Climate:

De Boer, Watson, Sandalow discuss significance of U.N., Bush admin meetings

This week, the United Nations, the Clinton Global Initiative and the U.S. State Department will all convene meetings to discuss international approaches to addressing climate change. During today's E&ETV Event Coverage of a recent Brookings Institution-sponsored discussion, climate experts preview these international meetings and discuss what they believe a post-2012 climate policy should look like. Participants include, Yvo de Boer, executive secretary of the U.N. Framework Convention on Climate Change, Harlan Watson, senior climate negotiator and special representative at the U.S. Department of State, and David Sandalow, energy and environment scholar and senior fellow at the Brookings Institution.

Transcript

Strobe Talbott: Ladies and gentlemen, friends, good morning. If everybody could take a seat please. I'm Strobe Talbott of the Brookings Institution from just on the other side of Dupont Circle and I want to welcome all of you. Thank you for coming out on a beautiful, and I'm tempted to say unseasonably warm, fall day to be part of what we regard as a particularly important event sponsored by the Brookings Institution.

Those of us at Brookings, and there are a number in the room, like to think that every issue we grapple with at the Institution is important. But I think it's safe to say that none of the issues that we're working on is more important than the one that we are grappling with today. Climate change is more than important, it's urgent. If we do not make substantive, you might even say decisive progress in the next decade the warming of our planet will hit a tipping point. It could become an irreversible process with catastrophic consequences for all kinds of life, including human life on the earth. Averting that catastrophe is going to require boldness, and I would add political courage, from our leaders. It's going to require unprecedented cooperation with other countries and particularly with international institutions like the United Nations, which is so well represented here today. It's going to require realism, support, knowledge, and sacrifice on the part of our citizenry. And it's going to require innovative ideas based on sound research and clear thinking from governments, private sector, universities, NGOs, and think tanks like our own. Let me, in that context, say just a few words about how we are approaching climate change at Brookings. We're doing so under the general rubric of energy security. And I think the logic of that is quite simple.

Meeting the energy requirements for our society and industry is central to the problem of greenhouse gas emissions. And solving that problem is vital to both the national security and also international security. And security has three dimensions to it; geopolitical, economic, and environmental. And if we do not promptly and effectively address the third of those dimensions, the environmental one, it's not going to do us much good over the long-term to make progress on the other two.

The Brookings energy security project is one of a small handful of issues that engages all five of our research programs at the institution. Those are governance studies, economic studies, global economy and development studies, metropolitan studies and foreign-policy studies.

The project has a distinguished advisory council under the co-chairmanship of Dan Yergin, a Pulitzer prize-winning author, the founder and longtime head of Cambridge Energy Research Institute Associates, a trustee of Brookings, and I might add a friend of mine for more than 40 years. And the other co-chair is Dick Lugar, a leader on these issues as well as on many others in the United States Senate and also a long-standing friend of Brookings. The project also has considerable talent that we've marshaled from within the institution itself, represented on the panel today by David Sandalow, the author of an important new book, "Freedom from Oil," and the driver, at least part-time driver, of an automobile parked out in front of the hotel, a plug-in hybrid Prius. It gets 150 miles to the gallon. I urge you to take a look at it on your way out, but stick around for the program in the meantime. And also Brookings is represented by Carlos Pascual, a friend and longtime colleague of mine in the U.S. government who is now vice president and director of foreign policy studies and who is going to introduce the rest of the panel and moderate program.

So Carlos, over to you.

Carlos Pascual: Strobe, thank you very much.

Many of you came for an event on climate change, but it's also a real pleasure to be able to use this as an opportunity to launch our energy security program at Brookings, which, as Strobe indicated to you, is going to make an effort to address questions related to security, to economics, and to the environment and how they interrelate with one another and the complexities that are involved. I'll just take one second if I might to mention a couple of other events on our program on energy security that are coming up. One will be on October 15 when we have a launch of a new book that David Sandalow has just written called, "Freedom from Oil." I will talk about that a little bit further later.

On October 17, I doubt any of you will be there, in Idaho we will have an event that focuses on oil dependence and the international framework related to climate change. But I just mention it because what we're trying to do is take these discussions out to wider country, because these are issues that are not just Washington questions, but need an understanding more broadly in the political sphere and in the context of the different parts of our country that are going to be affected by political and economic choices. And then on October 30, as a joint venture between our Energy Security Initiative at Brookings and the Hamilton Project, the Hamilton Project has put together a tremendous event on October 30 that will start at nine o'clock, that will focus first on questions related to the pricing of carbon. Looking at issues such as carbon tax swaps and cap-and-trade systems may not seem like a naturally exciting topic, but for anybody who is involved in these issues I think you're going to get some of the best debate possible on these questions with people like Rob Stavens and Gail Metcalf and Larry Summers. And then a discussion it's going to focus on technology related issues. So that's just a little bit of a foretaste of some of the things that we'll have coming up.

There's a flyer on the Energy Security Initiative which is available, I hope all of you have it. You'll see at the bottom of it Lee Rosenbaum, who is our project manager and a point of contact. You'll be able to get information on these events on our web site. And our web site is soon to transition to yet a bigger and better web site, so if you have little problems with it don't give up immediately. Today we really have an opportunity to focus attention on an issue related to climate change and there's a very specific reason why. Next week there are going to be three absolutely huge events related to questions of greenhouse gas emissions and climate change. One of them will be at the general assembly hosted by the Secretary General, 75 heads of state, and not sure how many other countries are attending. And that will address attention to the wider question of where we go on climate change and how can countries bring their views together? Second will be here in the United States hosted by the State Department, proposed by President Bush at the G8 summit in Germany this past summer, and it will bring together major economies that are principally responsible for the vast majority of emissions in the world. And if these economies cannot agree on a way forward it will be absolutely impossible to address these kinds of questions. So, what kind of platform will that create for the future? And the third event will be with the Clinton Global Initiative, and that will focus attention on the issues of climate from the bottom up.

In effect, the kind of pressure that comes from civil society and industry that, one, makes it possible to achieve many of the technological changes, but keeps all of us and our governments honest. As Strobe has said, this is really an existential issue that is at the court of the viability of the planet. When you read reports on climate change and its impacts, what it can do to flooding and desertification, its impact on crops, its impact on disease, the possible impacts on conflict over resources, then we think of course this would focus attention and result in viable solutions. And then we get into the complexity of the question. And it doesn't mean that the focus dissipates, but suddenly we're into realities that anybody who is emitting greenhouse gases has them joining together in the atmosphere. And so regardless of where the emission comes from, it has an impact on everybody. We have temporal questions that most of the benefits are in the future, but the costs are today.

We have a problem that has been created principally by the industrialized world. But the principal emitters of carbon in the future are going to be from the developing world and they're wondering why is it we should restrain ourselves if, in fact, somebody else actually created this problem? If we start aligning policies with technology we start to find that there are actually huge gaps to achieve the kinds of outcomes that even the widest range of scientific projections have suggested are necessary. And then if we think about what the formula is to actually achieve some of those technological changes, we inevitably have to come to questions about the pricing of carbon, because if you don't price it why should anybody innovate? And of course the minute that you start imposing those prices we all come back to our domestic constituencies and we ask the question of what industries and what labor groups are affected and how do you deal with those kinds of questions? And it's this complex network that is going to have to be dealt with in national policy and in international policy. And it is in this context that we really have this panel today and I'm sure that they will resolve all of these questions for us in the debate that we have today. We are very, very lucky to have an extraordinary panel with us.

And the first of the people I will introduce is the executive secretary of the U.N. Framework Convention on Climate Change, Yvo de Boer. Yvo began his career on climate in 1994, at that point in the context of the Kyoto Protocol. He has been involved in the negotiations in Kyoto. He has led the E.U. delegation to the UNFCC. He has been a senior official in the government of the Netherlands dealing with issues related to the environment as well as other questions. And one of the things that he particularly brings to this debate is the focus that he has placed on bringing into the equation all of the stakeholders. In the UNFCC context he has been one of the people who has focused on clean development mechanisms. In other words, partnership arrangements between countries in the north and developing countries in which they can actually work together on joint projects that can mitigate the impacts of environmental damage. He's also worked very closely with the World Business Council on sustainable development in trying to involve the private sector. And so from both perspectives, I think, he will be able to give us an important perspective on the role of those stakeholders.

Our second speaker today is Harlan Watson. Harlan, I should say, also has a Ph.D. in solid-state physics and will give him a technical platform from which to address this as well. He's currently the senior climate negotiator and special representative at the U.S. Department of State. And he has been the alternate head of the U.S. delegation that has gone to the conference of the parties of the U.N. Framework Convention on Climate Change. He has been deeply involved on these issues since he joined the State Department in 2001, but even before that, in 16 years in the U.S. Congress, where he was with the U.S. House of Representatives committee on science, and for 6 1/2 of those years he was the staff director of the committee's subcommittee on energy and the subcommittees on energy and environment.

And, finally, our last speaker will be David Sandalow, whom we have mentioned already. David is a senior fellow at the Brookings Institution. He was the assistant secretary for Oceans, Environment, and Science during the last part of the Clinton administration. Before that he was a senior director for environmental affairs at the National Security Council. He has a long career in this issue. And one of the things that I would just mention a little bit more about, because I think it's a tremendous product and it's reflective of the kind of work that Brookings does, a book that will be coming out on October 15, "Freedom from Oil." And if I can just mention two quotes of praise for this book, one comes from Bill Clinton, who says that it is a, "compelling analysis of one of the great challenges of our time." But in a truly bipartisan approach to this, Senator Lugar, who also said that, "Freedom from Oil should be required reading for all concerned citizens and elected officials." And so I hope you will give the book a lot of attention when it comes out on October 15 because of the seriousness of the issue and the attention that it pays to questions of energy policy. And if nothing else, David has at least brought us the best prop for the day, which as Strobe said, is sitting out front and I hope you take a look at it.

So, with that let me come back to Yvo de Boer and ask him to kick off our discussion today. And, Yvo, you have a tremendous job ahead of you over the coming week and we're interested in hearing more about what your goals and objectives are.

Yvo de Boer: Thank you and good morning everyone. What I wanted to do was talk to you a little bit today about where we are in the political process on climate change at the moment and, perhaps more importantly, where we need to go in the political process on climate change.

If I look back over the past year, the sense it gives me is that there is now an overall acknowledgment that we need to come to a more comprehensive, international climate change policy approach beyond 2012. And I think there is also a growing agreement that a post-2012 policy needs to be inclusive, cooperative, global, and, most importantly, embedded in sustainable development, which is ultimately what we're working towards. I believe it needs to accord equal importance to both adaptation and mitigation and include technology as a key component of the solution. It must involve strong commitments by industrialized countries who must continue to take the lead in reducing emissions given the historical responsibility for this problem, which was referred to just now during the introduction. And I believe they also have a responsibility and an important role in helping developing countries come to grips with this issue as well. As was indicated earlier on, we will soon be in a phase where developing countries will be emitting more greenhouse gases than industrialized countries. The overriding concern of those developing countries is economic growth and poverty eradication. And that means that we must find cooperative international mechanisms that will allow those developing countries to act on climate change while respecting those poverty eradication goals. Now, what have we got at the moment and where are we?

First of all, I think it's important to point out here that prior to President Bush's State of the Union address earlier this year chief executives of member companies of the U.S. Climate Action Partnership urged the president to support a mandatory cap on greenhouse gas emissions, to cut them by more than 60 percent by 2050. And that is very similar to the business voice that you here in Europe, in Australia, and in Canada, with the private sector calling for long-term clarity, a clear indication of where governments intend to go, a clear perspective on the policy environment within which they will have to make their investments.

Another important development that I've seen in this particular country is the way in which a large number of states have come together around the question of climate change, greenhouse gas emissions, have put in place cap-and-trade regimes. And together those states, in fact, account I believe all ready for about 24 percent of U.S. emissions. So, you see a growing consensus at the level of the states that this issue needs to be acted on, but also those states turning to cap and trade as what they feel to be the most cost effective instrument to address this issue. And the third thing I would like to mention is the fact that at the moment in the Senate, in the Congress there are 12 legislative proposals on climate change on the table and eight of those proposals have an international component of one kind or another. So that's another clear indication to me of a political desire to move forward and of a political desire to do that in an international context. And finally, in terms of the U.S. action, I would like to mention that the National Governors Associate, this month, said that they want to expand state regulation for limiting greenhouse gas emissions and also announced a task force to advance clean energy development.

So those, I think, are some very significant developments in your country over recent months. Then let me turn to the international level and see what we have under the auspices of the United Nations. Well, first of all we have the Kyoto Protocol, which 175 countries have ratified and which covers 61.6 percent of the greenhouse gas emissions. And that's significant because I think you often hear that only a small number of industrialized countries actually have legally binding emission reduction targets under the Kyoto Protocol. And what is often forgotten is the fact that all countries that are signatories to the protocol are obliged to undertake projects and policies to reduce their emissions of greenhouse gases. So although the legally binding component of it is limited, the scope is in fact a global one. The Kyoto Protocol involves a bottom up, flexible approach. It doesn't attempt to impose targets. It doesn't attempt to impose a particular policy approach. In fact, it leaves it free to countries to decide themselves or together, as in the case of the European Union, how they want to put in place the policies to achieve the goals that they commit to.

The Kyoto Protocol has succeeded in creating a carbon market and a toolbox for countries to meet their targets in a cost-effective way. In 2006 the carbon market grew in value to an estimated $30 billion, three times greater than the previous year. Approximately 25 billion was generated by the European trading scheme operated by the European Union and another 5 billion through the Clean Development Mechanism, which involves cooperation with developing countries and joint implementation, which involves cooperation with transition on economies. The Clean Development Mechanism is expected to result in emission reductions equivalent to 1.9 billion tons of CO2 at the end of 2012. And that amounts about to the annual in emissions of Canada and Greece together, to give you a feeling of the size. Activities in the CDM pipeline alone are estimated to have generated investments of about $25 billion in 2006. So, you see what you might call a relatively small amount of carbon finance, in fact, catalyzing much larger, commercially sound investments towards both a sound economic role and a climate change goal.

Now, despite these important advances you'll also have noticed that the latest science clearly tells us that more action is needed than we have in place at the moment. And where are we on that at this moment in time? The average global temperature rose by 7.4 degrees centigrade during the last century, the largest and fasting warming trend in the history of the Earth that scientists have been able to discern. Current projections show that trend will continue and will accelerate. In the 21st century the earth could warm by about 3 degrees centigrade. The Intergovernmental Panel on Climate Change is certain that climate change is unequivocal and that the largest part of the warming is caused by human activities.

The political answers to the science must now urgently be provided. There have been encouraging signals that there is a growing political momentum developing and I would like to mention here three. The first, and it was referred to in the introduction as well, is the very important outcome of the G8 meeting in Heiligendamm early this year, where the G8 put together an ambitious work plan and tight timeline for negotiations on a future climate change regime to be completed by 2009, the instruments to address climate change, particularly the carbon market and its role in creating economic incentives for developing countries to act on climate change. Also encouraging is the fact that the G8 plus 5, so the five large developing countries, called for the means of adaptation to be included in a future agreement, along with enhanced technology, cooperation, and financing.

So, that really is pointing towards a global approach that doesn't just focus on reducing emissions, but also focuses on adaptation, which is going to be particularly critical to some of the poorest countries in the world. Also in the context of that process Japan and the European Union called for emission reductions of 50 percent by mid-century. And, as you know, the European Union put an offer on the table to reduce its emissions by 20 percent in 2020 and go to -30 if other countries join. And what I find significant there is that that -20 offer stands, whatever happens. And that, I believe, is a very important signal to developing countries that are looking to industrialized nations to take the lead, that the Europeans are willing to do that.

And another important development, I think, was in the context of the so-called Vienna climate change talks, which happened in August, where parties to the Kyoto Protocol agreed to work based on a range of emission reduction objectives for industrialized countries of 25 to 40 percent below 1990 levels, which is actually in line with the most stringent scenarios of the Intergovernmental Panel on Climate Change. And this range will be used as a reference in the context of future work under the protocol.

And the third important development I would want to mention is the Gleneagles outcome, the process that was established by the United Kingdom's presidency of the G8, which clearly shows that countries are willing to move forward. And that process, I think, is an important contribution to laying the foundation for launching a comprehensive agenda on the future at the United Nations climate change conference in Bali in December.

Now, these are encouraging signs that countries are willing to move forward with a renewed sense of urgency. And important examples of this are Brazil and South Africa, which in the negotiations have been calling for an end to informal talks and the beginning of formal negotiations on a long-term climate change regime. Now, why this need to move forward with such urgency? Well, let me mention a couple of issues here. The first one relates to access of energy, which is one of the overriding developmental concerns of developing countries since economic growth demands increased energy supply.

Secondly, energy is crucial for economic development. In many of the least developed countries and small island developing states energy services fail to meet the needs of the poor; 1.6 billion people in developing countries still do not have access to modern energy services, and 2.4 billion people still rely on unsustainable traditional fuels for their cooking and heating needs.

Thirdly, according to the reference scenario of the International Energy Agency global energy demand will grow by 60 percent by 2030. In the period up to 2030 the energy supply infrastructure worldwide will require a total investment of $20 trillion, with about half of that in the developing world. A substantial proportion of global energy investment is required simply to maintain the present level of supply. Oil and gas wells are depleting, power stations are becoming obsolete, and transmission and distribution lines will need to be replaced. In total, 51 percent of investment in energy production will be needed simply to replace or maintain existing and future capacity. The remaining 49 percent will be in capacity to meet rising demand.

The way in which these energy needs are met has the potential to impact either positively or negatively on climate change and sustainable development goals. The challenge is for both national and international climate change policies and actions to play the determining role in the globally greening of energy supply and economic growth. Along with policies, shifts in investment and financial flows to more climate friendly and climate proved investments in energy are needed. Some 432 billion U.S. dollars is projected to be invested annually in the power sector. Of this amount $148 billion will be shifted to carbon dioxide capture and storage, renewables, nuclear energy, and hydro. Investments in fossil fuel supply is expected to continue to grow, but at a reduced rate. Or to put it simply, we will be spending, over the next 25 years, $20 trillion to supply the energy that is needed for economic growth. If we do that unwisely greenhouse gas emissions will go up by about 50 percent and if we spend it wisely emissions could go down by the 50 percent that the international scientific community is calling for.

Now, what is that scientific community telling us at the moment and in the context of its most recent report this year? First of all, that between 1970 and 2004 emissions of greenhouse gases have increased by no less than 70 percent. Secondly, that without concerted global action greenhouse gas emissions are projected to increase by between 25 and 90 percent by 2030, relative to the year 2000. And thirdly, that to abate this, trans-global emissions must peak and decline thereafter to meet any long-term greenhouse gas concentration stabilization level in the atmosphere. The lower the stabilization level that's chosen, the more quickly this peak and dip must then occur. According to the most stringent scenario of the Intergovernmental Panel on Climate Change, a long-term goal in line with the latest science would include, one, a peak in emissions in the next 10 to 15 years. Secondly, a decline of 50 percent over 2000 levels by the middle of the century, and this would stabilize emissions at around 450 parts per million of CO2 equivalents in the atmosphere and corresponds to about a 35 to 36 degree Fahrenheit rise in temperature.

The urgency of the situation, I believe, is driven home by the IPCC's projected effects and these include such issues as crop yield reduction in tropical areas, increased risks of hunger with perhaps half of the African population being confronted by water stress, and an increase of extinction of 20 to 30 percent of plants, animals, and species. Decisive action in the next decade can still avoid some of the most catastrophic scenarios the IPCC has forecast. A strong climate change framework needs to be in place by 2009 or 2010 in order to ensure that there is no gap between the end of the Kyoto Protocol's first commitment period and the entry into force of a new regime. And that is important for a number of reasons, including to give confidence to the carbon market that policies will continue to move forward. So to achieve all of that, I believe that a breakthrough in the form of a launch of a comprehensive agenda on the future is needed at the U.N. climate change conference in Bali.

So, that in Bali in December of this year governments decide to formally launch negotiations, that they agree the building blocks that those negotiations must focus on and that they set a deadline for 2009 or 2010 when those negotiations must be completed. That is the agenda that we have ahead of us and that is the agenda which we cannot achieve without the help and consensus of the United States and other countries from around the world. Thank you very much.

Carlos Pascual: Yvo, thank you very much. And let me call Harlan Watson to the podium. And Harlan, very excited to hear your perspective on how the US then fits into that wider picture.

Harlan Watson: OK, thank you very much, Carlos. Thank you all for coming. You can skip the title slide. There we go, and just go to the first.

What I want to do is to talk about what we intend to achieve next week here in Washington, next Thursday and Friday, which will be the first of what President Bush has proposed, a series of meetings of major economies. I was going to have a little background and set the stage, but that's obviously -- basically, there's a broad set of principles of course, which Yvo referred to here that we're particularly attracted to, but certainly I think as Carlos mentioned early on, the importance of addressing climate change, energy security, and really economic growth as a bundle, as a package.

As Jim Connaughton would say, if he was here, and I apologize for Jim, he had an urgent meeting this morning. As Jim would say, if you pull on one lever, it impacts one of the others. And so you really need to address these, obviously, as a package and certainly Yvo put up the importance of economic growth, the importance particularly in addressing the 1.6 billion people without access to modern energy services, the overriding priority, of course, that developing countries place upon poverty reduction and, of course, the importance actually of economic growth to developed countries also. Anyway, so you heard a few of the principals. They were essentially embodied as Yvo and others said, in the Gleneagles in 2005.

That dialogue of course has continued, most recently through last week in Berlin. And we report out to the G8 presidency in Japan next July. But we also had one of the things that perhaps did not get that much coverage here in United States was also that the 21 leaders of the Asia Pacific Economic Cooperation, APEC, also agreed two weeks ago in Sydney at the leaders' summit to a set of principles which actually echoed many of these same points. And I believe seven or eight of actually the major economies in that, that doesn't include of course China, Japan, the United States, Canada, and many of the others that will be involved in the major economies meeting, a very similar set of principles. And I think that obviously Yvo captured those very well. I think the basic set is very well recognized and I think, at this point, has a general endorsement by most of the major economies. Of course, it's going to be getting down to the details of course which will get tricky.

Anyway, let me go on to the next slide please. Let me talk then about what we intend on hopefully accomplishing over -- beginning with the meetings next week and then continuing on throughout the 2008 timeframe. Again, as Jim Connaughton would say, we're getting beyond I think the conceptual 100,000 foot level and want to get down into a kind of roll-up-your-sleeves stage. And so we really want to kind of get away from the dialogue. Dialogue is nice, but we really want to get down and drill down and see how we can really construct an architecture for what happens after the first commitment period of Kyoto ends in 2012. And, again, how to do that in the context of an agreement under the United Nations Framework Convention on Climate Change. We will have major economies next week and they include the list in there.

So we have a group of 17 economies with the United States included, and plus the United Nations will also be represented. One of the things we want to do is to launch a process into establishing a long-term global goal for reducing emissions. You've heard the figures out there. The challenge is daunting. If you just do the arithmetic of what's contained in article 2 of the convention itself, the ultimate objective of the convention is to stabilize atmospheric greenhouse gases in the atmosphere. And, of course, that's daunting. If you just do the arithmetic, it's on the order of 50 to 60 percent is going to be required for that. And, of course, the pace and timing of that, of course, and the ability to sustain economic growth, prevent dangerous asporogenic interference with the climate and so on is going to be a great challenge.

Now, and of course as Yvo mentioned in his talk, three have proposed long-term targets; the E.U., Canada and Japan are roughly talking about 50 percent, an aspirational goal of 50 percent reduction by mid-century, by 2050. And we will be considering those in this context. In my note I believe that the U.K. is actually talking about actually putting it into law a requirement that the U.K. reduce emissions by 60 percent by mid-century. Now, some of the countries in this group, of course have committed in principle to try to reach an agreement or a consensus on a long-term goal and some have not. And I don't want to single out who has not, but all have agreed to at least discuss the issue. And that may not seem like much, but I think it really is a big deal that actually the participants have agreed to consider this. Secondly, we're going to try to flesh out the current situation on national strategies for addressing greenhouse gases and improving energy security with a view towards shaping national portfolios of action post 2012.

Right now, of course, the European Union, Canada, United States, Australia, and others have already begun to define post-2012 national policies. What we're talking about then is what we need to do in the midterm, sort of the 2020, the 2030 timeframe. Yvo did mention any offer from the E.U. And then we need to design that at the national level because each of the nations, of course, each of the major economies in this process does have a different national circumstance. The effort here then will be the recognition that we expect. Those strategies would include binding elements certainly, such as in the United States we have mandatory fuel economy standards. We have, of course, mandatory renewable fuel standards, both at the federal level and many of the states. But it also would include many other features, including incentives, technology partnerships, and other hallmarks of cooperative action, such as voluntary programs which Japan has, the Top Runner program and things like climate leaders, for example, in the United States.

We then intend to focus on, if I could have been next slide please, we then hope to focus on key sectors in technology areas of priority. Much of the future growth, of course, in emissions is going to come from the power generation sector, particularly from coal-fired generation. And probably the second most amount that's projected is the use of petroleum in transportation. So we really want to hone in on the low-carbon fossil generation and particularly the carbon capture and storage issue of, again, vehicle and fuel technology. The third area of course is important and this has begun to become addressed in the UNFCCC discussions, is hit the avoided deforestation in developing countries. And, of course, the whole bundle of the land-use change, including forestry and Ag is about 20 to 25 percent of emissions. So that does need to be addressed.

Then we want to look at how do we really accelerate market penetration of existing technologies, energy efficiency technologies, nuclear, solar, wind, and so on. We also want to put particular interest on technology development and transfer. We certainly think between the figures, I think at least be IEA figures for R&D, global energy R&D, in any case, I believe that Japan and the United States account for well over half of the current R&D, energy R&D, that occurs in the globe. And that actually, globally, or at least within the IEA countries this amount has actually been going down in real terms.

We think it's going to take a significant increase and so one of the things that we will certainly want to promote is the increase in this funding, both at the national level and then cooperative. Of course, one of the easiest things to do to accelerate the transfer of the existing clean energy technologies is to eliminate tariffs and other non-tariff barriers to clean energy and environment, environmental goods and services. This is long agreed to be addressed within a [unintelligible] round. It's reputedly to be in place, both in the G8 context and actually in APEC two weeks ago. And we hope that we'll have some movement on that by the end of 2007. Obviously this is going to be a difficult issue, but we really think that we're inhibiting the flow of billions of dollars in clean energy technology. And of course we do want, as President Bush mentioned in his May 31 speech, he really wants to launch a global effort on examining how we share government development in known technologies at either low or no cost.

This is a particularly important issue to developing countries, the point of discussion, many discussions within the Framework Convention. We hope to move on that. And then of course addressing the energy efficiency, which has so much near-term potential, again, through enhancing new partnerships among the major economies. Finance, of course, is also a key, another cross cutting issue. I might mention technologies are not only important for mitigation, but also for adaptation. And, of course, finance is a very important component, the emphasis, and again very much a cross cutting issue, again, an intense topic of discussion within the UNFCCC.

And, again, we want to focus on the existing government and private resources and how we might best leverage these and also consider new low-cost capital sources to finance investment in transformational technologies and engaging development banks, our own OPEC here in the U.S. and so on. And then that rather mundane topic, of course, of harmonizing really emissions monitoring systems, is very good, I would say at the national level. But when you, again, start drilling down to the entity wide level and really see how people do things, there are some significant differences. And so we really think it's important to try to harmonize these accounting systems so they can really determine if we're making progress.

May I have the next slide please? Of course, the question has arisen again and again on how this all fits into the UNFCCC agenda. Is this competing? And the answer is absolutely not. And of course the G8 leaders themselves are very much committed as in paragraph 53 of the Heiligendamm leaders' statement, to reach an agreement by the end of 2008 and bring that to UNFCCC to forge an agreement, hopefully, in 2009. But we do hope to report out on at least the initial meeting. And I might say in an initial meeting we're not going to solve all these issues obviously. What we want to do is to set up processes. We want to set up work teams composed of -- some of the major economies to really drill down into these areas. And, of course, much of what we're doing here, much of the discussion is going to reinforce existing UNFCCC agenda items. And one of the things we're not doing, we are very focused on adaptation in the major economy's process. But, of course, the financing issues I believe are going to certainly be important in addressing adaptation. But we also want to hopefully see accelerated progress within the discussions, which will occur in Bali. Of course, we are addressing development and transfer of technologies, again, a major topic in discussion, the deforestation issue and reducing those emissions in developing countries and the whole topic of capacity building. And I think that's the last one. Yes, that's the last one. So anyway I will stop there, be happy, again, to take any questions you have on this and thank you very much for this opportunity.

Thank you.

Carlos Pascual: Harlan, thank you. That was very helpful in understanding what your agenda is this next week and how it fits in the broader UNFCCC framework. And let me ask my colleague here at Brookings, David Sandalow, to come and comment on these and to provide his own thoughts.

David Sandalow: Thank you Carlos and thank you Yvo and Harlan. Working on global warming can be a pretty sobering experience sometimes. So when I go home my favorite magazine is the Funny Times. If you don't get the Funny Times, I recommend subscribing to it. It's a monthly anthology of humor and it had an article in the recently about obvious headlines. For example, "Man Killed, Police Suspect Homicide." "Police Raid Gun Shop; Find Weapons." "Larger Kangaroos Jumped Farther Study Finds." My favorite is "Prostrate Cancer More Common in Men," and "Islamic Center Has Muslim Ties." So one obvious headline over the course of the past decade has been "Last Year Set Temperature Records." Just this morning another story that may strike many as obvious that they've seen before, "Arctic Ice Receding at Record Levels."

Ladies and gentlemen, we face a climate crisis. It is unprecedented in the nature of human history. It will require, as Strobe has already said, unprecedented amounts of cooperation in order to solve. It will require all of us to draw both upon new forms of analysis and new forms of cooperation and new forms of goodwill.

I would throw out just quickly two principles, it seems to me, we must follow in the decades ahead as we work to solve this problem. And first is that we must use all available tools. We must use all available tools. This problem is so far reaching, so broad-based we don't have the luxury of relying simply on one category of solutions. We must try many things. And there's a lot of different ways that one could slice this, but it seems to me we must, for example, rely upon individual action. And there's been an outpouring of attempts by individuals over the course of the past several years, I know in this country and in others, to figure out what they can do to help solve this problem and that's going to be an important part of the solution.

We have to rely on corporate action too. And there's been the same thing, an outpouring of companies looking at new ways that they can make money by helping to engage in solving the climate problem, both by cutting costs and by finding new market opportunities. We're going to need to rely on national level action. And I believe that climate change policy begins at home and that in order to solve this problem national governments must lead. And we've already seen in some countries around the world has been an essential part of the solution and it's going to continue to be.

And we're going to need to rely on international action. Obviously, global warming is a global problem and different forms of international cooperation are going to be required. So we must use all available tools. I also think as a second principle we must learn from experience. It would be shocking if the first efforts to solve this problem were perfect and completely successful. And as somebody who has now been to the Kyoto negotiating process, let me say that one wasn't, nor will future ones be. And it seems to me that the goal of all of us should be not to get into debates about what went before, but to critically analyze what went before. What were its strengths? What were its weaknesses? Learn from the strengths and weaknesses and apply those in future settings. So I'd say must use all available tools and learning from experience are key.

Now, last year this month Sir Richard Branson stood on stage in New York with Bill Clinton and announced that he, Sir Richard, was going to pledge all of the profits from several of his businesses over the course of the next decade to investment in renewable energy for the years ahead. Sir Richard described how he came to this idea after a discussion with Al Gore who came to him and said, "Sir Richard, you're a global leader on this problem and you can help make a difference." And he was motivated to actually decide upon his course of action by the opportunity to announce it on stage with Bill Clinton at the Clinton Global Initiative. That announcement was just one of scores of announcements made at the Clinton Global Initiative meeting last year, people who came together, partnerships that were formed to help solve the climate problem. And next Wednesday, in New York, the curtain will go up on the third annual meeting of the Clinton Global Initiative and I expect more announcements.

I've been working over the course of the past several months with scores, again, of companies, NGOs, and others, some of whom have come to me, just last week someone came and said, "Our CEO left last year's meeting and said we just made a commitment that I think makes a difference. Let's do something bigger and bolder next year. What could we do?" And those types of dialogs have gone on scores if not hundreds of times around the world and I think we're going to have some exciting announcements related to energy efficiency, related to renewable energy, related to public education, and others. And I think this is kind of a big, high profile example of a trend that is fundamental, which is the engagement of different types of civil society in solving this problem. And in many ways, if you look back to Rio, Rio was a somewhat path-breaking way of engaging civil society in the solution to a global problem. And that, in the 21st century, has continued to evolve.

And we have, for example, at the Clinton Global Initiative we have a dozen or more heads of state, we have CEOs, we have NGOs of all different kinds, we have media coming together to solve this problem in a 21st-century type of format. And I think as we look at all available tools this is exactly the type of thing we need to do. Our sessions will be live web casts. This is, by the way, it is a nonpartisan event. Obviously Bill Clinton is a Democrat. Laura Bush opened our conference last year. This year we will have a plenary session where Secretary of the Treasury, Hank Paulson, will speak. So this is an effort to bring in everybody to help solve problems.

And in addition to global warming at our conference, by the way, we also take on the problems of poverty, health, and education. Another example of this type of engagement by civil society has been a global leaders process pulled together by the Club of Madrid and the United Nations Foundation, which has an excellent set of recommendations for how to go forward in the international negotiating process. And, I believe, copies of their report are out on the back table and I recommend it to you. So there are two other meetings happening next week. There's the -- and just some quick words about those, because it seems to me that all three global meetings next week include elements that are important as we shape a response to climate change. Starting on Monday we'll have the high-level session convened by the Secretary General of the United Nations.

This is an unprecedented gathering of world leaders to talk about this issue. Yvo can tell us, and others here, the exact count. Last I knew, I believe, it was 75 or over, 75 or more world leaders were coming together to talk about this issue. And among the reasons this is important is because global warming is such a cross cutting issue. When I worked at the White House one of the jobs of a White House staffer is to bring agencies together when they disagree and try to resolve differences on issues. And on some issues you'd call a meeting and two or three agencies would show up.

When we called the meeting on global warming everybody showed up because everybody has a stake in the global warming issue. So obviously, the EPA, the Department of Commerce, the trade representatives, the State Department, the Department of Agriculture, the Department of Labor, the Department of Treasury, I mean just think about it, the list goes on. Everybody has a stake in this issue. And one of the weaknesses, it seems to me, of the multilateral global warming negotiation has been that they are mainly attended by environment ministers and in many countries environment ministers lack authority. And so the engagement of heads of state in solving this problem is absolutely essential. And what the secretary general has done in convening this meeting is an incredibly important contribution. And at the dawn of his tenure as secretary general he's making an important contribution on this issue.

I believe that President Bush's meeting next week also contains a very important positive element which is the gathering of a subset of key countries to work on this issue. Getting major emitters together in the room to talk about this is a good thing. Tony Blair has done this before and I think the international trade liberalization regime proceeded, over the course of 50 years, with bilateral agreements, regional agreements, building up to a global agreement, and the climate change regime, it seems to me, can learn from that. And it is a good thing to get countries talking to each other. And the U.S. and China account for more than 40, 45 percent of global emissions. If the U.S. and China are talking to each other and entering in some type of agreement that can make a difference. And I think gathering subsets of countries together is highly desirable.

I think the focus on a long-term goal is useful as well, so long as it doesn't distract from the focus on short or medium-term action. It is very helpful to know in a broad sense what type of temperature targets we're shooting for or what type of concentration targets we're shooting for. And it's a discussion worth having. Having been involved in these discussions for many years the potential for that conversation going on at length is considerable. And so I would commend that conversation to negotiators and others everywhere, so long as it does not distract from the critical effort to reduce emissions in the short term. Although I think there are some very important positive elements in the Bush meeting, there is a curious -- in some ways I think a curious omission in the agenda, which is the lack of attention to the carbon markets.

The carbon markets have been a critical element to solving this problem. And, of course, the irony here is that the carbon markets, you can in some sense trace the actual lineage of the carbon markets back to the first President Bush and some of his administration's embracing of emissions trading.

Today I think it continues to be unfortunate that this issue is not being embraced. More fundamentally, the future of the global climate regime will be shaped in 2009 and beyond. I think the Bush meetings can have an influence to the extent that they genuinely engage and persuade the players who will be here beyond 2009. And so I think we'll see, over the course of these conversations, the extent to which that happens. So I have a dream that someday an obvious headline will be "Emissions Dropping for the 10th Year in a Row." Happy to answer any questions. Thanks.

[End of Audio]

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