AUG-06-1999 16 17 202 647 0191 OES EGC UNCLASSIFIED Printed By Duncan R Marsh 07 26 99 09 21 25 AM BEUING7082 From MRN 7082 AMEMBASSY BEIJING ICNbrTED3481 Subjea EPA TECHNICAL TEAM VISIT TO CHINA 7 8-15 99 DatoA-lmo 260724ZJUL99 Precedence PRIORITY Cable Text ______________________ TED34B1 ACTION OES-01 INFO LOG-OO DODE-00 TkDE-00 NSAE-00 SP-00 G-00 AID-00 SRPP'OO IHR-00 NSCE-00 SSO-00 SAS-00 AMAD-01 EAP-01 10-00 NSF-01 SS-00 OlOW ACQ-01 EB-OO L-01 OIC-02 T-OO CIAE-00 E-00 ADS-00 PM-00 USIE-OO COME-OO UTfiD-OO M-00 PRS-00 EPAE-00 DINT-00 H-01 AC-01 ACE-00 PMB-00 P 260724Z JOT- 99 FK AMEMBASSY BEIJING TO SECSTATE WASHDC PRIORITY 5260 INFO HQEPA WASHDC PRIORITY AMCONSUL SHANGHAI PRIORITY AMCONSUL SHENYANG PRIORITY AMCONSUL GUANGZHOU PRIORITY AMCCaJSUL CHENGDU PRIORITY HQBPA WASHDC USDOE WASHDC UNCLAS SECTION 01 OF 03 BEIJING 007082 DEPT FOR OES DREIFSNYDER DMARSH E O 129S8 N A EPA FOR OIA MBAILEY AND OA WHHITE DOE FOR EE RDIXOM PE PTBENG FE DJUCKETT UNCIASSIFIED UNCDASSIFtEO BEIJING 01 OF 03 7083 USDOC FOR HBUFROUCHS TAGS SENV CH SUBJECT EPA technical TEAM VISIT TO CHINA 7 8-1S 99 1 THIS CABLE WAS DRAFTED BY THE DELEGATION- SUMMARY 2 THE US TECHNICAL TEAM VISIT JULY 8-15 1999 DISCUSSED FOUR ONGOING TECHNICAL COOPERATION PROJECTS AND POSSIBLE ADDITIONAL AREAS FOR TECHNICAL COOPERATION THE US PROPOSAL FOR A WORKSHOP ON PROJECT BASED CREDITING WAS REJECTED AGAIN THE TEAM BELIEVES UNCLASSIFIED 1 P 02 19 AUG-06-1999 16 17 OES EGC 202 647 0191 UNCLASSIFIED THAT SDPC CON3IDSRS ANY OFFICIAL COOPBRATIOW WITH THE US ON COM RELATED ISSUES TO BE A SIGSAL OF POLICY CHANGES FOR WHICH IT IS MOT YET PREPARED IH ADDITIOS NOW THAT WE HAVE A HrflH LEVEL bilateral statement of intent the ONGOING TECHNOLOGY COOPERATION PROJECT IS BEING SLOWED SIGNIFICANTLY AND MADE MORE COSTLY BY THE CHINESE SIDE AS A RESULT THE TECHNICAL TEAM WAS NOT ABLE TO agree WITH CHINESE COUNTERPARTS CW A WORKPLAN FOR THE NEXT YEAR'S WORK AND WILL HAVE TO CONTINUE NEGOTIATIONS VIA FAX AND EMAIL THE NATURAL GAS COOPERATIVE STUDY IS BEGINNING WITH A VERY SLOW START AND A REQUEST FROM CHINA FOR FAR MORE FUNDING THAN EPA BELIEVES IS NEEDED THIS WILL ALSO REQUIRE FURTHER NEGOTIATIONS FROM WASHINGTON BY PAX AND EMAIL 3 ECONOMIC AND ENVIRONMENTAL MODELING WORK AND THE PROJECT ON ASSESSMENT OF BENEFITS OF AIR POLLUTION AND PUBLIC HEALTH programs with the STATE ENVIRONMENTAL PROTECTION ADMINISTRATION SEPA ARE MOVING FORWARD CONSTRUCTIVELY THE TECHNICAL TEAM IS CONCERNED HOWEVER BY A PROPOSAL FROM SDPC TO ENTER INTO A MORE FORMAL STATEMENT OF INTENT ON THE ECONOMIC WORK BASED ON OTHER PROJECTS THIS WOULD LIKELY SLOW THE WORK AND RAISE THE COST SIGNIFICANTLY 4 SDPC APPEARS TO TAKE THE VIEW THAT ONCE PROJECTS ARE AGREED FORMALLY BETWEEN OUR GOVERNMENTS THEY BECOME EFFECTIVELY STATEMENTS OF CHINESE POLICY THEREFORE THEY ARE VERY CONCERNED ABOUT CONTROLLING AND PACING PROJECTS TO ENSURE THAT THEY DO NOT PRODUCE ANY RESULTS WHICH WOULD BE INCONSISTENT WITH CHINA'S POLICY POSITIONS- THIS PROBLEM IS MADE MORE DIFFICULT BY THE FACT THAT SDPC HAS A RELATIVELY SMALL STAFF 4 PEOPLE ON CLIMATE CHANGE WITH A GREAT DEAL OF OTHER WORK THE RESULT IS VERY SLOW PROGRESS ON CLIMATE CHANGE RELATED PROJECTS THIS MAY IMPROVE OVER TIME AS WE WORK THROUGH THE INITIAL STAGES OF THE TWO FORMAL PROJECTS BUT IS HOT CLEAR AS A RESULT THE USO MAY SEED TO BE VERY CAREFUL ABOUT PUSHING ADDITIONAL JOINT TECHNICAL PROJECTS ON CLIMATE CHANGE THROUGH OFFICIAL CHANNELS OPENING MEETING WITH SDPC JULY B 5 THE TECHNICAL TEAM VISIT BEGAN WITH AN OPENING MEETING WITH MADAM SON CUIHDA HR MA AIMIN AND MS LI LIYAN OF THE SDPC OFFICE OF NATIONAL COORDINATING COMMITTEE FOR CLIMATE CHANGE US PARTICIPANTS WERE PAUL SCHWENGELS AND RICHARD GARBACCIO USEPA ROBERT BOYNTON AND STANLEY WATT US EMBASSY RON BENIOFF AND DESHA LEM NATIONAL RENEWABLE ENERGY LABORATORY NREL JEFFREY LOGAN PACIFIC NORTHWEST NATIONAL LABORATORY PNNL AIMEE MCKANE LAWRENCE BERKELEY NATIONAL LABORATORY LBNL AND PETER KEHENY BURNS L ROE 6 THIS MEETING TOUCHED ON A RANGE OF CLIMATE CHANCE TECHNICAL COOPERATION PROJECTS BETWEEN EPA AND CHINA 1 THE CLEANER AIR AND CLEANER ENERGY TECHNOLOGY COOPERATION PROJECT 2 THE COOPERATIVE STUDY OF NATURAL GAS UTILIZATION IN CHINA 3 THE PROJECT TO ASSESS THE BENEFITS OF PROGRAMS TO REDUCE AIR POLLUTION AND PROTECT PUBLIC HEALTH 4 ONGOING COOPERATION OH ECONOMIC AND ENVIRONMENTAL MODELING 7 IN ADDITION THE US TEAM RAISED AGAIN THE POSSIBILITY OF JOINT METHODS FOR PROJECT BASED GHG ACCOUNTING AND FOREST PROJECTS FOR GHG REDUCTIONS TWO COOPERATIVE PROJECTS technical work on UNCLASSIFIED 2 P 03 19 AUG-06-1999 16 18 202 647 0191 □ES EGC UNCLASSIFIED HERE PROPOSED DURlNC ADMINISTRATOR BROWNER'S VISIT IN MARCH FOR POSSIBLE INITIATION AT THE CHINA-Ufi FORUM ON ENVIROMMSNT AMD development IH APRIL AFTER FAILURE TO ACHIEVE AGREEMENT ON SPECIFIC PROPOSALS ADMINISTRATOR BROWNER PROPOSED A TECHNICAL WORKSHOP TO EXPLORE POSSIBLE COOPERATIOM ON THESE SUBJECTS 8 THE SDPC PARTICIPANTS REJECTED THE IDEA OF A WORKSHOP ON PROJECT BASED CREDITING TOPICS MADAM SUN STATED THAT THE US AND CHINA HAVE LARGE DIFFERENCES IN POLICY POSITIONS REGARDING CDM AND OTHER CREDITING MECHANISMS AND WE ALREADY HAVE CHANNELS FOR DISCUSSION OF THESE ISSUES SHE DID NOT RECOGNIZE ANY DISTIMCTiaN BETWEEN TECHNICAL METHOOOLOGY WORK AND POLICY DISCUSSIONS SHE REFERRED TO THE ONGOING HIGH-LEVEL POLICY DIALOGUE AT THAI TIME SHE INDICATED THAT A MEETING MIGHT OCCUR BEIJING 02 OF 03 7082 USDOC FOR HEURRQUGHS TAGS SEMV CH SUBJECT EPA TECHNICAL TEAM VISIT TO CHINA 7 8-1S 99 1 THIS CABLE WAS DRAFTED BY THE DELEGATION ON JULY 19 NOTE THE MEETING TO WHICH SHE REFERRED WAS A VISIT BY STATE U S LOY TO BEIJING- THE VISIT HAS BEEN POSTPONDED TO THE FALL AND INDICATED THAT THIS AS A SUFFICIENT CHANNEL FOR DISCUSSIONS ON PROJECT BASED CREDITING ISSUES THE TEAM BELIEVES TKATIT MIGHT BE MORE PRODUCTIVE TO INITIATE PROJECT BAED METHODS WORK INFORMALLY WITH TECHNICAL IN6TITTIONS IN CHINA RATHER THAN ATTEMPTING TO PUSH AGEEMENT ON SUCH PROJECTS THROUGH OFFICIAL CHANNELS AT THIS TIME 9 IN ADITIOH SDPC PROPOSED THAT WE CONSIDER A FORMAL STTEMENT or INTENT TO COVER OUR WORK ON ECONOMIC AND ENVIRONMENTAL MODELING THE US DELEGATION AGREE TO CONSIDER THIS AMD RESPCEH LATER ANDCLEANER ENERGY TECHNOLOGY COOPERATION CACETC POJECT MEETINGS cleaner air 10 BEGINNING LATE MORNING JLY 8 AND CONTINUING THROUGH JULY 13 THESE MEETINGS INCLUDED TWO WITH SDPC AND A SERIES OF EXPERT MEETINGS ON SPECIFIC TECHNOLOGY AREAS THREE REPRESENTATIVES OF THE CANADIAN GOVERNMENT PARTICIPATED IN THESE HBSTINOS BASED ON THEIR INTEREST IN POSSIBLY JOINING THE PROJECT IN THE FUTURE ALL MEETINGS WERE ATTENDED BY AT LEAST ONE SDPC REPRESENTATIVE A NUMBER OF ADDITIONAL CHINESE AND US TECHNICAL EXPERTS AND INDUSTRY REPRESENTATIVES JOINED EACH EXPERT MEETING SEVERAL HORKPLANNING MEETINGS WERE ALSO HELD INCLUDING NREL TSINGKUA UNIVERSITY AND SDPC STAFFS 11 THERE WAS A GREAT DEAL OF GOOD TECHNICAL DISCUSSION IN THE EXPERT MEETINGS AND A HUMBER OF VALUABLE SUGGESTIONS HADE REGARDING BARRIERS TO TECHNOLOGY TRANSFER AND POSSIBLE APPROACHES to ADDRESS THESE BARRIERS 12 THE FINAL MEETING WITH SDPC WAS CHAIRED BY MR GAO GUANGSHENG DIRECTOR GENERAL OFFICE OF THE NATIONAL COORDINATION COMMITTEE FOR CLIMATE CHANGE NOW THAT WE HAVE A VERY HIGH LEVEL UNCLASSIFIED 3 P 04 19 AUG-06-1999 OES EGC 16 18 202 647 0191 UNCLASSIFIED FORMMx AGREEMENT ON THIS PROJECT SDPC IS TAKING A POSITION THAT RESULTS OF THE PROJECT REPRESENT GOVERNMENT POSITIONS AND THEREFORE SDPC MUST MAINTAIN CAREFUL CONTROL OF THE PROJECT AT EVERY STEP TO ENSURE THAT IT PRODUCES ONtV THOSE RESULTS WHICH ARE CONSISTENT WITH CHINESE POLICY POSITIONS ON TECHNOLOGY transfer 13 THIS IS REFLECTED IN SEVERAL CLEAR DISAGREEMENTS BETWEEN THE US AND CHINESE SIDES ABOUT NEXT STEPS IN THE PROJECT FIRST SDPC HANTS TO SLOW THE PACE OF THE WORK THE DS PROPOSES TO CONTINUE WORK ON FOUR TECHNOLOGY AREAS IDENTIFIED IN THE STATEMENT OF INTENT AND POSSIBLY ADO OTHERS WHILE SDPC PROPOSES TO SELECT ONLY TWO OF THE TECHNOLOGIES FOR WORK IN THE FIRST YEAR WITH OTHERS TO BE ADDED LATER THE US AND CHINESE EXPERTS HAVE IDENTIFIED A WIDE RANGE OF BARRIERS TO AND ACTIONS WHICH COULD promote each TECHNOLOGY INCLUDING CAPACITY BUILDING TECHNICAL ISSUES POLICY REFORMS AND INVESTMKNT NEEDS SDPC IS SIGNALING THAT DOMESTIC POLICY REFORMS SHOULD NOT BE INCLUDED AND THAT IT IS HOST INTERESTED IN TECHNOLOGY EXAMPLES WHERE CHINA CAN ARGUE THAT THE US SHOULD PROVIDE ADVANCED TECHNOLOGY AND TECHNICAL INFORMATION ON PREFERENTIAL TERMS FINALLY THE SDPC AND TSINGHUA UNIVERSITY PARTICIPANTS ARE ARGUING THAT MORE FUNDING IS REQUIREO from THE US TO CARRY OUT THIS PROJECT WE HAVE PROPOSED TO TRANSFER US 100 000 TO TSINGHUA UNIVERSITY IN THE FIRST YEAR AND TO PROVIDE SUBSTANTIAL ADDITIONAL SUPPORT THROUGH KREL AND OTHER US TECHNICAL EXPERTS PROM LABORATORIES AND CONSULTANTS THIS IS A LARGER DIRECT SUPPORT THAT THE TECHNOLOGY COOPERATION AGREEMENTS PILOT PROGRAM TCAPP 13 PROVIDING TO ANY OF THE OTHER 5 COUNTRIES CURRENTLY WORKING ON SIMILAR COOPERATIVE PROJECTS THE CHINESE SIDE IS INDICATING THAT THIS IS NOT AN ADEQUATE amount of funding EVEN TO WORK OK TWO TECHNOLOGY AREAS 14 THIS SERIES OF MEETINGS ENDED WITH AN IMPASSE WE WERE NOT ABLE TO AGREE ON A WORKPLAN FOR THE NEXT YEAR'S WORK BECAUSE OF DISAGREEMENTS OVER THE NUMBER OF TECHNOLOGIES TO BE ADDRESSED ANl THE FUNDING TO BE PROVIDED THE US DELEGATION AGREED TO TAKE TH CHINESE PROPOSAL BACK TO WASHINGTON FOR DISCUSSIONS WITH EPA MANAGEMENT AND OTHER AGENCIES AND TO PROVIDE ADDITICWAL COMMENT AND PROPOSALS OVER THE NEXT FEW WEEKS IS NATURAL GAS PROJECT MEETINGSj TWO MEETINGS JULY 6 AND 13 WERE HELD WITH MR ZHANG YUQING DEPUTY DIVISION CHIEF DEPARTMENT OF ECONOMIC FORECAST SDPC WHO HAS BEEN IDENTIFIED AS BEIJING 03 OF 03 70 2 SUBJECT EPA TECHNICAL TEAM VISIT TO CHINA 7 8-1S S9 1 THIS CABLE WM DRAFTED BY THE DELEGATION THE POINT OF CONTACT FOR THE NEW PROJECT “COOPERATIVE STUDY OF NATURAL GAS UTILIZATION IN CHINA THIS PROJECT IS GETTING STARTED MORE SLOWLY THAT THE U6 HAD HOPED AND MAY ALSO BE DIFFICULT TO IMPLEMENT THE MESTINOS WERE A LITTLE MORE FORMAL AND DELIBERATE THAN WE HAD HOPED AND MADE LESS PROGRESS THE SECOND MEETING WAS JOINED BY TWO REPRESENTATIVES OF THE UNIVERSITY OF PETROLEUM BEIJING WHICH WAS IDENTIFIED AS THE technical lead ORGANIZATION FOR CHINA THESE EXPERTS PRESENTED THEIR PRELIMINARY IDEAS ABOUT A WORKPLAN AND BUDGET WHICH APPEAR TO LEAN TOO FAR TOWARD RESEARCH AND AWAY FROM POLICY UNCLASSIFIED 4 P 05 19 AUG-06-1999 16 19 202 647 0191 QES EGC UNCLASSIFIED RECOKMENCATKWS ■ THE BUDGET REgUESTED FOR THE CHINESE TECHNICAL TEAM IS ALSO POUR TIMES WHAT EPA KAO BUDGETED WE HAVE IDENTIFIED THESE DIPPEREMCES OF VIEWS IN A PRELIMINARY WAY AND AGREED THAT PNNL THE US TECHNICAL LEAD INSTITUTION WILL WORK WITH THE UNIVERSITY OF PETROLEUM TO TRY TO DEVELOP A CONSENSUS JOINT PROPOSAL ECONOMIC AND ENVIRONMENTAL MODELING 16 ON JULY 14 THE US TEAM MET WITH ZHOU DADI DEPUTY DIRECTOR AND SEVERAL OTHER STAFF OF THE ENERGY RESEARCH INSTITUTE ERI OF THE SDPC PHILIP TSENG OF US DOE IN BEIJING TO CONDUCT TRAINING ON THE MARKAL MACRO MODEL AT TSINGHUA UNIVERSITY AND STANLEY WATT OF THE US EMBASSY ALSO PARTICIPATED IN THE MEETING AT ERI IN ADDITION DURING THE WEEK RICHARD GARBACCIO ALSO MET separately with ECONOMIC MODELERS AT THE DEVELOPMENT RESEARCH CENTER DRC OF THE STATE COUNCIL AND THE CHINESE ACADEMY OF SOCIAL SCIENCES CASS THESE MEETINGS WERE FAIRLY POSITIVE DEVELOPING A NUMBER OF IDEAS FOR CONTINUE COOPERATION AND MODEL COMPARISON WHICH COULD LEAD UP TO ANOTHER WORKSHOP POSSIBLY IN EARLY 2000 AS A RESULT OF THESE MEETINGS THERE IS A STRSaJG CONSENSUS AMONG THE US TEAM THAT IT WOULD BE BEET TO KEEP THE TECHNICAL AND METHODS COOPERATION AS INFORMAL AND EXPERT-TOEXPERT AS POSSIBLE INITIATING A STATEMENT OF INTENT WITH SDPC ON THIS WOULD LIKELY SLOW PROGRESS AND INCREASE THE COST 17 IF THE US AND CHINA DISCUSS POSSIBLE JOINT POLICY STUDIES ON CLIMATE CHANGE THIS WOULD NO DOUBT BECOME A MORE FORMAL AND CAREFULLY CONTROLLED PROCESS EVERY EFFORT SHOULD BE MADE TO KEEP THE TECHNICAL HETHODOLOCY WORK SEPARATED FROM A POLICY INITIATIVE SO THAT HE CAN KEEP THIS RELATIVELY CONSTRUCTIVE TECHNICAL TRACK MOVING FORWARD AND CREATING A FOUNDATION FOR POSSIBLE POLICY CHANGES IN THE FUTURE 18 AIR POLLUTION AND PUBLIC HEALTH PROJECT C» JULY 12 PAUL SCHWENGSLS RICHARD GARBACCIO AND JEFFREY LOGAN MET WITH MR LUO YI DIRECTOR SCIENCE AND TECHNOLOGY DIVISION SEPA WHO HAS BEEN identified as our government CONTACT FOR THE “COOPERATION TO ASSESS BENEFITS OP PROGRAMS TO REDUCE AIR POLLUTION AND PROTECT PUBLIC HEALTH THIS MEETING WAS ALSO ATTENDED BY OTHER SEPA STAFF AND DR LIU XIANDE OF THE NATIONAL RESEARCH CENTER FOR ENVIRONMENTAL ANALYSIS AND MEASUREMENT THIS MEETIHG HAS VERY POSITIVE INCLUDING A FAIRLY DETAILED TECHNICAL DISCUSSION SEPA INDICATED STRONG SUPPORT FOR THE PROJECT AND SOME EXPERTISE IN THE TECHNICAL ASPECTS OF THIS WORK BOTH SIDES AGREED TO EXCHANGE WRITTEN MATERIALS AND TO WORK TOGETHER CLOSELY ON DESIGN AND IMPLEMENTATION OF REMAINING STEPS IN THE PROJECT 19 US BUSINESS REPRESENTATIVES ON JULY 14 PAUL SCHWENGELS RICHARD GARBACCIO PHILIP TSENG JEFFREY LOGAN AND DEBRA LEW MET WITH A GROUP OF US INDUSTRY REPRESENTATIVES AT A BREAKFAST MEETING WHICH WAS ARRANGED BY CHRISTOPHER ADAMS OF THE US EMBASSY AND PAMELA BALDINGER OF THE US-CHINA BUSINESS COUNCIL THE MAJORITY OF THE PARTICIPANTS WERE FROM OIL AND GAS INDUSTRY AND THERE WAS A VERY USEFUL DISCUSSION OP CONCERNS OF US INDUSTRY ABOUT WORKING ON CHINA NATURAL GAS DEVELOPMENT AND THE POSSIBLE WAYS THE NEW NATURAL OAS COOPERATIVE STUDY PROJECT COULD BE HOST HELPFUL THIS DISCUSSION HAS VERY POSITIVE AND RESULTED IN A NUMBER OF CONCRETE IDEAS TO BE PURSUED IN THE STUDY ROCESS INDUSTRY REPRESENTATIVES ALSO INDICATED A STRONG INTEREST IN participating AS REVIEWERS AND IN OTHER WAYS AS THE STUDY PROGRESSES A FEW REPRESENTATIVES FROM OTHER ENERGY TECHNOLOGY AREAS HAD A DETAILED DISCUSSION OF THE CACETC PROJECT AND OTHER POSSIBLE TECHNOLOGY COOPERATION WITH DEBRA LEW AND PHILIP TSENG UNCLASSIFIED 5 P 06 19 fiUG-06-1999 16 20 202 647 0191 OES EGC UNCLASSIFIED MCCAHILL NHNN End Cable Text Printed By Duncan R Marsh 07 26 96 09 21 25 AM UNCLASSIFIED 6 P 07 19