RETURN of
pages, attached to this response sheet
FEB-18-1998 15:55 TO:18 - CEA
FROM:FITTER, E.
P. 3/20
Questions for the Record Submitted by Chairman Schaefer to
Under Secretary of State Timothy Wirth
House Committee on Commerce
Energy and Power Subcommittee
July 15, 1997
19. Q: Article 17.4 of the Framework Convention on Climate Change (FCCC) specifies
that only "Parties to the Convention may be Parties to a protocol." However, there is no
assurance that all or even a majority of the 167 Parties to the FCCC will deposit
instruments of ratification, acceptance, approval or accession to any protocol adopted by
the Parties by consensus or otherwise in Kyoto. What assurances does the U.S. now have
that most, if not all, developing country parties to the FCCC will become Parties to a Kyoto
protocol? Why is it in the U.S. interest to agree, without assurances, to a protocol that
proposes to set legally binding post-2000 targets and timetables for Annex I Parties only
and also imposes on the U.S. new and legally binding commitments to advance
implementation of Article 4.1 of the FCCC, such as those prescribed in paragraph 1, 2, 3,
and 4 of Article 5 of the U.S. draft protocol?
A: The Kyoto Protocol strengthens the Framework Convention on Climate Change in several
ways. It sets legally binding quantified targets for industrialized countries to reduce or limit their
emissions of the six most critical greenhouse gases in the period 2008-2012. It contains
important flexibility provisions - emissions trading, joint implementation, and a new Clean
Development Mechanism - to help industrialized countries meet their targets as cost-effectively
as possible. It preserves for each industrialized country the choice, at the national level, of
policies and measures it will use to meet its target. It also contains provisions designed to
advance the implementation of existing commitments under the Framework Convention,
provisions that are legally binding on all Parties that ratify or accede to the Kyoto Protocol,
including developing countries.
It is in the U.S. interest - and in the interest of all nations - to advance global efforts to
combat the threat of global warming because of the risks involved in failing to act, because
acting now can help to avoid significant climate change. because acting now will be far cheaper
than acting in the future and because waiting to act will limit the scope of future action. In the
FEB-18-1998 15:55 TO:18 - CEA
FROM:FITTER, E.
P. 4/20
Framework Convention, Industrialized countries plodged to lead the global response the Kyoto
Protocol makes good on that pledge.
It is in the interest of developing countries to ratify or accede 10 the Kyoto Protocol for
several reasons. First, developing countries are likely to experience the impacts of significant
climate change more acutely than developed countries because their coonomies are more
dependent on activities, such as agriculture, that are sensitive to global warming. in addition,
significant portions of the population in developing countries live in coastal areas likely to be
affected by storm surges, salt-water intrusion and sea-level rise. Consequently, developing
countries have an interest in promoting and encouraging further efforts to address this
environmental problem. Second, developing countries stand to benefit from investments in
project activities under the Kyoto Protocol's Clean Development Mechanism. Third, by
ratifying or acceding to the Protocol and taking on quantified emissions limitation commitments
by amending the Protocol's Annex B (which lists all such commitments), developing countries
may engage in emissions trading. Fourth, by ratifying or acceding to the Kyoto Protocol,
developing countries will have a voice in decisions taken under the Protocol - a voice they will
not have as non-Parties. And fifth. developing countries want to encourage industrialized
countries to implement the commitments they have agreed to in the Kyoto Protocol - the United
States has made clear that it will not do so without the meaningful participation of developing
countries. While ratifying or acceding to the Protocol does not in itself constitute "meaningful
participation," a failure on the part of developing countries to ratify or accede to the Kyoto
Protocol could derail the efforts of industrialized countries to move forward with the Protocol.
FEB-18-1998 15:55 TO:18 - CEA
FROM:FITTER, E.
P. 5/20
Questions for the Record Submitted by Chairman Schaefer to
Under Secretary of State Timothy Wirth
House Committee on Commerce
Energy and Power Suboommittee
July 15, 1997
20. Q: In a July 18, 1994, letter to the then House Committee on Energy and Commerce
[the State Department] said:
We agree that there are substantial commitments beyond 2000 for all parties to the
Framework Convention under Article 4. Article 4.1 (applicable to both developed and
developing countries) contains commitments that are not limited by any specific
timetable.
a) Is there any evidence to date that the U.S. is not abiding by these Article 4.1
commitments? If there is none, why should the U.S. voluntarily agree to reaffirm, as
required by Article 5.1 of the June draft, to what the U.S. already agreed to when It
ratified the FCCC in 1992?
b) Is the U.S. asserting that other Annex I Parties are not abiding by such commitments?
If so, please identify those Parties.
A: a) The United States is abiding by its Article 4.1 commitments. However, these obligations
are only rather vaguely defined, and implementation of these commitments could be improved
with a more detailed dofinition of the obligations. Furthermore, while under the UNFCCC,
Annex I and Annex II Parties have additional obligations (e.g., the "aim" of Article 4.2), such
specificity is not provided for developing countries under Article 4.1 provisions. Reaffirming
and continuing to advance these commitments provided an opportunity to elaborate on specific
provisions and to ensure that a more robust level of action is generated by all Parties to address
the threat of global warming.
b) The U.S. is not asserting that other Annex 1 countries are not abiding by these provisions.
FEB-18-1998 15:55 TO:18 - CEA
FROM:FITTER, E.
P. 6/20
Questions for the Record Submitted by Chairman Schaefer to
Under Secretary of State Timothy Wirth
House Committee on Commerce
Energy and Power Subcommittee
July 15, 1997
22. Q: Article 5.3 requires that each Party take "measures to facilitate investment in
climate-friendly technologies." What "measures" does the Administration contemplate?
How would they be implemented in the U.S.? What are their regulatory and budgetary
implementations?
A: A wide range of programs under the Climate Change Action Plan fall equarely within this
requirement. For example, "Energy Star" labeling programs facilitate investments in climate
friendly technologies by providing information to consumers. The "Green Lights" program
provides information and recognition for participants, thus encouraging their investment in
climate friendly technologies. Activities under the Climate Change Action plan are included in
the budget requests of agencies involved in these programs.
As a first installment on this plan, President Clinton announced in his State of the Union
address last month a $6.3 billion Climate Change Technology Initiative over five years to cut
U.S. greenhouse gas emissions - $1.3 billion higher than the President announced in his initial
plan in October. This vigorous initiative calls for tax cuts coupled with research and
development to take cost-effective, practical steps that will position us well to meet the challenge
we face early in the next century. We hope the Congress will view the President's initiative
favorably and appropriate the funds and enact the tax incentives that he has requested. We look
forward to working with you to put the President's proposals into action.
FEB-18-1998 15:55 TO:18 - CEA
FROM:FITTER, E.
P. 7/20
Questions for the Record Submitted by Chairman Schaefer to
Under Secretary of State Timothy Wirth
House Committee on Commerce
Energy and Power Subcommittee
July 15. 1997
23. Q: Article 16 of the draft provides that the Parties "shall adopt, by [2005], binding
provisions so that all Parties have quantitative greenhouse gas emissions obligations and so
that there is a mechanism for automatic application of progressive greenhouse gas
emissions obligations to Parties, based upon agreed criteria."
a) Does this mean that there could be a second protocol or another legal instrument by
[2005] which is only 7 years after the December meeting in Kyoto?
b) Do the words "all Parties" in this Article mean that only the "Parties" to the U.S. draft
protocol would be required to "adopt" by 2005 such an instrument? Unless developing
country Parties to the FCCC, such as China, India, and Brazil, become Parties to the
Kyoto instrument (as proposed by the U.S.) prior to [2005], how does this Article
address the issue of greenhouse gas emission growth by all non-Annex I Parties?
c) Could such a new Instrument adopted by [2005] impose new and additional obligations
on the U.S. beyond those proposed to be adopted in Kyoto? Why is that possibility a
good result for the U.S. economy, trade, and competitiveness?
d) What "mechanism for automatic application of progressive greenhouse gas emissions
obligations" does the Administration contemplate by this proposal? What are its
implications for the U.S., including its sovereignty?
A:
a) These questions were based on Article 16 of the U.S. draft protocol text which dealt with the
issue known as "evolution." This article, ultimately, was not included in the Kyoto Protocol.
However, it may be useful to answer these questions both in terms of the now mooted Article
16 of the U.S. draft protocol and in terms of the actual provisions of the Kyoto Protocol
itself. Article 16 of the U.S. draft protocol text would have meant that there would be a
second protocol or another legal instrument by 2005 or some other date agreed upon in the
negotiations. Article 3, paragraph 10, of the Kyoto Protocol provides for considering
FEB-18-1998 15:55 TO:18 - CEA
FROM:FITTER, E.
P. 8/20
commitments for periods subsequent to the first commitment period (2008-2012). In
particular, it provides for initiating consideration of such commitments at least seven years
before the end of the first commitment period - in other words, by 2005.
b) Yes, the term "All Parties" in the draft U.S. protocol text meant "all Parties to the protocol."
The article in the draft U.S. protocol text did not, itsclf, address the issue of greenhouse gas
emission growth by all non-Annex I Parties - other provisions, such as U.S. proposals
governing entry into force of the protocol, addressed this issue.
c) Yes, Article 16 in the U.S. proposed protocol text could have involved new and additional
obligations for the United States beyond those that we envisioned would be adopted in
Kyoto. This could have been a good result for the U.S. economy, trade and competitiveness
if it had included new and additional obligations for others, particularly for key developing
countries and our industrialized country partners.
d) By "mechanism for automatic application of progressive greenhouse gas emissions
obligations," we sought to promote the concept that countries should be prepared to take on
higher levels of commitment for combating global warming as their economies develop. Its
implications for the United States, including for our sovereignty, would have been
positive - it would have promoted a more a more ambitious, and more inclusive, global effort
to address the threat of climate change, while retaining full national flexibility for each
country to determine the policies and measures it would adopt to meet its quantified
emissions limitation or reduction commitments.
FEB-18-1998 15:55 TO:18 - CEA
FROM:FITTER, E.
P. 9/20
Questions for the Record Submitted by Chairman Schaefer to
Under Secretary of State Timothy Wirth
House Committee on Commerce
Energy and Power Subcommittee
July 15, 1997
26. Q: The Global Climate Coalition sent a letter to the Department of State on February
14, 1997, raising a number of questions about the January 17, 1997, version of the U.S.
draft protocol, particularly in regards to trading. The Administration has not yet
responded to those questions. Please respond to them as part of your reply to this inquiry.
A: It is our understanding that the questions of the Global Climate Coalition were fully
answered during several face-to-face meetings with the Director of the Office of Global Change,
the most recent of which took place on 12 September 1997. If the GCC has any remaining
questions, it is welcome to contact the Office of Global Change and we will be pleased to address
them. The Office of Global Change may be reached at (202) 647-4069.
FEB-18-1998 15:55 TO:18 - CEA
FROM:FITTER, E.
P. 10/20
Questions for the Record Submitted by Chairman Schaefer to
Under Secretary of State Timothy Wirth
House Committee on Commerce
Energy and Power Subcommittee
July 15, 1997
30. Q: The State Department's September 9, 1996, reply to the Committee stated that the
U.S. did not agree to an "EU Bubble in Berlin" and that the U.S. delegation "successfully
opposed including language in the Berlin Mandate which might have suggested that any
country or group of countries could "bubble" in the post-2000 period." The reply then
said:
Clearly, the question of "bubbling" with respect to post-2000 commitments is
complex, and one that will be closely scrutinized and carefully considered as
negotiations progress. The Administration has consistently and continuously
consulted with Congress, as well as with U.S. industry and U.S. NGOs, on all aspects
of the negotiations concerning post-2000 commitments and will continue to do so.
The Administration has not yet held meaningful discussions with this Committee on the
issue of the EU bubbling to "meet target and timetables," its Implications for the U.S., its
merits, or its complexities. Given the fact that the negotiations are just approaching a
conclusion in Bonn and Kyoto, when do you plan to consult us on this aspect of the
negotiations?
A: In the run up to the Kyoto Conference in December 1997, representatives of the
Administration testified repeatedly before Congressional committees and spoke frequently with
Members of Congress and their staffs. The Administration also invited the leadership of the
Senate and of the House of Representatives to set up formal, bipartisan groups to serve as focal
points within the Congress and to participate with the U.S. delegation in Kyoto. Both chambers
did so, and many members of both the Senate and House groups traveled to Kyoto where the
U.S. delegation benefited from their support and advice. Among the issues discussed repeatedly
beforehand and in Kyoto was the E.U. bubble. Ultimately, the U.S. delegation accepted the E.U.
bubble in the Kyoto Protocol, but only after the European Union clarified the responsibilities that
would fall to each of its member states and to the E.U. commission, only after the European
Union agreed that new entrants (e.g., Poland) would not affect the quantified emission limitation
FEB-18-1998 15:55 TO:18 - CEA
FROM:FITTER, E.
P. 11/20
and reduction commitments agreed for the first budget period (2008-12) and only after the
European Union accepted that an agreement among its member states to jointly fulfill their
quantified emission limitation and reduction commitments would remain in operation for the
duration of the budget period. By the same token, the United States was able to secure many of
its key negotiating objectives, including realistic and achievable targets, the inclusion of
flexibility mechanisms (emissions trading, joint implementation and the Clean Development
Mechanism) to ensure the most cost-effective reductions, full national autonomy in the choice of
policies and measures to meet the targets, etc.
FEB-18-1998 15:55 TO:18 - CEA
FROM:FITTER, E.
P. 12/20
Questions for the Record Submitted by Chairman Schaefer to
Under Secretary of State Timothy Wirth
House Committee on Commerce
Energy and Power Subcommittee
July 15, 1997
32. Q: The EU has proposed an amendment to the Convention to provide for a vote to
adopt all future protocols by three-fourths If all efforts at consensus are exhausted. The
proposed amendment would appear to have a retroactive effect for Kyoto.
a) Under this proposal, is It possible that three-fourths of the FCCC Parties could vote to
"adopt" any Protocol that imposed new obligations for Annex I and/or non-Annex I
Parties and then decide not to deposit an instrument of ratification, etc.?
b) Does the U.S. support such an amendment to the Convention?
c) Has the U.S. changed from its June 19, 1996, response to this Committee in regards to
any of these matters? Would the Administration agree to a resolution of one of these
matters, namely voting on a protocol, without a resolution of the financial and budget
matters for both the Convention and all future protocols?
A: a) Yes. Under the current Climate Convention, as well as this proposal, Parties could adopt
an agreement (pursuant to whatever rule of procedure governs adoption) and then not ratify.
b) We have substantial concerns about the provisional application aspect of the proposal. In
effect, it amends the treaty without waiting for the Parties to ratify the amendment.
c) No, the position has not changed.
FEB-18-1998 15:55 TO:18 - CEA
FROM:FITTER, E.
P. 13/20
Questions for the Record Submitted by Chairman Schaefer to
Under Secretary of State Timothy Wirth
House Committee on Commerce
Energy and Power Subcommittee
July 15, 1997
33. Q: Does the Administration intend that any international emission trading program
would apply in the same way and to the same extent to public and private catities
internationally and in the U.S.? For example, would it apply to local governments and to
defense or other agencies of each Party and to the emissions of such entities? What will be
the impact on the U.S. Defense Department of an international, or, for that matter, a
domestic, emissions trading program?
A: The U.S. has proposed international emissions trading as a means of providing for greater
flexibility to achieve reductions at the lowest possible cost. No country, nor any entity within a
country, would be required to participant in trading. However, having this option for those
countries that want to participant offers substantial cost saving opportunities. Implementation of
any international trading would be up to rules that individual countries could establish consistent
with any requirements set out in the International troaty. The Department of Defense has been an
active participant in Administration-wide discussions concerning climate polices and, as clearly
stated by Under Secretary of State for Economic, Business and Agricultural Affairs Ambassador
Stuart E. Eizenstat in his testimony before the Senate Foreign Relations Committee on February
11, 1998, the U.S. delegation in Kyoto achieved everything outlined by the Department of
Defense as necessary to protect our military operations and our national security.
FEB-18-1998 15:55 TO:18 - CEA
FROM: FITTER, E.
P. 14/20
Questions for the Record Submitted by Chairman Schaefer to
Under Secretary of State Timothy Wirth
House Committee on Commerce
Energy and Power Subcommittee
July 15, 1997
34. Q: Greenhouse gases not covered by the Montreal Protocol are not pollutants within
the meaning of the Clean Air Act and are not subjected to the command and control
provisions of the Act or other environmental laws. It is our understanding that although
the U.S. has cited (in a September 9th reply to this Committee) authority to implement the
Climate Change Action Plan with voluntary measures, the U.S. draft protocol, because it
may call for mandatory measures, could not be given full effect in the U.S. without the
enactment of new legislation by Congress. Do you share that understanding? Is the
Administration considering a domestic emission trading legislative program patterned on
the 1990 Clean Air Act?
A: Under Secretary of State for Economic, Business and Agricultural Affairs Ambassador Stuart
E. Eizenstat was clear and unequivocal in his testimony on this issue before the Senate Foreign
Relations Committee on February 11, 1998 - the Administration anticipates the need for
additional legislation to implement the Kyoto Protocol and will in no way circumvent the
Constitutional prerogative of the Congress in this regard. Last October, President Clinton
outlined a three-stage approach to addressing global warming here at home. The first stage, he
said, would consist of immediate actions to stimulate development and use of technologies that
can minimize the cost of meeting U.S. goals in reducing greenhouse gas emissions. Stage two
will review options created through ongoing technology development and lead to detailed plans
for a domestic, market-based permit trading system for carbon emissions. Stage three will begin
to implement a market based emissions trading system. As a first installment on this plan,
President Clinton announced in his State of the Union address last month a $6.3 billion Climate
Change Technology Initiative over five years to cut U.S. greenhouse gas emissions - $1.3 billion
higher than the President announced in his initial plan in October. This vigorous initiative calls
for tax cuts coupled with research and development to take cost-effective, practical steps that will
position us well to meet the challenge we face early in the next century. We hope the Congress
FEB-18-1998 15:55 TO:18 - CEA
FROM: FITTER, E.
P. 15/20
will view the President's initiative favorably and appropriate the funds and enact the tax
incentives that he has requested. We look forward to working with you to put the President's
proposals into action.
FEB-18-1998 15:55 TO:18 - CEA
FROM:FITTER, E.
P. 16/20
Questions for the Record Submitted by Chairman Schaefer to
Under Secretary of State Timothy Wirth
House Committee on Commerce
Energy and Power Subcommittee
July 15, 1997
35. Q: I understand that the Administration has recently established the White House
Climate Change Task Force, a Deputies Group and an Assistant Secretaries group. Please
explain the role and purpose of each in regards to the development of the Administration's
position and policies for the international negotiations for a protocol or another legal
instrument in 1997 and for the development of implementing legislation in the U.S. Please
identify the members of each group. Please provide any documents regarding the
formation of these groups, their membership, mission, tasks, and/or assignments.
A: The White House Climate Change Task Force was recently established under the auspices of
the Council on Environmental Quality and the National Economic Council for the purposes of
expanding outreach activities and to encourage input from interested constituencies in the policy
development process. The charter of the Task Force is enclosed. Within the Administration, it is
common to establish internal coordinating groups at various levels to assist in the policy
development process. Such groups comprised of assistant secretaries and deputies are typically
established on an informal basis as the need arises to address specific issues. No formal charter
or mandate exists for these groups.
FEB-18-1998 15:55 TO:18 - CEA
FROM:FITTER, E.
P. 17/20
Attachment to
EXECUTIVE OFFICE OF THE PRESIDENT
COUNCIL ON ENVIRONMENTAL QUALITY
WASHINGTON, D.C. Z0503
2#35
COUNCIL ON ENVIRONMENTAL QUALITY
MANAGEMENT FUND CHARTER
A. IDENTIFICATION OF MANAGEMENT FUND PROJECT
Title: White House Climate Change Task Force
Task: To coordinate and expand activities among agencies aimed at informing the
public and interested parties about climate change and to build support for Administration
policy and international negotiating positions.
B. PURPOSE AND AUTHORITY
The authority for this project is derived from Section 102(2)(F) of the National Environmental
Policy Act; Section 206 of the Environmental Quality Improvement Act, as amended, 42 U.S.C.
Sec. 4375; section 602 of the Economy Act, as amended, 31 U.S.C. Sec. 1535; and the
authorizing legislation of the Office of Environmental Quality and the agencies involved. The
Task Force was created by the Co-Chairs of the Deputies' Climate Change Committee.
The task force will:
Coordinate interagency activities related to climate change outreach and communications
activities;
Coordinate interagency activities related to the development of outreach and
communications materials related to climate change:
Coordinate interagency activities to work with and to inform Congress about issues
related to climate change:
Coordinate outreach activities among agencies to key affected groups including the
public. industry. environmental groups, labor, and other interested parties;
Participate in development of policies (at Deputies and Assistant Secretaries levels) and
in international negotiations in order to ensure effective coordination with outreach
activities:
Periodically report to the Deputies about its activities.
FEB-18-1998 15:55 TO:18 - CEA
FROM:FITTER, E.
P. 18/20
C. FINANCIAL PLAN
The Project anticipates an expenditure of $200,000 with funding provided by participating
agencies including the Department of Energy. the Department of Interior, the Environmental
Protection Agency, the Department of Agriculture, the Department of State, and the Department
of Commerce and others.
D. PARTICIPATING ORGANIZATIONS
The Office of Environmental Quality will be the co-chair of the task force along with the
National Economic Council. Other White House offices that will participate include the Office
of Science and Technology Policy, the office of Management and Budget, and the Council of
Economic Advisors. Other agencies participating in Task Force activities will Include: the
Department of Energy, the Department of Commerce, the Department of Interior, the Department
of Agriculture, the Environmental Protection Agency, the Department of Health and Human
Services, the Department of Transportation, the Nuclear Regulatory Commission, The National
Aeronautics and Space Administration and the National Science Foundation. Other interagency
processes that will contribute to the Task Force include the Global Change Research Program
and the President's Commission on Sustainable Development, as appropriate.
E. RELATION TO CEO/OEO STATUTORY AUTHORITY
The Council on Environmental Quality was established by Title II of the National
Environmental Policy Act (NEPA) of 1969. The primary role of CEQ is to implement the
policy goals set forth in NEPA. One of CEQ's key roles is to coordinate interagency activities
related to policy development and implementation. In addition, Section 102(2)(F) provides that
federal agencies shall recognize the worldwide and long-range character of environmental
problems and, where consistent with foreign policy of the United States, lend appropriate support
to initiatives, resolutions, and programs designed to maximize international cooperation in
anticipating and preventing a decline in the quality of mankind's world environment. This
particular project will assist in furthering CEQ's role in coordinating such a policy.
F. STAFFING ARRANGEMENTS
Chief Project Officer: David Sandalow, Associate Director for Global Environment, CEQ (202)
456-6543
Administrative Contact: Carolyn Mosley, Administrative Officer, CEQ, (202) 395-5754.
G. DUTIES
The duties of the task force are advisory in nature.
FEB-18-1998 15:55 TO:18 - CEA
FROM:FITTER, E.
P. 19/20
H. TERMS AND DURATION OF THE PROJECT
The project is scheduled to commence in February 1997 and is expected to last until June 1998.
The Task Force will provide periodic reporting to the Deputies' Climate Change Committee.
APPROVED:
Date 2 17
FEB-18-1998 15:55 TO:18 - CEA
FROM:FITTER, E.
P. 20/20
Questions for the Record Submitted by Chairman Schaefer to
Under Secretary of State Timothy Wirth
House Committee on Commerce
Energy and Power Subcommittee
July 15, 1997
36. Q: Please provide a table of all contracts, cooperative agreements, grants, and
interagency agreements and any extensions thereof (hereinafter referred to as
"agreements") entered into with any individual, agency, or public or private entity (foreign
or domestic) by or through any federal Department or Agency, including the Departments
of State, Commerce, and Energy, the Environmental Protection Agency, for the period
beginning July 1, 1994 to the present that relates to, or includes (directly or indirectly)
climate change matters or issues of any kind. These should include matters relating to (a)
domestic or international emission trading, including economic and other analysis of such
trading, the administration and verification of such trading in the U.S. and elsewhere, (b)
public outreach, general and specific public education, grass roots, community outreach,
workshops, (c) transportation efficiency, alternative fuels, transportation generally,
utilities, impact on pollutants like ozone and particulate matter, and (d) any legal analysis
of these matters and of the Convention or of any statutes concerning climate change or
trading. Each table should Identify the date of the agreement, the agreement recipient, the
amount of Federal funds, the term, including extensions, a brief description, the product,
and whether ft is publicly available, and the status. Please include with each table the
applicable "Statement of Work," including any revision thereof, for each agreement.
A: Each Agency will be submitting their data separately.
Contact points for the Agencies:
State - Ms. Susan Wickwire - (202) 647-4069
Energy - Ms. Linda Silverman - (202) 586-3896
EPA - OAR . Ms. Sharon Saile - (202) 564-9156
- OPPE - ?????? - (202) 260-xxxx
Commerce -7??? . (202) 482-xxxx
TOTAL P.19
Q's & A's for Climate Change testimony 2/98
The Protocol
How can you say the Kyoto Protocol is a success if there is no mention of developing
countries? The Protocol is severely flawed.
On the contrary, most of the elements of the President's package were put firmly in place at
Kyoto. The Protocol includes the market-based mechanisms of international emissions trading
(across all six greenhouse gases) and joint implementation among developed countries. Moreover
it allows for full flexibility on the kinds of policies and measures a country may enact domestically
to achieve compliance, and sets the targets on the basis of a multi-year objective, rather than a
single fixed-year obligation. With regard to developing countries, it allows for investment in
projects in developing countries to be used as offsets against obligations in developed countries
(through the Clean Development Mechanism (CDM)). The Protocol also beefs up all Parties'
national communications and gives advanced developing countries the option of adopting an
emissions budget and trading under the Protocol - potentially providing more development
resources than the project-based CDM. There is of course more work to do, particularly on
gaining the meaningful participation of developing countries, and we plan to make bilateral and
multilateral efforts to this end.
Institutional/Procedural/signature/ratification Issues
Do you plan to sign the Kyoto Protocol and then ignore Senate advice and consent?
Absolutely not, and we are here today to begin this dialogue. As we have said, U.S. ratification
will require the advice and consent of the Senate. The United States may choose to sign the
Protocol during the year that it will be open for signature, but that would not bind the United
States to the Protocol's requirements.
When do you expect the President to sign the Kyoto Protocol?
The Kyoto Protocol opens for signature in March 1998 and remains open until March 1999. We
hope and expect to sign during that period.
When do you expect the President to submit the Protocol to the Senate for its advice and
consent? Isn't the President disregarding the Senate's appropriate constitutional role of
advice and consent?
As we have said, U.S. ratification will require the advice and consent of the Senate. The United
States may choose to sign the Protocol during the year that it will be open for signature but that
would not bind the United States to the Protocol's requirements.
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If the Kyoto Protocol is such a positive achievement, why has the Administration said it
will not submit it to the Senate for its advice and consent to ratification?
The Kyoto Protocol is an historic step forward in the effort to meet the challenge of global
warming. We believe it reflects an environmentally strong and economically sound approach to
this very difficult problem. But there are details of additional elements we need to work out in
order to have a package ready for submission to the Senate. In particular, we have not yet
established the mechanism and activities to ensure that the President's requirement for meaningful
participation from key developing countries is fully met. Though the Protocol makes a down
payment on such participation, more needs to be done in this area. Additional work also needs to
be done in fleshing out the rules and procedures for market-based emissions trading. The
Administration is working hard to fill in these pieces and looks forward to submitting the Kyoto
Protocol to the Senate once these objectives have been achieved.
Why did you agree to a provision that will allow this Protocol to go into effect all over the
world without U.S. ratification? Didn't you intentionally diminish the role of the
Congress?
The U.S. entered these negotiations with the very clear position that we did not want to reserve
the power to block this important international treaty simply by not ratifying it. It is not in
American interests to prevent the international community from acting against the very serious
threat of climate change.
Nevertheless, for the Kyoto Protocol to be effective in reducing global emissions, it must apply to
the majority of the world's large emitters. Accordingly, to enter into force, the Protocol must be
ratified by at least 55 countries including Annex I nations, accounting for at least 55 percent of
the total 1990 carbon dioxide emissions of developed countries. We anticipate that to meet this
threshold, either the Russian Federation or the United States will have to ratify, even if the
European Union and other developed Parties ratify as well as most developing countries.
Regardless of when we ratify, we will still participate as a Party under the UN Framework
Convention on Climate Change and have significant influence over the related processes.
Science
How do we know there is any reason for taking action? Isn't this just too costly?
The science of global warming is compelling. A 1995 report, representing the work of more than
2,000 of the world's leading climate change scientists, concludes that "the balance of evidence
suggests that there is a discernible human influence on global climate." While a clear empirical
relationship between cause and effect is difficult to establish, 1997 is the warmest year on record
for average global surface temperatures, and nine out of the last 11 years are among the warmest
ever recorded. More record warm years are in the forecast. The Administration does not believe
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it is responsible to delay taking preventative action on the climate change issue; however, we
recognize that any action must proceed sensibly in a way that is economically sound.
Background: The cost of inaction would be devastating in human and financial terms: a greater
incidence of droughts and storms, relocating entire communities because of the inundation of our
coastal areas, a higher incidence of tropical disease, and a threat to plant and animal species
throughout the United States. Droughts and storms are indeed costly: the Southern Plains
drought of 1996 was estimated to cost $4 billion, and the Northwest floods of 1996-97 about $3
billion. Although recent examples of severe droughts cannot be unequivocally attributed to global
warming, they do indicate a pattern consistent with scientific understanding. Abroad, climate
change could devastate the Middle East and Africa, exacerbating political tensions, and the
world's poorest countries, already hurt by food production and distribution problems, are
expected to suffer more in these areas because their countries will not be able to adapt to further
challenges posed by climate change.
We are shown graphs and data depicting global warming, but we have heard reports that
say NOAA satellite data refutes this warming; and in fact shows a cooling trend How do
you explain this contradiction?
There is no contradiction. Satellites measure temperature above ground (5,000-30,000 feet),
taking into account aerosols and ozone loading (due to volcanic eruptions). Surface
measurements are taken at ground and sea levels, where aerosols and ozone loading are not as
effective as in the atmosphere. NOAA Satellite data consistently has shown over the past 17
years a global warming trend, when adjusted for the influence of aerosols and ozone loading due
to volcanic eruptions such as Mt. Pinatubo. This pattern is consistent with the warming trend
assessed from balloon temperature readings and surface temperatures readings.
Is it true that even if all the developed countries complied with their targets that their
actions would be just a "drop in the bucket" in addressing climate change? Over what time
scale is global action likely to be required?
The Kyoto Agreement is an historic step in the effort to address climate change. The binding
targets agreed to by developed nations provide important real reductions and lay the groundwork
for additional reductions in the future.
Clearly, however, Kyoto is only one step in a long process. To ultimately stabilize emissions at a
safe level in the atmosphere, significant reductions - beyond those agreed in Kyoto - will be
needed. Furthermore, developing countries - whose emissions are likely to eclipse those of
industrialized nations by 2030 - must also begin to limit their emissions if we are to effectively
address the problem. The Administration is firmly committed to working to secure meaningful
participation from key developing countries and will not submit the Protocol to the Senate until
such participation has been achieved.
Background: Even the most stringent proposal tabled for consideration by the Parties in Kyoto
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(that proposed) by the Alliance of Small Island States, requiring developed country Parties to
reduce emissions by 20 percent below 1990 levels by 2005) would have had only a small impact
on the overall problem. It is anticipated that to maintain global concentrations at current levels,
global reduction of approximately 60-70 percent of CO2 emissions would be needed.
How can we trust the data emerging from the Intergovernmental Panel on Climate Change
(IPCC)?
The Intergovernmental Panel on Climate Change (IPCC) is the most authoritative body on the
science of climate change reflecting the views of the world's pre-eminent climate experts. The
more than 2,000 scientists concluded in the IPCC's 1995 Second Assessment that there is a
"discernible human influence on the climate system." For the first time, we have a clear scientific
indication from experts around the world that human emissions of greenhouse gases are affecting
the climate system, and we have ample indications about the potential impacts of climate change.
Enforcement & Compliance/U.N./Sovereignty
Given the rules of procedure of the Conference of the Parties, aren't we turning over
decisions that will affect the prosperity of American citizens to the very developing
countries that are exempt from any obligations under the agreement?
No, we are not. The emission reduction commitments in the Kyoto Protocol were adopted with
the full participation and consent of the Parties to which they will apply. To take effect, each of
these Parties must ratify the protocol. In the United States, ratification would occur only after the
advice and consent of the Senate under our Constitution. Moreover, under the Kyoto Protocol,
we will have full national flexibility in how we meet our emission reduction commitment because
we succeeded in Kyoto in rejecting calls for mandatory standardized policies and measures, such
as energy taxes. Any change in the emission reduction commitments made in Kyoto could only
occur through an amendment to the protocol. Any party that objected to such an amendment
would not be bound by it. Thus, decisions that could affect the prosperity of American citizens
will continue to be taken nationally by the United States and not by others.
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If we ratify the protocol, won't developing countries be able to dictate the U.S. target in the
future-and penalize us, if we fail to comply?
No. Any subsequent targets would have to be agreed to by the Parties to whom they would
apply.
Is the Kyoto Protocol a threat to U.S sovereignty?
No, it is not. Under the Kyoto Protocol, individual nations decide for themselves how best to
comply with greenhouse gas emissions targets they have agreed to. The Conference specifically
rejected proposals which would have imposed mandatory, standardized policies and measures,
such as energy taxes. It does not threaten our sovereignty for us to agree to cooperate with other
nations in combating climate change. We cannot solve a global problem alone. The
Administration believes that the Kyoto Protocol is in the best interests of the United States and
will provide important environmental protection while ensuring continued economic growth and
competitiveness.
Isn't this just another way of establishing another UN mega-Secretariat? Do we need
anymore big international bureaucracies subsidized by the U.S. taxpayer? Moreover,
aren't these people going to become an enforcement operation - and if we don't comply -
what will happen? International penalties for noncompliance?
The Protocol contains several provisions intended to promote compliance. It calls for each Party
to establish a system for national reporting and measurement of greenhouse gas emissions. As a
result of a U.S.-proposed provision, a Party not in compliance with its measurement and reporting
requirements cannot receive credit for joint implementation projects. Thus, the primary
responsibility for enforcement is at the national level, and the will to act is a domestic matter
which cannot be imposed by any foreign authority. We will work with other Parties to ensure that
future compliance systems, as yet undetermined, will be strong but not overly bureaucratic.
In the Protocol, the Parties sought to use existing institutions and to minimize the creation of new
ones. For example, the subsidiary bodies and Secretariat under the Convention will continue their
functions under the Protocol. Because the United States contributes approximately one fourth of
the Secretariat's budget under the Framework Convention on Climate Change we have
considerable influence within the Convention and vis-à-vis its Secretariat. In all of its actions
under the Convention, the Secretariat looks to the Parties for guidance, and must answer to the
Parties with respect to its activities. If the United States ratifies the Kyoto Protocol, we will have
similar influence under that instrument. Furthermore, in the case of the Clean Development
Mechanism, the Parties will oversee the mechanism with the help of a small executive board and
"operational entities to be designated" will certify emission reductions from specific projects.
What verification procedures are there to ensure that other countries honor their
obligations?
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There are several examples of different types of verification procedures in the Protocol. In
Article 8, expert review teams will assess Parties' implementation of their obligations. These
teams, coordinated by the Convention Secretariat and nominated by Parties, would initiate a
thorough and comprehensive technical assessment of all aspects of the implementation by Parties.
These teams are taken from the model of the existing system of in-depth review teams that
examine Parties' national communications. There is also provision for the creation of verification
and monitoring systems for emissions trading (Article 16 bis), joint implementation (Article 6),
and the Clean Development Mechanism (Article 12). These will be developed in the coming
years, beginning at COP-4 this November, as stipulated in the Protocol. The U.S. will use every
opportunity to influence their formulation to ensure their acceptability.
How will the Protocol be enforced? Either it will be an honor system, without any real
enforcement, in which case the United States will get taken advantage of as we honor our
obligations while others ignore their own; or there will be a real enforcement system, in
which case international bureaucracies will be able to sit in judgment on whether we are
meeting our obligations. Which will it be? And aren't both these alternatives
unacceptable?
As with most compliance systems, whether they are legal or regulatory in nature, there is usually
some middle ground. There is still a tremendous opportunity to craft the compliance system of
the Protocol as effective procedures and a mechanism to determine and address non-compliance
are to be decided at later meetings. For both environmental and competitiveness reasons, the
United States will be working on proposals to strengthen the compliance and enforcement regime
under the Protocol but no international bureaucracy will be able to "sit in judgment" on whether
we are in compliance. The primary responsibility for enforcement is at the national level, and the
will to act is a domestic matter which cannot be imposed by any foreign authority. We will work
with other Parties to ensure that level of responsibility is preserved.
ROGUE NATIONS
Why doesn't the Protocol exclude rogue nations like Iran, Iraq or Libya? Do you think
they should be able to benefit from this Protocol?
The Kyoto Protocol is a global effort to reduce the trend of dramatically increasing greenhouse
gas emissions. All nations recognized by the United Nations are eligible to join in this effort.
Because Iran, Iraq and Libya are oil-producing countries with significant contributions to global
emissions, it is especially important to include them in efforts to reduce emissions. The
alternative, excluding them from emissions reductions efforts, would allow these countries to be
"free riders," that is, to enjoy the global environmental benefits without joining in the global
effort. Any possible activities under the Clean Development Mechanism would be governed by
existing sanctions or other trade restrictions.
Target/Economic Issues
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While the President proposed in October that the U.S. reduce emissions to 1990 levels by
2008-2012, the U.S. agreed in Kyoto to a 7% reduction below 1990 levels in the same
timeframe. Why did we accept a more stringent target?
The 7% target is close to the President's initial proposal. It represents at most a 3% real
reduction below the target of returning to a composite of 1990/1995 baseline levels by
2008-2012.
The remaining 4 percentage points result from changes in the way certain gases and activities that
absorb carbon are counted.
Why did the U.S. support binding emissions limitations? I understand that voluntary
programs may be equally as successful.
Two factors prompted the U.S. to propose binding limits for greenhouse gas emissions. First, it
became clear that only two industrialized nations would meet the voluntary aim, established in
Rio, to reduce emissions to 1990 levels by 2000 (and neither of those for reasons related to
climate change). Second, the IPCC's 1995 Second Assessment Report provided important new
information on the science of climate change, further underscoring the need to take action.
While binding targets provide greater surety that obligations will be met, they by no means
preclude voluntary action. Limited voluntary here in the U.S. have proven effective in cutting
emissions, and the Administration has proposed significantly expanding such programs in an effort
to meet the Kyoto target. As an example, the Administration will be working with industry over
the next nine months to develop voluntary, sector-by-sector initiatives for reducing emissions.
What's all the fuss over "sinks"?
The treatment of sinks in the Protocol altered the accounting method for carbon-absorbing
activities, such as planting trees, in the U.S. total: sinks account for about 3% of the 7%
reduction. The President's original goal assumed that the 1990 baseline would be lowered by
carbon-absorbing activities, but under the method agreed in Kyoto, such activities do not lower
the 1990 baseline. Because the 1990 level baseline is thus higher under the Kyoto agreement, the
U.S. target becomes somewhat less stringent. Specifically, had the U.S. maintained the same level
of effort assumed by the President in October, and no other factors had changed, the shift in the
accounting method for carbon-absorbing activities would, alone, have transformed the President's
goal of 1990 levels into a goal equivalent to at least 3% below 1990 levels. (As noted above,
certain carbon-absorbing activities will count against emission reduction commitments in the
budget period.) Despite opposition from a number of countries, the United States insisted that
they be included in the interest of encouraging activities like afforestation and reforestation.
Accounting for the role of forests is critical to a comprehensive and environmentally responsible
approach to climate change. It also provides the private sector with low-cost opportunities to
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reduce emissions.
What is the Administration proposing to do to ensure that the United States is not put at
an economic disadvantage?
While the U.S. and other industrialized countries would incur some reduction costs that would
only gradually be borne by the developing countries, (e.g. higher short-medium term energy costs
in the industrialized countries), the weight of the evidence suggests that, in the aggregate, these
costs would be insignificant to U.S. competitiveness or exports.
Where the question addresses competitiveness concerns of a few energy-intensive manufacturing
industries, such as aluminum, paper, and chemicals, we should consider the following: In her
testimony, Dr. Janet Yellen noted the contraction of some industries and the expansion of others
that one could expect in any instance of significant structural change to the economy. Some facts,
however, provide a perspective on the issue: 1) on average, energy accounts for only 2.2% of
total costs to U.S. industry; 2) energy prices already differ significantly between the U.S. and
countries such as Venezuela, and yet U.S. industry does not generally flee to other countries; and
3) 2/3 of all emissions are generated by the transportation and "buildings" sectors - not
manufacturing. To those observations I would add one more: the U.S. energy efficiency and
alternative energy sectors are among the most advanced and competitive in the world. As other
countries expand their own domestic climate change action plans, significant export opportunities
are sure to open up for U.S. manufacturers in these fields.
How will the Kyoto Protocol impact the U.S. economy?
The President has put forward a comprehensive program that, if fully implemented, can reduce
U.S. greenhouse gas emissions to the targeted levels while maintaining economic growth and
competitiveness. In Kyoto, the U.S. succeeded in rejecting unrealistic targets proposed by other
countries. Furthermore, we won acceptance of key market-based mechanisms, such as emissions
trading, which will substantially lower the costs of complying with emissions targets.
But aren't there studies suggesting that the Kyoto Protocol will cost millions of U.S. jobs
and tank the economy?
We see these kinds of studies every time this nation takes action to protect our environment.
Whether it's climate change, clean air, or clean water, there continue to be those who believe that
environmental protection must come at the expense of economic growth. We must look at the
record: Today, unemployment stands at less than 5%, inflation is low, investment is booming, real
wages are rising, and the economy has generated more than 14 million new jobs since 1993. All
this good news despite the doomsday predictions of self-interested economic studies that warned
of the disastrous consequences of the Clean Air Act, Clean Water Act, and other efforts to
protect the environment.
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How do you respond to the serious concerns of U.S. business, agricultural groups and labor
about the Protocol?
In the months leading up to Kyoto, the Administration conducted an extensive outreach effort to
solicit the views of major interest groups, including the business, labor, agricultural, and
environmental sectors. This effort included a White House Conference which brought together
leading experts from around the country to explore different aspects of the climate issue. What
we learned contributed heavily to the U.S. policy announced by the President in October.
In Kyoto, we succeeded in gaining agreement on the key elements of the U.S. position, including
a realistic, achievable, and comprehensive emissions target and flexible implementation
mechanisms like international emissions trading and joint implementation. Accordingly, a number
of interest groups have been supportive of the agreement. That is not to say that all sides are
happy. A wide range of issues have been raised, and we look forward to working with interested
parties to address legitimate concerns.
Did the Vice President's visit - with his call for greater flexibility on the U.S. side -
diminish your negotiating leverage and help lead to the cave-in of our position of 1990
levels by 2008-2012?
The Vice President's visit injected new life into the negotiations by urging all Parties to seek
common ground. Earlier in the meeting, the U.S. signaled its openness to consider differentiated
targets for developed countries. This move helped bring on board a number of critical countries
and demonstrated that we were serious about obtaining a successful outcome in Kyoto. The Vice
President's call for greater flexibility went further in building trust among our negotiating
partners. We were able to convince them to lower their expectations of higher, unrealistic targets
and include all six major greenhouse gases and carbon "sinks" - elements which they had
previously opposed. In the end, the U.S. level of a 7% reduction in emissions actually represents
most a 3% real reduction below the President's initial target for stabilization of emissions at 1990
levels by 2012 when the sinks and all six gases are factored in.
Does the Protocol create a perverse incentive for the destruction of rain forests around the
world?
No. The Protocol actually creates incentives through the Clean Development Mechanism in
developing countries. The CDM will encourage afforestation and reforestation projects, as well
as investments in clean technology, and allow these efforts to partially fulfill the emission
reduction commitments of industrialized countries. Thus, industrialized (Annex I) countries will
see advantages to working with developing countries in these and other areas as a means of
achieving cost-effective reductions. Through such projects, developing countries will be able to
obtain the financial resources, technology and know-how to promote their own sustainable
development. In terms of temperate rain forests in developed countries, the way in which sinks
are counted in the budget period actually penalizes countries that engage in deforestation.
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Comment: The deforestation or loss of carbon sinks equates to increased emissions. Annex B
Parties would have to reduce other emissions to a greater extent in the budget period to meet
their targets.
General Implementation
What enabling legislation might be necessary to implement any agreement that would
mandate legally-binding emissions reductions on the United States?
Legislation to implement the agreement domestically will depend on the policies chosen to
implement it domestically. For example, bringing a domestic carbon emissions trading program
into effect - as the President has proposed to start in 2008 - would in all likelihood require
legislation. For now, the President has chosen to emphasize those measures that are more
voluntary and incentive-based in nature, such as the his five-year, $6 billion initiative involving tax
cuts and R&D aimed at cutting greenhouse gas emissions. The greater the success of these early
efforts, the less we will need to rely on tougher measures to bring us into compliance with our
emissions target down the road. The Administration will seek Congress's assistance in fully
funding these initiatives and is still evaluating a wide range of options for other domestic
implementation efforts, and therefore I cannot state with any specificity what implementing
legislation might be required.
Will we wait until the Protocol is ratified to take domestic actions to reduce emissions?
No. President Clinton has laid out a comprehensive plan for cutting U.S. emissions of greenhouse
gases that will enhance, not diminish, our economic growth and competitiveness. The President's
plan includes $6 billion in tax incentives and R&D spending on energy efficient and low
carbon-emitting technologies, restructuring of the electricity industry that will both cut emissions
and save taxpayer dollars, overhauling of Federal energy use and procurement practices, and
industry-by-industry consultations to develop specific voluntary plans for reducing emissions. We
look to the Congress for support in these endeavors.
Taking quick, decisive, and economically sensible action to cut emissions will also send a
powerful signal to the rest of the world that the United States is prepared to lead in the effort to
address global warming. In particular, this will help in our efforts to recruit developing countries
to play a greater role.
Are you planning to implement the Protocol by Executive Order?
The Administration fully recognizes the important role of the Senate in providing advice and
consent to ratification of the Kyoto Protocol, and we look forward to working with the Senate,
and with this Committee in particular, toward this end. The President has stated that we will
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submit the Protocol for ratification once we have secured meaningful participation from key
developing countries and further elaborated rules and procedures for international emissions
trading.
As the President said in his State of the Union address, there are actions that we can begin taking
at home today that will reduce emissions while saving money and making our economy ore
efficient. The Administration plans to pursue these initiatives - which began with our 1993
Climate Change Action Plan - with increased vigor in the weeks, months, and years ahead. We
look forward to the support of the Congress as we move forward.
Isn't the domestic Climate Change Program just a way of implementing an international
agreement without securing Congressional agreement to the policy first?
Absolutely not. The President's recent announcement of a new $6 billion initiative to address
climate change, which includes $3.6 billion in tax credits and $2.7 billion in new R & D spending,
seeks to place the country on a path intended to reduce emissions before such reductions become
binding (if the Protocol is ratified). It is necessary to start this process now, to avoid the much
greater costs of starting later. The intent is to build upon the accomplishments of the U.S.
Climate Change Action Plan launched in 1993 to meet the voluntary commitments under the UN
Framework Convention on Climate Change. Although the Plan is not expected to achieve its
stated objective of returning U.S. emissions to their 1990 levels by the year 2000, it has
demonstrated that voluntary actions can be effective. As was the case in 1993 and after, the new
initiative will require Congressional support to have the widest possible influence.
National Security
Is it true that the Kyoto Protocol's binding emissions limits could compromise our national
security interests in some way by limiting our capability to participate in certain military
activities?
No. In Kyoto, we got everything that the Department of Defense outlined as necessary to protect
military operations and our national security. These objectives deal with the treatment of bunker
fuels and with emissions related to multilateral operations pursuant to the UN Charter. Moreover,
emissions of greenhouse gases by the U.S. military amount to less than one-half of one percent of
total U.S. greenhouse gas emissions. Even if these were to increase modestly because of
unilateral military actions, it is simply untrue that such an increase would make military actions
politically or diplomatically more difficult. We have ample room within the emissions reductions
commitments agreed to in Kyoto to accommodate U.S. military emissions, including any that
might result from unilateral military actions.
Background: More specifically, the Protocol exempts from emission limits those emissions from
"bunker" fuels (for international maritime or aviation use), emissions from multilateral operations
pursuant to the United Nations Charter (i.e., not only multilateral operations expressly authorized
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by the UN Security Council (such as Desert Storm, Bosnia, Somalia) but also multilateral
operations not expressly authorized that are nonetheless pursuant to the UN Charter, such as
Grenada). Countries may also decide, among themselves, how to account for emissions relating
to multilateral operations (for example, U.S. training in another NATO country). This provision
avoids the need to use emissions trading to allocate such emissions.
Why don't you just exempt the military rather than use this complex formula for bunker
fuels in the Protocol and the decision of the Parties to exempt certain well-defined military
operations?
We have ample room within the emissions reductions commitments agreed in Kyoto to
accommodate U.S. military emissions, including any that might result from unilateral military
actions. Emissions of greenhouse gases by the U.S. military amount to less than one-half of one
percent of total U.S. greenhouse gas emissions. To exempt the military would overlook
opportunities for the Federal government to make its own operations more energy efficient,
thereby saving taxpayers' dollars. DoD has already made significant strides in this area, reducing
their logistical burden of procuring fuel.
Emissions Trading
Isn't it true that your own analysis showed that reducing greenhouse gas emissions would
slow economic growth and raise gasoline prices at least $0.26 per gallon?
The findings to which you refer are projections of the Interagency Analytical Team's draft analysis
completed in June of 1997. Since this did not take into account the specifics of the Kyoto
Protocol, or the elements of the President's domestic plan, the Administration is currently
completing a new economic analysis. [Preliminary findings of the new interagency analytical
effort]
How can the Administration set up a verifiable trading regime anyway?
The Administration will build upon its experience with the SO2 emissions trading program in
developing verifiable domestic and international trading regimes. This coming November in
Buenos Aires, the Parties to the FCCC will continue their work on emissions trading to define the
"relevant principles, modalities, rules and guidelines" for verification and monitoring of emissions
trading.
Can you assure the Congress that every other party to the Protocol will have equivalent
monitoring and verification procedures for emissions trading?
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Parties participating in the international emissions trading regime will have to comply with the
monitoring and verification procedures to be agreed in future meetings of the Parties. Compliance
procedures and mechanisms also to be developed will help ensure that equivalent monitoring and
verification procedures are maintained by all trading parties.
How can you be so sure trading will save us money?
A number of economic studies, as well as our own experience with domestic emissions trading to
combat acid rain, indicate that international emissions trading has the potential to substantially
lower the costs of complying with emissions targets.
It seems that the trading regime is constructed on the premise that we pay Russia for the
reductions that occurred due to the collapse of their economy not because they have taken
any action to reduce greenhouse gas emissions. Is this sensible?
The international emissions trading scheme agreed to at Kyoto will be open to all countries with
targets. Countries whose actual emissions are below their allocated emissions can sell the
difference to other countries seeking more economical emissions reductions. A country can enjoy
excess emissions "credits" because it is more efficient at domestic reductions or, as in the case of
Germany or several countries of the Former Soviet Union and Eastern Europe, due to a major
economic transition. Allowing these countries to sell some of these credits can both help lower
domestic costs of greenhouse gas reductions in the U.S., and provide those countries with the
resources that will allow them to invest in the most climate-friendly technologies possible as their
economies recover.
Aren't we giving Russia a potentially sizable transfer of resources with no guarantee that
Russia will use it wisely? We will also have no leverage on Russian policies with these
funds. Isn't this a giveaway of taxpayer money?
In funding additional energy research and creating incentives for increased use of renewable and
alternative energy sources, the Administration's domestic implementation plan is aimed at creating
the domestic capacity to reduce greenhouse gas emissions cost-effectively. However, U.S. firms
- not the U.S. government - may also choose to purchase international emissions credits in order
to meet their emissions obligations. As with any market transaction, purchases of these credits
will have to comply with all U.S. legal and regulatory requirements. At the same time, Russia will
have significant incentives to use the revenue generated to invest in the most modern,
climate-friendly plants and equipment so that as its economy recovers, it continues to produce
emissions credits that it can sell on international markets.
Comment: The Russian Federation will be on a more sustainable path in its use of energy. Initial
projections by Department of Energy, Energy Information Administration, indicate that the
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countries of the former Soviet Union and Eastern Europe may have up to 800 million metric tons
of emissions credits available for sale in 2010. End comment.
You claim that getting emissions trading was a great achievement and you base much of
your economic case -- that this agreement won't be too costly -- on trading. But the
protocol includes only the most general concept of trading, without the principles in your
January 1997 proposal. Haven't we lost our leverage by signing onto a binding target and
timetable without achieving the specifics on emissions trading?
Clearly additional work needs to be done in establishing appropriate rules and procedures for
emissions trading. We will use every multilateral and bilateral opportunity until the November
Conference of the Parties in Buenos Aires, Argentina to develop a consensus on the structure of
an emissions trading regime. However, let me be clear. The Protocol locks in the right to trade
emissions, and this is not a right that will be surrendered at any future negotiation.
You don't know how trading will be monitored, verified or administered, do you?
The rules and procedures for the international emissions trading regime are to be defined at the
Fourth Conference of the Parties (COP-4) in Buenos Aires, Argentina this coming November.
Until COP-4, we will work hard to build a consensus on the structure of an emissions trading
regime which provides the greatest flexibility for our private sector and domestic implementation.
Can you explain how the system will work if some countries have domestic trading, as is
anticipated here, and others, such as the EU, do not? Will U.S. companies trade with
foreign countries? Will our trades have to be made through the government?
At this time it is premature to speculate on how foreign governments will choose to design their
own domestic emissions reduction programs. From our perspective, however, the private sector
will play a critical role; we envision U.S. firms actively participating in our domestic program as
buyers, sellers and intermediaries of emissions trading. We will seek to structure a similar
role for the private sector in the international trading regime. One could envision a U.S.
company, for instance, purchasing emissions permits from foreign counterparts, or eventually,
from private brokers (in the case of a private sector managed program) or dealing directly with a
state-run emissions trading office in a foreign country that chooses to maintain more direct
government involvement. Of course if need-be, the USG will be prepared to facilitate trades
where foreign governments institute public sector managed programs, but we do not envision the
USG funding trades directly.
UMBRELLA
You've talked about setting up a potential trading block of countries outside the EU -- an
umbrella to counter their bubble. How would the umbrella work? Would you intend to
limit trading to countries within the umbrella? Is that legal? Do you think setting up such
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a block that excluded the EU makes good sense from a broader foreign policy perspective?
We have proposed a meeting of the prospective members of an "umbrella" group -- including
representatives from Canada, Japan, Australia, New Zealand, and Russia, among others, -- to
discuss the function(s) that the group may have. The umbrella group will serve as a forum to
develop consensus among the member countries on important issues involving design of an
emissions trading regime leading up to the Fourth Conference of the Parties in Buenos Aires,
Argentina this coming November. We will be reviewing other roles of the umbrella group with
our partners during this meeting. Whatever function the umbrella serves will be fully compatible
with applicable trade agreements (WTO, MAI, etc.) and our broader foreign policy objectives.
THE BUBBLE
If the "bubble" arrangement gives the EU an advantage, as Under Secretary Eizenstat
admitted to congressional observers, why did the U.S. agree to it?
Accepting the European Bubble arrangement was essential in reaching agreement with the EU on
a number of elements of the Kyoto Protocol which were key to the US, including international
emissions trading, joint implementation, and project-based reductions in developing countries
under the "Clean Development Mechanism." While we ultimately accepted their proposal, we
succeeded in scaling down the benefits of the bubble by excluding new members to the EU from
bubble allocation arrangements during an ongoing commitment period and defining the
responsibility of the EU and individual members in case of non-compliance.
Haven't we just given the Europeans free "hot air" under their bubble and saddled
ourselves with paying for it?
Agreeing to the European Bubble arrangement was essential in reaching agreement with the EU
on a number of elements of the Kyoto Protocol key to the U.S., including international emissions
trading, joint implementation, and project-based reductions in developing countries under the
"Clean Development Mechanism." Depending upon how the EU decides to allocate EU-wide
emissions to its members, several European countries could stand to benefit from reductions
generated by the UK and Germany.
These reductions, however, came only at great effort by the UK and Germany, as the UK virtually
shut down its coal industry and shifted to natural gas, and Germany's taxpayers funded industrial
restructuring and expensive efficiency improvements in the former East Germany. In allowing
their reduction to be used to subsidize emissions growth in Portugal, Spain, and Greece, it is the
German and UK taxpayers who have "saddled" themselves with paying for it, as these tons will no
longer be available for purchase by the U.S. or other potential buyers of emissions credits in an
international emissions trading market. At the same time, those same countries will likely be
accepting more stringent internal reduction targets which will also have their costs.
Developing Countries
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What exactly does President Clinton mean by "meaningful participation from key
developing countries"?
Climate change is a global problem that requires a global solution. Current projections show that
developing country emissions will surpass those from industrialized countries by 2030 or sooner.
The problem of climate change cannot be solved unless developing countries take measures
themselves to limit greenhouse gas emissions.
The U.S. will be working bilaterally, regionally, and multilaterally in the coming months and years
to promote more active efforts by developing countries to limit their emissions. We will
concentrate on key countries and on approaches that are consistent with the economic growth and
development of these countries and with other environmental objectives. We will not submit the
Kyoto Protocol to the Senate for advice and consent to ratification until we feel we have achieved
meaningful participation from key players in the developing world.
We must also recognize that the term "developing country" encompasses a wide range of nations
which are at various stages of industrialization and contribute differently to global emissions.
Accordingly, there is no one-size-fits-all approach to measuring developing country participation.
Clearly, a country with high GNP or one that emits a proportionally large share of global
emissions should be expected to do more than one that is poor or whose emissions are negligible.
Can developing countries assume binding targets under the Kyoto Protocol?
Yes, they can. Developing countries seeking access to the benefits of international emissions
trading may voluntarily assume binding targets through amendment to the annex of the Protocol
that lists countries with targets. They may choose to do so to gain access to the (financial)
benefits of international emissions trading.
Despite our efforts and the support of some developing countries, the Kyoto Protocol does not
include a separate article for developing nations to assume voluntarily targets.
Did developing countries agree to do anything in Kyoto?
Yes. The Kyoto Protocol makes a down payment on the meaningful participation of developing
countries.
First, developing countries agreed to the creation of a clean development mechanism through
which industrialized and developing countries can establish partnerships to cut emissions in the
developing world, to the benefit of both parties. Specific projects - such as construction of a
high-tech, low-emitting power plant - can include direct participation from the private sector.
Industrialized countries (and firms within those countries) will be able to use certified emissions
reductions earned from such projects to contribute to their compliance with greenhouse gas
GCCSTATE.WPD
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reduction targets while developing countries get the technology they need for cleaner, more
sustainable development.
Second, developing countries also agreed to advance the implementation of their existing
commitments under the 1992 Framework Convention on Climate Change. These commitments,
which apply to all Parties, include, in particular, more specific reporting requirements on actions
taken to reduce emissions and also call for the identification of specific sectors (including the
energy, transport, and industry sectors as well as agriculture, forestry, and waste management) in
which actions should be considered in developing national programs to combat climate change.
Why did the U.S. agree to delete a key provision on developing countries from Protocol?
Although we would have preferred a free-standing provision permitting voluntary adoption of
emissions targets by developing countries, we still succeeded in preserving this option in the
emissions trading article. Developing countries may participate in emissions trading provided they
take on a quantified emissions limitation or reduction commitment under Annex B.
Why did the U.S. agree to a Protocol which exempts developing nations?
The Protocol does not exempt developing nations from action. In fact, Article 10 of the Protocol
includes obligations to advance the commitments of all parties, specifically including developing
countries. All parties are obligated to implement national programs that consider actions in the
energy, transportation, industrial, and other sectors to mitigate climate change. The Protocol also
permits developing countries to participate in emissions trading, provided they adopt legally
binding emissions targets under Annex B. We are planning further efforts to secure more
meaningful participation by developing countries as we continue efforts to address global
warming under the Framework Convention on Climate Change.
Isn't it true that the Protocol will permit developing countries to add new binding
limitations on the U.S. by a simple 3/4 vote at future climate change meetings?
No. On the contrary, we would need to agree on new binding limitations that would apply to the
U.S. and any such agreement would also require Senate advice and consent before the President
were to ratify it.
Why do we need "mechanisms" to transfer resources from developed countries to
developing countries? These countries are exempt from obligations under the protocol so
why transfer resources to them?
These mechanisms are not simple resource transfers. They will accomplish the two important
objectives of involving developing countries in reducing global greenhouse gas concentrations and
allowing U.S. companies to achieve emissions reductions at lower cost:
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First, by supporting Clean Development projects, they will produce real reductions in global
greenhouse concentrations in developing countries.
Second, by participating in the CDM, U.S. companies will be able to partially offset their
emissions reduction obligations.
The fatal error in this negotiation was the Berlin Mandate, which completely let the
developing countries off the hook. Shouldn't we have just let this Kyoto process fail and
started over on a sounder footing? As you have said, this is a problem that must be
resolved over decades, so why get going on the wrong foot?
In fact, by agreeing in Kyoto, we satisfied the requirements of the Berlin Mandate and can now
put it behind us.
Had the Kyoto Conference failed to produce a protocol, not only would international confidence
in our ability to achieve an agreement have been eroded, we would still be left with an unfulfilled
Berlin Mandate as an excuse for some in the developing world to refuse to take action.
What real incentive do developing countries now have to agree to tough limits of their
own?
Developing countries have plenty of incentive to address global warming - most analyses indicate
that it is developing countries that will suffer the most from climatic change and its associated
effects.
Within the Protocol itself, the most economically attractive flexibility mechanisms - JI between
Annex I countries and emissions trading - are only available to those Parties that have undertaken
quantified emission limits.
What is the Administration's strategy doing to get developing countries to participate more
fully in the Protocol?
Getting developing countries to participate more fully in the global response to climate change is
our objective - this is important, because that participation can be accomplished in a variety of
ways. First, developing countries can decide that it is in their own interest to take unilateral
action to help avert the potential impacts of global warming. Many are already doing so, and we
should not lose sight of the efforts they are already making. They have a strong interest here
because most of their economies are highly vulnerable to the adverse consequences of global
warming - their populations are located in coastal and low-lying areas that are susceptible to
storm surges, erosion, and salt-water intrusion. Many are also heavily dependent on agriculture.
Most also lack the resources to cope with extreme weather events, much less to implement the
extensive infrastructure changes that could be needed to adjust to significant climate change
GCCSTATE.WPD
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impacts such as sea-level rise, increased drought or flood.
Second, we are working extensively with a broad range of developing countries on a bilateral
basis to encourage their participation in the global response to climate change. Last year, the
President announced a $1 billion initiative over a five-year period largely involving the U.S.
Agency for International Development but also the Department of Energy and the Environmental
Protection Agency in cooperative bilateral efforts related to climate change. We are working also
in the U.S. Climate Change Country Studies Program with over 55 developing countries and
countries with economies in transition to help them inventory their greenhouse gas emissions,
assess their vulnerability to climate change and consider the options available to them to respond.
In addition, we have initiated many other programs, including the Inter-American Institute for
Global Change Research, to support the efforts of developing countries to participate in scientific
research related to global warming. We have a series of bilateral "common agendas" with some
of the most important developing countries, including India and Brazil, under which we discuss
climate change issues and promote cooperative actions. And, under the aegis of Vice President
Gore, we are working cooperatively with China on a range of climate change issues.
Third, following the Kyoto meeting in December, we are engaged in a comprehensive review of
our strategy with respect to securing the more meaningful participation of developing countries to
determine how we can best make further progress. In particular, we are considering ways to
encourage advanced developing countries voluntarily to take on quantified emissions limitation
commitments, including how to approach such difficult issues as the bases for such commitments,
how they would apply and the advantages that might accrue from signing on to them.
You went into the Kyoto conference with very low expectations regarding developing
countries - just seeking a provision that would have allowed individual developing
countries to opt into the Protocol voluntarily. Even that modest provision was denounced
and defeated. In light of that reception by the Chinese, Indians, Brazilians, and others,
isn't it self-delusion to think that you will draw the key developing countries into the
Protocol even in the next few years?
Given the lack of incentive for developing countries to participate and the lack of leverage
over them, won't it be years before we can expect enough key developing countries to
participate?
Although there clearly was not as much movement in the positions of the developing country
blocs as we would have liked, the fact that the Kyoto Protocol includes provisions that many
developing countries opposed prior to the conference -- such as emissions trading and joint
implementation shows that negotiating flexibility does exist.
Many developing country governments stated bluntly before Kyoto that they would not discuss
limits on their emissions until the developed world undertook its own commitments. However,
we now have an opportunity to lead the global response by our own example - what the U.S.
does matters vitally in these discussions, both because we emit around one-fourth of the world's
greenhouse gas emissions and because others look to us for innovation and creativity in
GCCSTATE WPD
confronting problems and resolving them.
If [it does take years to secure meaningful participation by key developing countries], won't
it be years before the Protocol is ready to be submitted to the Senate, by your own
standard?
Securing more meaningful participation from key developing countries is a top priority for us.
Kyoto made a down payment on such participation, and we believe more progress is on the
horizon. That said, the President has made clear that the Protocol is a work in progress and that
without more developing country involvement, he will not submit it for ratification.
And if years do pass, won't it in effect become impossible to achieve the target you have
accepted in the 2008-2012 period?
Clearly, the sooner the Protocol comes into force the better. That said, we did not accept our
target premised on immediate ratification and entry into force. The Protocol is a very complicated
document, and many details remain to be worked out - entirely separate from the developing
country question.
The President's domestic plan for cutting emissions reflects this by offering a phased-in approach
to taking action. In the first few years, the emphasis will be on efforts that reduce emissions
through creating incentives for the purchase and use of energy efficient technologies. These
measures make sense in their own right - by reducing pollution, lowering energy use, and saving
money for consumers.
Before the beginning of the first budget period in 2008, there is a window of several years, and I
am confident that within that time we can accomplish what we need to submit the Protocol for
your consideration.
Clean Development Mechanism
This CDM is clearly a scheme to saddle us with another international institution. How will
this be funded? How will it be set up? Is this yet another arm of the World Bank?
The Clean Development Mechanism provides a means through which industrialized and
developing countries can establish partnerships to cut emissions in the developing world, to the
benefit of both parties. It was designed to make effective use of existing institutions, not to create
a new one. It will be funded from a small share of the proceeds from each project certified to
reduce greenhouse gas emissions. It is an arm of the Parties to the Protocol not the World Bank.
Why do we need "mechanisms" to transfer resources from developed countries to
developing countries? These countries are exempt from obligations under the protocol so
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why transfer resources to them?
Climate change is a global problem that requires a global solution, and the U.S. will be working
bilaterally, regionally, and multilaterally in the coming months and years to promote more active
efforts by developing countries to limit their emissions. One way is to create partnerships through
which we can share our technology and cut emissions. As developing countries understand that
they can protect the environment without compromising their economies, they may be more
inclined to join us in taking on emission reduction commitments. Developing countries may
participate in emissions trading if they adopt binding emissions targets under Annex B which
could provide even greater benefits for their economies and for the global environment.
How will this advance "meaningful participation" with developing countries?
The CDM and the projects it will generate will advance the meaningful participation of developing
countries by helping those countries to develop in a more sustainable manner. These projects may
help them acquire and introduce new, less carbon-intensive technologies and show them that what
is good for the environment can also be good for the economy.
How can we make this scheme work? What will it take?
With the cooperation of private industry in the U.S. and in developed countries around the world,
the CDM can play an important role in advancing the mitigation efforts of developing countries.
Ultimately, it will take the combined efforts of businesses in developed and developing countries,
as well as the governments of both to adopt reasonable rules and efficient procedures to promote
the greatest possible number of projects under the CDM.
As in the case of emissions trading, you are claiming the Clean Development Mechanism as
a big success and as a key element in keeping costs down for American business, but, once
again, the Protocol only includes the general concept, with no clear outline of how it would
work. Haven't we lost our leverage by signing onto a binding target and timetable without
achieving the specifics on joint implementation?
No, we have not. The creation of the CDM represents a significant success of the Kyoto
Protocol. While currently the Protocol contains only a framework for how the CDM would be
set up, modalities and procedures designed to ensure transparency will be elaborated at the Fourth
Conference of the Parties in November in Buenos Aires. The U.S. will work throughout the
upcoming year to ensure that the components of the program in its final form are as flexible as
possible.
Can you describe in detail how the CDM would work?
Yes. The CDM largely embodies our ideas on joint implementation. It will enable help
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developing countries participate meaningfully in the global response to climate change by
encouraging projects in their countries that promote energy efficiency, the diffusion of
lower-carbon emitting technologies and the use of renewable forms of energy. The CDM will do
so by enabling the private sector in the developed world to share in the greenhouse gas emissions
reductions achieved as a result of these projects, either directly as a consequence of their active
collaboration and investment in these projects, or indirectly by purchasing the emissions
reductions achieved on the open-market. The private sector will then be able to use these
reductions to offset greenhouse gas reduction commitments at home.
Background: Parties to the Protocol will form an executive board to supervise the CDM. The
will also designate multiple "operational entities" - existing institutions, such as stock exchanges,
regional development banks or international agencies -- that will certify the emissions reductions
resulting from each project activity on the basis of agreed criteria. Participation in the CDM will
be voluntary, and each Party must approve the project activities within its territory. These project
activities will be designed to achieve real, measurable and long-term benefits related to the
mitigation of climate change, and they will achieve emissions reductions that are additional to any
that would occur in the absence of these activities. At their next session in November this year,
we expect that the Parties to the Convention will begin elaborating modalities and procedures to
ensure transparency, efficiency and accountability under the CDM, in particular through
procedures for independent auditing and verification of project activities
A share of the proceeds from these project activities will be used to cover administrative expenses
of the CDM as well as to assist developing countries that are particularly vulnerable to the
adverse effects of climate change to meet adaptation costs. Importantly, certified emission
reductions obtained during the period from the year 2000 up to the beginning of the first
commitment period (2008-2012) can be used to assist in achieving compliance in that first
commitment period.
The Protocol indicates that the part of a nation's target that can be met through the CDM
will be determined by a later [Meeting of the Parties]. So it is possible that the ability of
our companies to use the CDM to meet our target will be very restricted, isn't it?
If it is very restricted, will we walk away from the deal? Wouldn't if be foolhardy to sign
the Protocol before we know how restricted our ability to use the CDM is going to be?
At present, the extent to which a country's target that can be met through the CDM is undefined.
Our goal is to seek maximum flexibility in this regard.
How will the CDM be financed?
The Clean Development Mechanism is fundamentally a vehicle to allow cost-effective emissions
reductions by facilitating private sector investment in clean technologies. Thus, we anticipate that
the vast majority of financing for the CDM will be from private sources. Most of this financing
will be channeled directly into investments in developing countries. We anticipate that there may
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be minor administrative transaction costs associated with using the mechanism. While
governments would also be free to purchase credits, there is no obligation for governments to
contribute in any way.
How big a share of the proceeds will be devoted to assisting developing countries with
adaptation to climate change - 5%? 20%? 50%? Do we really have any idea? Who
decides?
The Parties will decide. We anticipate that the "proceeds" to be shared will be derived from the
value of the emissions reductions achieved by a project, not the value of the underlying project.
The Protocol leaves the distribution of the certified emissions reductions up to the entities
involved. We anticipate that this figure will be in the 10% range in terms of the funds collected,
depending on projections of the volume of traffic under the CDM. Most Parties in Kyoto
indicated that they would be comfortable with this figure.
The OPEC countries actually had the nerve to press for a compensation fund so that we
would have to pay them to make up for the reduced use of oil that is likely to result from an
effort to cut greenhouse gases. We opposed that demand, but couldn't these proceeds end
up being applied, at least in part, to pay off OPEC countries?
Article 12 of the Protocol that establishes the Clean Development Mechanism allows for proceeds
to go to Parties that "are particularly vulnerable to the adverse effects of climate change" to meet
"the costs of adaptation." The reference to "adverse effects of climate change," as opposed to,
for example, "adverse effects of response measures to climate change," makes clear that it is
intended to benefit small island states and nations with low-lying coastal areas: This concept
differs from the so-called "compensation" fund - whose objective included assistance to nations
that would be adversely affected by actions taken by developed countries to mitigate climate
change.
Since projects under the CDM will be done in developing countries that do not have
emissions budgets, who will monitor and verify that the reductions from a given project are
real? Who will decide that those reductions are more than would have occurred anyway,
and how will they decide that?
The Parties to the Kyoto Protocol will establish operating entities who will certify emission
reductions from projects. This certification will verify that the resulting emissions reductions are
real and additional to those that would have occurred anyway. Though the rules have to be
fleshed out, the operating entities and their procedures will be subject to the authority of the
Conference of Parties.
If credits were given for reductions that would have occurred anyway, then the CDM could
turn into another environmental sham, couldn't it? That is, industrialized countries could
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be allowed to satisfy their reduction requirements by getting credit for reductions that were
going to have to occur anyway in developing countries; and since the developing countries
have no budget, there could be no offsetting reduction of their budgets. Isn't that right?
No. The Kyoto Protocol, in defining the Clean Development Mechanism, clearly establishes that
CDM projects be certified only if there are "reductions in emissions that are additional to any that
would occur in the absence of the certified project activity." Projects will be independently
audited to verify that the emissions reductions are indeed additional. Over the course of the next
year or so, Parties to the Convention will design procedures to ensure transparency, efficiency and
accountability in the CDM processes.
How will the CDM be administered? Are we going to create yet another international
institution? Who will control it?
The Parties will oversee the Clean Development Mechanism with the help of a small executive
board, and "operational entities to be designated" (not "created") will certify project emission
reductions. At this time the details have not been elaborated by the Parties - they will revisit
these issues at the Fourth Conference of the Parties in November 1998.
You say that this idea is in effect the same as our idea for joint implementation, but JI
would have operated on a company to company basis without new international
bureaucracies, while the CDM will require a new bureaucracy, right?
The concept of the CDM is effectively very similar to that of joint implementation, with the
crediting of investments for reductions made in another country. We do not envision the CDM as
needing an additional bureaucracy. We plan to consult with already-existing organizations who
are likely to be asked to serve as "operational entities" in the CDM. Some general types of
organizations possible for this role would be: regional development banks or stock exchanges.
JLY
ONE HUNDRED FIFTH CONGRESS
JAF
TOM BLILEY, VIRGINIA, CHAIRMAN
W.J. "BILLY" TAUZIN, LOUISIANA
JOHN D. DINGELL, MICHIGAN
MICHAEL G. OXLEY, OHIO
HENRY A. WAXMAN, CALIFORNIA
MICHAEL BILIRAKIS, FLORIDA
EDWARD J. MARKEY, MASSACHUSETTS
U.S. house of Representatives
SP
DAN SCHAEFER, COLORADO
RALPH M. HALL, TEXAS
JOE BARTON, TEXAS
RICK BOUCHER, VIRGINIA
J. DENNIS HASTERT, ILLINOIS
THOMAS J. MANTON, NEW YORK
Committee on Commerce
JA
FRED UPTON, MICHIGAN
EDOLPHUS TOWNS, NEW YORK
CLIFF STEARNS, FLORIDA
FRANK PALLONE. JR., NEW JERSEY
BILL PAXON, NEW YORK
Room 2125, Rapburn house Office Building
QF
SHERROD BROWN, OHIO
PAUL E. GILLMOR, OHIO
BART GORDON, TENNESSEE
JAMES C. GREENWOOD, PENNSYLVANIA
ELIZABETH FURSE, OREGON
Washington, DC 20515-6115
MICHAEL D. CRAPO, IDAHO
PETER DEUTSCH. FLORIDA
CHRISTOPHER COX, CALIFORNIA
BOBBY L. RUSH, ILLINOIS
NATHAN DEAL, GEORGIA
ANNA G. ESHOO, CALIFORNIA
STEVE LARGENT, OKLAHOMA
RON KLINK, PENNSYLVANIA
RICHARD BURR, NORTH CAROLINA
BART STUPAK, MICHIGAN
BRIAN P. BILBRAY, CALIFORNIA
ELIOT L. ENGEL. NEW YORK
December 10, 1998
ED WHITFIELD, KENTUCKY
THOMAS C. SAWYER, OHIO
GREG GANSKE, IOWA
ALBERT R. WYNN, MARYLAND
CHARLIE NORWOOD, GEORGIA
GENE GREEN, TEXAS
RICK WHITE, WASHINGTON
KAREN McCARTHY, MISSOURI
TOM COBURN, OKLAHOMA
TED STRICKLAND, OHIO
Nec l 12-17-98
RICK LAZIO, NEW YORK
DIANA DEGETTE, COLORADO
BARBARA CUBIN, WYOMING
JAMES E. ROGAN, CALIFORNIA
JOHN SHIMKUS, ILLINOIS
HEATHER WILSON, NEW MEXICO
JAMES E. DERDERIAN, CHIEF OF STAFF
The Honorable Janet Yellen
Chair
Council of Economic Advisors
Old Executive Office Building
Washington, D.C. 20502
The Honorable Melinda Kimble
Acting Assistant Secretary of State
Oceans and International Environmental and Scientific Affairs
U.S. Department of State
2201 C Street, N.W.
Washington, D.C. 20520
Dear Dr. Yellen and Ms. Kimble:
I appreciated your testimony at the hearing held by the Subcommittee on Energy and Power on
October 6, 1998 regarding the Kyoto Protocol: The Outlook for Buenos Aires and Beyond. Since that
hearing, the Administration participated in the Fourth Conference of the Parties to the Framework
Convention on Climate Change (COP4) which reached decisions on a number of issues related to the
Kyoto Protocol. I am writing to relay a number of follow-up questions from the hearing and COP 4,
and would appreciate your reply by December 31, 1998. If you have any questions in this regard,
please contact Cathy Van Way of the Commerce Committee staff at (202) 225-2927.
Thank you for your prompt attention to this matter.
Subcommittee on Energy and Power
DS/cvw
Enclosure
Follow-up Questions
Energy and Power Subcommittee
1.
What is the status of negotiations to obtain the participation of developing countries?
Which countries have expressed a willingness to participate?
--
What will be the nature of their participation (i.e., will they agree to binding
emission reductions by the same commitment period as is facing developed
State
countries)?
Could a developing country "volunteer" to take on binding emissions limitations
that involve significant growth in their emissions (like Australia's 8%) so that they
could trade emissions credits?
2.
The Kyoto Protocol set a "binding" target of reducing U.S. emissions of greenhouse gases to a
level seven percent less than what we emitted in 1990.
--
Who determines whether a particular emissions target has or has not been met?
--
What are the consequences, legal or otherwise, if the United States fails to attain this
"binding" target?
What are the consequences if other countries fail to meet their targets?
--
What are the mechanisms to enforce compliance, both ours and that of other countries,
with these binding targets?
3.
The Administration has characterized the Kyoto Protocol as a "work in progress." Can the
Protocol be amended before it enters into force?
4.
Under the terms of the Kyoto Protocol what issues are still to be negotiated? What issues cannot
be reopened in the Kyoto Protocol?
5.
If the Protocol cannot be amended prior to ratification, how do you propose to secure their
meaningful participation prior to the U.S. ratifying the Kyoto Protocol?
6.
Does the Administration consider participation in the Clean Development Mechanism to be
"meaningful participation" as promised by the President?
7.
One of the stated advantages of the Kyoto Protocol is the amount of lead time it gives industry to
prepare; binding commitments don't begin until 2008. However, the Administration has said it
won't send the Treaty up for ratification until it has meaningful commitments by developing
countries. The Administration has also indicated that it won't seek to implement the Protocol until
it is ratified. How long will it take the Administration to secure meaningful participation by
developing countries? If it is likely to take years, what will happen to the lead time built into the
Protocol? Will the first budget period be extended?
8.
In testimony before the Subcommittee it was noted that the Administration is developing a domestic
emissions trading system to be in place by 2008. Can you please explain under what authority that
program is being developed?
9.
The Administration's forecast of "modest" costs of the Kyoto Protocol on the U.S. economy is
predicated on the assumption of developing country participation and full use of flexible
implementation mechanisms. What would be the total costs to the U.S. economy if those two
assumptions are not correct - that is, if the major developing countries do not participate, and if the
use of flexible implementation mechanisms is capped at no more than 50% of our 7% reduction
target?
10
What U.S. industries and sectors of our economy would be hardest hit by the Kyoto Protocol?
11.
Will the combination of tax credits, research and development, and emissions trading be sufficient
to meet all of the U.S. target of a 7% reduction, or will additional measures be necessary? If
additional measures are likely to be needed, what specifically is the Administration proposing?
12.
The Administration is currently undertaking efforts to obtain voluntary commitments from U.S.
companies to reduce their emissions of greenhouse gases. What sort of credits are being promised
to these companies in exchange for early action?
13.
The Administration has been working on a "conceptual agreement" with some countries to pursue
"an umbrella group to trade emissions permits." There are no details about the nature of the
agreement or what is contemplated. Would this be a part of the Protocol or a separate agreement
outside the Protocol? How would it be recognized by the Protocol Parties?
14.
Has the Administration offered its economic analysis for peer review?
15
One of the assumptions upon which the Administration's economic analysis is based is "meaningful
participation by key developing countries". Could you please explain what that meant for purposes
of the economic analysis? For example what was the nature of the commitment that was assumed
for countries like China, India, etc How are cost estimates impacted if countries like Argentina
or South Korea take on commitments but countries like China and India do not?
16.
(From Mr. Markey) Dr. Yellen: Most of your testimony was about the costs of reducing
greenhouse gas emissions. But you also mentioned that the same measures reduce pollution, thus
bringing economic benefits. How can one compare the costs against the benefits of reduced
pollution and reduced global warming?
17
(From Mr. Markey) Dr. Yellen: Do you account in your economic analysis for the number of lives
saved due to reduced pollution? If not, why not?
18.
(From Mr. Markey) Dr. Yellen: In your testimony you project that the cost per household of
implementing the Kyoto Accord will be "nearly fully offset" by price declines from electricity
restructuring. You also comment that the electricity restructuring is likely to cause asignificant
reduction of greenhouse gas emissions. Why is that - where would the reduced emissions come
from? How are we going to get lower electricity prices, greater efficiencies, and technological
innovations all at the same time?
(19.
(From Mr. Markey) Dr. Yellen: The breakup of AT&T was followed by rapid technological
innovation and adoption in the telecommunications industry. If the breakup of electricity
monopolies also spurs rapid changes in electricity generation, transmission, and distribution
technologies, how would that affect the cost predictions of current economic models?
20
(From Mr. Markey) Dr. Yellen: The second panel presented economic analyses that project higher
costs to reduce emissions than the ones you presented. Why do their results differ from the
Administration's forecasts?
21
(From Ms. Furse) Many countries wanted the Protocol to address only the three major greenhouse
gases, carbon dioxide, methane, and nitrous oxide. The Administration advocated, and won,
inclusion of all 6 categories of greenhouse gases. What are the economic benefits of including 6
lek
kinds of gases, instead of 3?
22
(From Ms. Furse) You discuss in your testimony the cost-savings possible with effective
international trading. Since the rules of international trading have not been agreed to, could you
describe what you mean by an effective international emissions market?
23
(From Ms. Furse) You state in your testimony that the Kyoto Protocol will not affect aggregate
employment. However, we have heard from other economists that this agreement could cost the
U.S. millions of jobs. Why is the range of estimates so large?
24
(From Ms. Furse) The Kyoto Protocol does not require countries to meet binding targets until
2008. However, there are certain aspects of the Protocol, such as the Clean Development
Mechanism, that allow for emissions reductions to occur as early as the year 2000. Further, the
Administration is pushing for tax incentives and Research and Development now. Dr. Yellen, why
is it so important to do these things now?
25
(From Ms. McCarthy) Ms. Kimble: Could you please review the business opportunities that this
treaty creates for U.S. firms, both at home and abroad?
26
(From Ms. McCarthy) In Kyoto, many countries pushed for an early commitment period. The
Administration pushed for a later commitment period of 2008-2012, which ultimately was included
in the Protocol. What was the economic rationale behind pushing for this later commitment period?
27.
(From Ms. McCarthy) How do we encourage countries, such as Russia, to invest money from
emissions credits in clean energy developments?
CC:MJ
F. JAMES SENSENBRENNER, JR., Wisconsin, CHAIRMAN
GEORGE E. BROWN, JR., California
JF
Ranking Minority Member
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Vacancy
TOM A. COBURN, Oklahoma
PETE SESSIONS, Texas
October 20, 1998
The Honorable Janet L. Yellen
Chair, Council of Economic Advisers
Executive Office of the President
Old Executive Building, Room 314
17th and Pennsylvania Avenue, NW
Washington, DC 20500
Dear Dr. Yellen:
Paragraph 4 of Decision 1/CP.1 (the Berlin Mandate), adopted in March 1995 by the first
Conference of Parties (COP) to the United Nations Framework Convention on Climate Change
(UNFCCC), called for an analysis and assessment of the economic impacts of any future protocol.
However, none was made by the Parties to the UNFCCC, including the European Union (EU). In
the United States, the Administration started an analysis prior to Kyoto, but it was never finished.
Although there have been several analyses by the private sector, yours of last March and July, to
my knowledge, was really the first by a Government. However, it was not comprehensive and it
is still preliminary. It was designed to show that the economic impacts of complying with the
Kyoto Protocol "are likely to be relatively modest". Clearly, it was not the broader, independent
analysis of the type promised in 1995 but never delivered.
For these and other reasons, this Committee made a bipartisan request to the Administrator of the
Energy Information Agency (EIA), for the enclosed report entitled "Impact of the Kyoto Protocol
on U.S. Energy Markets and Economic Activity." The report's Preface explains that EIA
arranged for nine experts, including William Nordhaus of Yale University and three prominent
persons from Resources for the Future, to review and comment on versions of the report.
Nevertheless, I understand that some in the Administration, reportedly including the Secretary of
Energy, are critical of the EIA report. In fact, Ms. Kathleen McGinty, Chair of the Council on
Environmental Quality, is reported by the October 13, 1998 edition of The Energy Daily as
disputing the EIA conclusions. She reportedly believes that "several key factors were
conspicuously missing from EIA's analysis", including cost savings from international trading of
greenhouse gas emissions which she says "has already begun" and is likely to exist on a
The Honorable Janet L. Yellen
October 20, 1998
Page two
"broad scale within a decade." The article quotes her as saying: "Some people try to make the
point that this is an expensive endeavor and it isn't. Those who want to mislead will use this
account."
That is rather harsh criticism of another Administration Agency that long ago was required by
section 205(c) of the Department of Energy Organization Act and a 1974 law to provide
independent analysis of this kind to Congress and its Committees. Nevertheless, I take this
criticism seriously and I request your views and comments on the EIA report, taking into
consideration your latest version of your March analysis, which, apparently, was not available to
the EIA in preparing this report and those made by the private sector, particularly the analysis
made by DRI for the United Mine Workers, and the enclosed article.
I understand from your analysis and your October 6, 1998 testimony before the House Commerce
Committee, that your optimism, and that of Ms. McGinty, about the economic impact of the
Protocol is largely based on expectations about the availability of so-called "flexible mechanisms"
under Articles 6, 12, and 17 of the Kyoto Protocol which, of course, has not entered into force.
Additionally, it has not been submitted to the Senate for advice and consent to ratification, nor has
it been signed by the Administration on behalf of the Executive Branch.
The EIA report, on page xii, also takes note of these mechanisms and says that they "may reduce
the cost of compliance in the United States." The EIA then adds:
"Guidelines for those provisions, however, remain to be resolved at future
negotiating meetings, and rules and guidelines for the accounting of
emissions and sinks from activities related to agriculture, land use, and
forestry activities must be developed. The specific guidelines may have a
significant impact on the level of reductions from other sources that a
country must undertake.
*****
"Because the exact rules that would govern the final implementation of the
Protocol are not known with certainty, the specific reductions in energy-
related emissions cannot be established."
As the State Department knows, the UNFCCC Secretariat prepared a proposed work plan and
schedule relating to these mechanisms, other Protocol provisions, and some UNFCCC provisions
for decision of the Parties at the eighth Subsidiary Body session last June (FCCC/SB/1998/1,
April 9, 1998). However, there was no progress on that proposal. Instead, on June 12, 1998,
Indonesia, speaking for the Group of 77 and China (G77/China), said:
The Honorable Janet L. Yellen
October 20, 1998
Page three
"The Group of 77 and China maintains that the mechanisms of the Kyoto Protocol
have to proceed on a step-by-step basis, as the protocol has yet to enter into force,
and that a common understanding has to be reached on the nature of these
mechanisms. The study of methodological issues is a first step to be taken. All the
mechanisms have to be examined on the basis of the principles of equity,
sustainable development, the other principles, and the objective of the Convention.
The issues relating to the Clean Development Mechanism (CDM) should be
addressed first. The Group further maintains that domestic actions by the
developed countries should be their primary means of greenhouse gas limitation
and reduction, and that the overseas mechanisms should be supplemental to such
domestic actions by developed countries for the purpose of meeting their
quantified emissions limitation and reduction commitments."
It appears therefore that the aim of the developing countries is not only to avoid new
commitments to reduce and limit their greenhouse gas emissions, but also to restrict the very
flexibility mechanisms that you and Ms. McGinty are counting on to keep the Protocol costs
"modest."
I understand that the UNFCCC Secretariat has prepared a new work plan proposal
(FCCC/CP/1998/3, Sept. 9, 1998) for the fourth Conference of Parties (COP-4) in Buenos Aires.
However, there is little to suggest that this document or something similar to it will be well
received at COP-4. In fact, another group, the European Union Environment Ministers, who
were reported to be mellowing in their views on some significant issues in regards to the
Mechanisms, met earlier this month and issued on October 6th their "Community Strategy on
Climate Change - Council Conclusions." It appears that, in reality, the EU Ministers who also
want a work plan and schedule adopted at COP-4, have not changed their views, but have
attempted to "re-package" them. They continue to press for "coordinated" policies and measures
"amongst Annex I Parties", including taxes, "to achieve the targets of the Kyoto Protocol." As to
the mechanisms, they concluded in paragraph 6:
"The Council reaffirms that the flexible mechanisms defined in the Kyoto Protocol
are supplemental to domestic action, which should provide the main means for
meeting the commitments under Article 3 of the Protocol. The principles,
modalities, rules and guidelines for the operation of the mechanisms have to ensure
that they do not undermine domestic action or weaken these commitments. In this
context, the Council also recalls that a concrete ceiling on the use of flexible
mechanisms has to be defined to achieve these aims. It should be defined in
quantitative and qualitative terms based on equitable criteria. The Council believes
that the discussion between all Parties on the practical elaboration of the
supplementarity principle has effectively to start at COP-4. This elaboration needs
The Honorable Janet L. Yellen
October 20, 1998
Page four
to constitute an essential element of the work plan to be adopted at Buenos Aires.
The Council urges all Parties to co-operate with a view to reaching final agreement
on this issue at COP-5."
It does not appear that the views and positions of the G-77/China and the EU coincide with those
of New Zealand, in reply for the so-called "Umbrella Group" (which includes the U.S.) to
questions by the G-77/China on the mechanisms. As the views and positions of these two large
groups persist, it becomes more and more difficult to accept your rather rosy economic analysis of
the Protocol's impacts on consumers, business, and jobs. There appears to be broader support
among the UNFCCC Parties for the limitations sought by the EU than for the more flexible view
urged by the U.S. through the Umbrella Group. It would seem therefore that the EIA's broader
analysis which recognizes these uncertainties about future negotiations, and does not assume their
availability without the limits urged by these groups, is more realistic, at least for now, than your
analysis. Therefore, in commenting on the EIA report, please explain the basis for your optimism
about these negotiations and indicate what your views will be if the EU and G77/China continue
to press those views and positions over the next two years of the Administration's term.
Let me stress that I and many of my colleagues in Congress fully agree that the Administration
must continue at all costs to continue to stand firm at COP-4 and thereafter against coordinated
policies and measures and the interpretation of "supplemental" urged by these groups if the
Administration intends to conform with S. Res. 98 which is your basic "bible".
In addition, I note that the incomplete version of the Administration's analysis that was started
prior to Kyoto seemed to recognize that the Protocol is not self-executing in the U.S. (even with
COP guidelines, rules, etc.) and that, if and when, it is ratified, implementing legislation would be
needed. That document also contemplated an emission permit program and the recycling of
rather large sums of money. The EIA report also mentions the likelihood of such legislation and
recycling. However, your July analysis appears to omit any mention of the need for implementing
legislation or discuss the possibility of a domestic emission trading proposal that would generate
large sums of money which might be recycled, subject to the provision of 31 U.S.C. 3302 and
other applicable provisions of law regarding the disposal of revenues. In your reply, I request that
you address the issue of the need for implementing legislation, if and when, the Protocol is ratified
and whether the pre-Kyoto analyses about domestic programs and revenue recycling are still
under consideration. I recognize, of course, that such matters may only be in the early stages of
consideration and, may never be developed if the Protocol is not submitted to the Senate for
advice and consent to ratification during the remaining term of this Administration.
The Honorable Janet L. Yellen
October 20, 1998
Page five
Finally, your response should identify any "key factors" that are missing in the EIA report. This
should include a discussion of the international trade that Ms. McGinty says "has already begun,"
and an explanation as to how that trade relates to a Protocol that is not in force and is not yet
complete in many important details. Specifically, what is that trade, what entities are involved,
what are they trading, and for what purpose?
In responding to these matters, please consult, as necessary, with Ms. McGinty and others in the
Executive Branch to ensure a full and complete response. Also, so that you may have the benefit
of the results of the COP-4 session, I do not expect your comments about the EIA report and
these related matters until November 30, 1998. However, if you cannot meet that deadline,
please advice in writing and indicate when you will reply before the end of 1998.
Sincerely,
F. JAME SENSENBRENNER, JR.
Chairman
Encloser
FJS/hlw
cc:
Secretary of State
Secretary of Energy Bill Richardson
The Honorable Kathleen A. McGinty, Chair, Council on Environmental Quality