----- UNCLA$SIFIED U S Department of State Case No F-2012-40055 Doc No C05574600 Date 03 24 2015 -·------- - - -- ·- - n b RELEASED IN FULL United States Department of State 11 Bureau of Oceans and International Environmental and Scientific Affairs • t _ _ ·-q·' · t -- 1 Washington D C 20520 D' - h t i e- 1 ' t l l 1 · -1 - i 1- _fc c · i o V _ l JI c · - ·· • f i L -h__ • · · - · •' · · ·· - ' · - - · _ - · j -- o LJ c _ s JC't-' ' - r f ll -« · July 15 1997 REVIEW AUTHORITY Alan Flanigan Senior Reviewer TO - BEST COPY AVAILABLE Distribution vef O'' '- FROM OES - Rafe Pome r ance SUBJECT Principals' Meeting Developing Country Paper Attached please find a draft paper on developing countries for consideration at the principals' meeting this Friday We have scheduled a meeting on Wednesday July 16 at the State Department from noon to 1 00 p m in Room 7835 to discuss it For entry into the building please contact Ms Debra Clark-Ware on 202-647-2232 If you are able to attend the meeting we ask that you send us your comments no later than COB tomorrow July 16 1997 The fax number is 202-647-0217 If you · have any questions about the paper please contact Dr Jonathan Pershing on 202-6474069 I Thank you for your attention to this matter --· - C---- UNCLASSIFIED U S Department of State Case No F-2012-40055 Doc No C05574600 Date 03 24 2015 UNCLASSIFIED U S Department of State Case No F-2012-40055 Doc No C05574600 Date 03 24 2015 DISTRIBUTION · Organization ·Name· Fai · · · ' - Pii • _ --·· State Eileen Cla uSsen Rafe Pomerance 647-0217 Commerce OSTP Jeffrey Hunker 482-4636 456--6025 CEA 395-6958 Jeff Frankel 395-6947 NEC Mark Mazur Treasury Justice Robert Gillingham 395-6809 622-2633 Lois Schiffer 514-0557 Interior NOAA ·oMB __ Rosina Bierbaum Alicia Munnell USTR USDA DOE EPA fun Simon Brooks Yeager Brooke Shearer TenyGarcia T J Glauthier Josh Gottbaum Jennifer Haverkamp Charlie Rawls DanReicher Mark Chupka Joe Romm 208-4561 208-1873 482-6318 395-4639 395·1005 395-457 720-5437 586-0148 586-0861 647-1554 647-2232 482 -6055 456-6077 395-5036 395-5046 395-5147 622-2220 514-2701 208-6182 208-6291 482-3567 395-4561 395-3060 395-7320 720-6158 586-9500 586-5523 586-9260 586-9220 260-5155 260-7400 David Gar iiner Frank Kruesi 260-0275 366·7127 Pete Jordan Marty Spitzer 456-9500 408-6839 260-4332 366 -4544 · 456-9513 408-5296 343 1162 343-1060 647-3028 647-1827 Mary Nichols David Doniger DOT oVP· PCSD Christine Ervin CCTF DirkForrister S veSeidel USAID Sally Shelto11·Colby David Hales 703-875-4639 703-875-4205 DOL Ed Montogmery 219-4902 DOD Sherri Goodman · 219-5108 703-695-6639 703-693-7011 ··•··· · _ ·· UNCLASSIFIED U S Department of State Case No F-2012-40055 Doc No C05574600 Date 03 24 2015 UN-CLASSIFIED U S Department of State Case No F-2012-40055 Doc No C05574605 Date 03 24 2015 RELEASED IN FULL REVIEW AUTHORITY Alan Flanigan Senior Reviewer DEVELOPING COUNTRY PAPER DRAFT 7 15 97 Greenhouse gases are emitted by all countries in varying quantit es The· United States is the world's largest emitter with approximately 22 percent of the global total -CoJ fctively the developed countries of the world including the countries· With e oiiorrii s· in tr siti n -· Russia NIS and Eastern Europe account for more than 60 percent of the global total However developing country emissions are growing much more rapidly than those in the industrialized world within the next 30 years developing country emissions will comprise more than half of the world's aggregate emissions although they will account for 80 percent of global population While compelling in suggesting the need for global action these statistics obscure a critical point per capita emission levels vary widely as do national totals and developing countries have the lowest levels Currently global average emissions ofC02 are approximately 4 tons per person this contrasts with emissions of nearly 20 tons per person in the United States 16 tons per person in the OECD and less than two tons per person in most of the developing world Furthermore the contribution to global conc ntrations of greenhouse gases is the result of cumulativ emissions over time ·When considered from this vantage North America is responsible for 35 percent of the increase in ambient concentrations of C02 since 1800 Western Europe 26 percent the USSRJFSU and Eastern Europe nearly 20 percent the combined total of the developing countries is only about 15 percent see figures charts __ Recogni z ing· both the unequal contribution to global emissions and the unequal capacity to develop and implement policies and measures to reduce emissions the United Nations Framework Convention on Climate Change FCCC established differentiated levels of commitments for developed and devek ping countries It called upon developed countries to take the lead in _addressing the climate change problem and to aim to return emissions to 1990 levels it provided no similar aim for $e developing country Parties Similarly in agreeing on the · mandate for negotiations of a next step the Parties recognized that developed countries had failed to ··iead over the three years after the FCCC was signed in Rio in 1992 a period during which developed country emissions continued to rise The next step therefore focused on a more concerted effort by developed countries toward reducing the rising trend in 'atmospheric concentrations Thus while calling on developed countries to set quantified emissions limitation and reductions objectives and to elaborate policies and measures to reduce emissions ·the mandate specifically stated that there would be no new commitments for developing countries and that they w mld instead continue to advance the implementation offu eir existllig commitments U S Protocol Proposal Recognizing the need for a solution that involves all countries yet agreeing that the Berlin Mandate appropriately acknowledges valid differences between Parties -the U S· draft · ·· protocol proposal sought to develop a set of appropriate elements for a developing country strategy It included three elements 1 an elaboration of the existing commitments defining what would be meant by ••continuing to advance the implementation of existing commitments 2 establishing a new category Annex B of commi ents for the most advanced developing countries providing a halfway house between a limited obligation and the more extensive obligations agreed y the OECD members and 3 calling for the negotiation of a new · _ UNCLASSIFIED U S Department of State Case No F-2012-40055 Doc No C05574605 Date 03 24 2015 UNCLASSIFIED U S Department of State Case No F-2012-40055 Doc No C05574605 Date 03 24 2015 DRAFT 2 7 15 97 I __ agreement by 2005 which would include legally binding emissions targets for all countries including developing countries the evolution concept The first element contained three separate components including a requirement to annually inventory and report on emissions and actions taken to reduce emissions 2 taking no regrets actions actions which would benefit the climate sy steqi but whicllJnight be taken for other economic or envfronmental reasons and 3 'caiLrng f9 aii in ptli ew pr05 ess so that the actions taken by developing countries could ti assessed by aneutral group and examined for adequacy While the first of pie U S elements is considered within the ambit of the Berlin Mandate by nearly all Parties to the FCCC to date most other countries have argued that the other two i e Annex B and evolution are beyond its scope The U s - has been urged to drop its proposal for a new annex with many countries suggesting that the annex concept be revisited in light of the revision to the existing groupings in the Convention scheduled for 1998 We have also been urged to drop our proposal for evolution in favor of a separate agreement at some future date · Incentives for Developing Country Participation While a combination of peer pressure and self-interest may guide the willingness of developing countries to commit themselves to legally binding obligations to reduce emissions a series of incentives may facilitate this choice To this end the Administration has established a number of elements in its developing country approach bot h within the draft protocol proposal - but more significantly outside the agreement These include a strong bilateral assistance program an ongoing commitment to providing a contribution to the Global Environment Facility designed to support the incremental global benefit of development projects calls for reorienting the loan guidelines for the international lending institutions and the establishment of a proposal for joint implementation which would encourage the private sector to undertake projects in developing countries to reduce emissions and claim credit for the·se reductions against a domestic obligation The first of these announced in the President's New York statement at the U N Special Session on the Environment establishes a $1 billion five-year package to help developing countries plot climate friendly path to development The primary component of this initiative will be a five year minimum of at least $150 million per year in bilateral assistance for climate related programs and the potential to use development credits dedicated to climate friendly investment projects The initiative will also include a $25 million 5-yefil interagency program to assist developing countries to meet the terms of the FCCC A significant focus in this initiative will be on using credit tools to induce greater U S private sector volvement in transferring climate friendly technologies a Our financial contribution to the GEF was one of the original incentives to developing countries to support the FCCC - and to take action to mitigate climate change However while the U S had pledged a contribution of $430 million to the GEF over a three year period Congressional funding has lagged considerably FY96 contributions were at $35 million rather than $110 million and FY97 prospects are just about as bleak To date we have no proposals within the Administration to cover our previous pledged amounts In combination with the steadily declining percentage of the U S budget that is directed toward development assistance the reduced U S contribution to the GEF will make any subsequent calls for developing country action much more difficult to sustain · UNCLASSIFIED U S Department of State Case No F-2012-40055 Doc No C05574605 Date 03 24 2015 UNCLASSIFIED U S Department of State Case No F-2012-40055 Doc No C05574605 Date 03 24 2015 DRAFT ·- _ 7 15 97 3 One of the most significant ele ments of the U S approach to encourage developing country participation is joint implementation JI Similar to the concept of emissions trading JI allows countries to offset emissions at home through projects undertaken elsewhere However unlike the situation ill emissions trading under a JI regime projects could be undertaken in developing countries - countries without legally binding emissions budgets 1Jie analytic work performed to date suggests that allowing JI could reduce sts Y1 i$i J ·the tf S sul fstantially Emissions trading could reduce costs by as much as 4o percent · jJ ·could· rediic psts o J another 50% - or by as much as 80 percent below costs in systems which did not allow trading or JI Developing countries see enormous benefits as well in the form of technology transfer and private sector investment flows In spite of the potential benefits significant opposition remains developing countries are concerned at the loss of control ov r domestic emissions environmentalists are concerned that it may be impossible to measure project based emission reductions and some in the private sector and Congress have suggested that JI will result in significant transfers of wealth overseas The International Reception Views on Developing Countries by Negotiating Blocs Other countries have had a varied reaction to the U S proposals on developing country engagement in the process The following blocs are active in the negotiations and provide a sense of i he current dynamics in the process _ European Union While calling for an extremely aggressive commitment from developed countries 15 percent reduction in emissions below 1990 levels by 2010 the EU has proposed only very soft commitments on developing countries They have supported U S proposals for elaborating commitments in the FCCC Article 4 1 and have proposed that Mexico and Korea commit to the same obligations as those in the OECD not too far removed in substance from the U S Annex B but are not prepared to accept the U S language on Evolution adopted as part of the Kyoto agreement They do not support JI with developing countries Non-EU OECD Members principally Japan Canada Australia This group of countries broadly supports including developing country obligations under the Kyoto Agreement Australia and Canada are the most vocal in support Of action while Japan as host of the December session is concerned that an aggressive approach would potentially derail the negoti tions As nearly all countries in this bloc have extensive competitive trade outside of the OECD they are more aggressive in demanding developing country action For comparative purposes nearly 90 percent of EU trade is within the OECD while for AustrB lia it is only about 50 percent With the exception of Japan this group supports JI Big Developing Countries China India and Brazil These three countries are the primary drivers of the developing country position - and some of the world's largest emitters China is second after the U S and India is number six These countries have taken a standard north south line arguing that global warming has been caused by the developed world and calling upon the industrialized countries to pay for the clean-up They claim that when developing countries have incom s and per capita en$sions equal to those of North they will then participate in the clean up effort In spite of their often strident public rhetoric these countries particularly China and Brazil have shown a willingness to constructively engage on this issue on a bilateral basis They have active domestic climate change mitigation efforts and have privately indicated a support for many elements of the U S proposal However they have all opposed JI the '-· OPEC Well organized in the climate negotiations the OPEC countries have been led by Saudi Arabia and Nigeria and advocate positions designed to slow or block the negotiations UNCLASSIFIED U S Department of State Case No F-2012-40055 Doc No C05574605 Date 03 24 2015 UNCLASSIFIED U S Department of State Case No F-2012-40055 Doc No C05574605 Date 03 24 2015 D R A F T 7 15 97 4 _ - These countries have strongly urged 1 that developing countries should not have to act now recognizing that this is antithetic to the U S view and will therefore help derail negotiations and 2 that industrialized countries should compensate developing countries that might be affected by any action taken in industrialized countries to reduce emissions principally noting that reduction in oil revenues should be compensated This group has l o cr e ited procedural barriers to reaching agreement including blocking t J e·ad ption· f ies of procedure this last tactic may require any agreement be by consensus in Kyoto aiid ·anow OPEC-coIDJ tri b · block at the end Small Island States A group of37 small island states have banded together to create an alliance AOSIS that seeks to balance OPEC's influence Largely composed of member countries with low lying territory which will be gradually inundated by climate- associated sea level rise these countries have pushed an aggressive next steps to combat the problem - calling for a 20 percent reduction in industrialized country emissions below 1990 levels by the year 2005 Unfortunately despite their convictions they are often quelled l y the big developing countries and by OPECso that their moral righteousness is often muted in public debates Thus in spite of a recognition that to solve the problem all countries must participate the AOSIS countries have been reluctant to support U S calls for developing country action their proposal omits any mention of any developing country commitments to be undertaken as part of the Kyoto agreement and they opposen NIS FSU While active in some elements of the negotiations e g emissions trading this group has been relatively silent on the issue of developing countries Russia has a proposal similar to that of the U S on evolution - but they have not been particularly vocal on this position They have supported n _ Other Countries Playing mostly lesser roles in the negotiating proces s the influence of these countries is more a function of individual personalities than institutional positions These countries may be individually persuade¢ by elements of the U S position and will occasionally voice public support for these but most of the positions are driven by internal G-77 politics largely dominated by the more organized OPEC group or by the large and dominant big countries The formal G-77 position on developing country obligations has been to deny any obligation to act under the Kyoto agreement to insist that developed coi intries transfer to developing countries appropriate technologies and resources and Jo call for compensation and to date to oppose n The Domestic Debate Congress the Private Sector and the Environmental Community While for the majority of the deliberations under the FCC C the issue of developing countries had taken a back seat to the establishment of a target and timetable if has more recently moved to the fore For most observers the issue seems to have been created as a red herring to derail the negotiating process Certain industry lobbies opposed to any action to address climate· change have parlayed their message on developing countries into Congressional objections fullpage newspaper advertisements and international consternation ___ Those concerned with developing country participation have pointed to two principal ·· · rationales for action I that the problem cannot ultimately be solved without developing country participation and 2 that any action we-take if not balanced by equal developing country commitments will have an immediate significant and negative impact on our competitiveness While there is some grain of truth in both arguments neither is fully supported by an analysis of the U S proposal On the first the U S draft protocol language does not envision a lengthy gap between develOped and developing country commitments and recognizes UNCLASSIFIED U S Department of State Case No F-2012-40055 Doc No C05574605 Date 03 24 2015 UNCLASSIFIED U S Department of State Case No F-2012-40055 Doc No C05574605 Date 03 24 2015 DRAFT 7 15 97 -- - 5 that the international negotiations at this stage will never stand for a concurrent commitment in light of the enormous disparity in per capita emissions per capita income and historic contribution to the problem On the latter the level of action likely to be called is anticipated to be so low as to be oflimited value in reducing global emissions - but also too low to · significantly effect international competitiveness While more stringent reductioQ might have thiS effect any such future reduction obligations woul JJe ticipated to· e o er al ountri s for the e o h · I fui e rs d d- ny that t · · Notwithstanding arguments opponents tr'eati developing country issue is adequate reason not to act now Senator Robert Byrd with more than 60 co-sponsors has proposed a sense of the Senate resolution which warns the Administration that the Senate will not provide advice and consent to ratification of any agreement that does not call for and adopt'new scheduled developing country commitments in the same time period as those adopted by developed countries The Global Climate Coalition made up of the coal companies the coal-fired utilities and many in the manufacturillg sector has set forward a similar - albeit more rhetorically strident- position They have actively sought to delay postpone or derail negations since they began The environmental commun ity strongly supportive of the developed countries acting first has yet to make a clear and cogent case for this view- and has been unable to persuade many in the Senate of its validity Getting to Yes Agreement in Kyoto '---• An agreement in Kyoto that accommodates the current U S developing country position which while considerably more stringent than that of any other country is substantially less stringent than that demanded by the Senate will be extremely difficult to achieve The next scheduled negotiations July 28-August 7 will not resolve any of the developing country questions absent some change in the U S position However we can anticipate that the meeting will be a difficult one in which U S intent to seriously address the climate change problem will be fundamentally questioned Reports similar to thos e that surrounded the Denver Summit and the New York UN session will be repeated To avoid another repetition in October at the last officials level negotiations prior to the Kyoto meeting a number of steps should be taken although even these do not guarantee success in December 1 It will be necessary to continue an intensive diplomatic campaign to convince other c_Quntries of the appropriateness of our views - and the fact that we'will walk away from an agreement which does not adequately cover our developing country concerns Such an effort must proceed at all levels from the staff level to the cabinet to be successful it must ultimat ly include both the President and Vice President Calls to key players in each of the international blocs will be necessary to persuade - and ultimately to exhort- to join in on the U S position A possible pitfall here Is that some developing countries may not want an agreement yet- not only OPEC but China may choose to let us take the heat for derailing negotiations 2 It will be necessary to reach a domestic agreement on the level and timeframe of a target which would be acceptable to·us- and it must be sufficiently progressive to convince other countries we are serious about the problem - and therefore entitled to demand more from developing countries A signal of the directi which we intend to move must be given as sooi i as possible If no signal is pro ed b at the next ne oti ting session will _ begm to see elements· of the U S pos1tion-particular y our developmg coun positions removed from the tabl fl 3 It will be necessary to compromise with others -particularly de doping countries This will necessitate giving up or postponing some of our most cherished ideas We may need to be UNCLASSIFIED U S Department of State Case No F-2012-40055 Doc No C05574605 Date 03 24 2015 UNCLAS SIFIED U S Department of State Case No F-2012-40055 Doc No C05574605 Date 03 24 2015 DRAFT 7 15 97 6 · _ flexible in the timing of various actions e g JI might be postponed until 2005 in orCler to be included in the agreement or we might delay beyond 2005 in agreeing on a new legal instrument It will be difficult to know where the final deal is until the end of the dayDecember in Kyoto 4 Developing countries must be mollified This will be particularly Q i ficult in 1ight of the U S inability to pay our pledged contribution to the Gloq L J lVir npi nt fa·c il tl ' fK rs ng_ developing ountries that they must engage in next steps while· af the saine time' denying them financial support to help them undertake these steps will be nearly impossible An aggressive effort must be mounted to support the GEF replenishment and to seek Congressional support for paying off our earlier pledge The President's announcement of the $ l billion initiative inay also be viewed with considerable skepticism internationally- as it iargely involves reprogramming of existing funds a factor which will not be well-received by many in the developing country connnunity and the fact that we do not yet have a clear view on how the funds will be distributed However properly packaged it could provide an enormous boost 5 Of the U S developing country proposals the most difficult to obtain will be agreement on evolution the commitment from all parties to negotiate a next step with legally binding · obligations including for developing countries by 2005 Nearly as hard will be getting agreement for the creation of a new category to allow countries to graduate from the ranks of developing to developed To get the international agreement will ultimately require high level contact and arm-twisting no amount of technical or scientific support for the U S position will be persuasive Given the enormous importance attach ed to the developing country c ommitments in Kyoto decisions will need to be made probably at the cabinet level on what negotiating flexibility might be given to the U S delegation on these issues '- _ file H briefers cabinet briefing papers developing country paper doc _ __ UNCLASSIFIED U S Department of State Case No F-2012-40055 Doc No C05574605 Date 03 24 2015