warming, we will not have a second chance -- failure to act will lead to irreversible consequences. We will be committing ourselves, our children and our grandchildren to a very different planet, and they will never forgive us. But the premium for this insurance policy must be reasonable. For this reason we rejected unrealistic targets in Kyoto; we insisted on full recourse to market-mechanisms; and we opposed mandatory policies and measures - like carbon taxes. The totality of our scientific information, including that on vulnerability and impacts of global warming, provides a compelling reason to act. Let me now turn to the recent Kyoto Conference. Kyoto Protocol Last December in Kyoto, Japan, the nations of the world reached agreement on an historic step to control greenhouse gas emissions which cause global warming. No sooner had the negotiating session ended, however, than some critics on both ends of the political spectrum, without a full examination of the results achieved, denounced the agreement as either too little too late or too much too soon. In fact, the Kyoto Protocol, reached only through the exercise of vigorous American leadership, represents an important achievement in the best interests of the United States. But it is a framework for action, a work in progress, not a finished product ready for Senate consideration. U.S. Negotiating Objectives In order to secure an effective agreement that is environmentally strong and economically sound, while protecting the unique worldwide interests of the U.S. military, President Clinton and Vice President Gore established three major objectives. As a result of the Kyoto negotiations, we achieved the first two - realistic targets and timetables for reducing greenhouse gas emissions among the world's major industrial nations, which fully protect the unique role of our military in its global reach; and flexible market-based mechanisms for achieving those targets cost-effectively. The third, meaningful participation of developing countries, will be the focus of our work in the coming months and years, but with the Kyoto Protocol we have made an important down payment. Elements of the Kyoto Protocol and Related Decisions Our first objective - realistic targets and timetables among developed countries had to be a credible step in reducing the dangerous buildup of greenhouse gases, yet measured enough to safeguard U.S. prosperity at home and competitiveness abroad. In the end, we secured the key elements of the President's proposal on targets and timetables, often over the initial objections of the European Union and other developed S The U.S. concept of a multi-year time frame for emissions reductions rather than a fixed, single-year target. The multi-year time frame will allow the United States, other nations and our industries greater flexibility in meeting our targets. Averaging over five years, instead of requiring countries to meet a specific target each year, can lower costs, especially given an uncertain future. The averaging can smooth out the effects of short-term events such as fluctuations in the business cycle and energy demand, or hard winters and hot summers that would increase energy use and emissions. The U.S. specific time frame of 2008-2012, rather than earlier periods preferred by the European Union and others, giving us more time to phase in change gradually and deploy new technologies cost-effectively, and thereby to cushion the effects on our businesses and workers. Differentiated targets for the key industrial powers ranging from 6% to 8% below baseline levels (1990 and 1995) of greenhouse gas emissions, with the United States agreeing to a 7% reduction. When changes in the accounting rules for certain gases and offsets for activities that absorb carbon dioxide are factored in, the level of effort required of the United States is quite close to the President's original proposal to return emissions to 1990 levels by 2008-2012, representing at most a 3 percent real reduction below that proposal, and perhaps less. An innovative proposal shaped in part by the United States, allowing certain activities, such as planting trees, that absorb carbon dioxide - called "sinks” – to be offset against emissions targets. This will both promote cost-effective solutions to climate change and encourage good forestry practices. As a major forestry nation this will be of special benefit to the United States. As proposed by the United States, the Kyoto Protocol covers all six significant Flexible Market Mechanisms Our second broad Presidential objective was to make sure that countries can use flexible market mechanisms to reach their targets rather than the mandatory “policies and measures," such as carbon taxes, favored by the E.U. and many other developed 6 The Kyoto Protocol enshrines a centerpiece of this U.S. market-based approach the opportunity for companies and countries to trade emissions permits. In this way, companies or countries can purchase less expensive emissions permits from companies or countries that have more permits than they need (because they have met their targets with room to spare). This is not only economically sensible, but environmentally sound. By finding the least expensive way to reduce emissions, we will be providing a strong incentive for achieving the maximum level of emissions reductions at the least cost. The United States has had a very positive experience with permit trading in the acid rain program, reducing costs by 50 percent from what was expected, yet fully serving our environmental goals. This was a new concept for developed and developing countries alike – some of whom fought it vigorously. But we have it firmly enshrined in the Kyoto Protocol and it is a critical way of ensuring cost-effective solutions. Its inclusion was a major victory for us. We went even further by achieving a conceptual understanding with several countries, including Australia, Canada, Japan, New Zealand, Russia and Ukraine, to trade emissions rights with each other. This 'umbrella group' could further reduce compliance costs. Ensuring that we can meet our target reductions cost-effectively will depend significantly on access to the flexibility mechanisms we fought hard to include in the Kyoto Protocol. Let me be very clear: The commitment we made in Kyoto would not have been made -- could not have been made -- were it not for the flexibility mechanisms that were also agreed there. Until we are satisfied with the rules and procedures yet to be established, the promise of Kyoto will never be realized. The importance of emissions trading was emphasized by CEA Chairman Yellen in her recent statements. Meaningful Participation of Developing Countries Our third objective was to secure meaningful participation of key developing countries, a concern that I know you, Mr. Chairman, and members of Congress obviously share, as evidenced by last summer's Byrd-Hagel resolution in the Senate. Global warming is, after all, a global problem which requires a global solution - not only from the developed world but also from key developing countries. Per capita emission rates are low in the developing world and will remain so for some time, and over 70 percent of today's atmospheric concentrations of greenhouse gases attributable to human activities are the result of emissions by the industrialized world. At the same time, it is also true that by around 2015 China will be the largest 7 greenhouse gases in total than the developed world. So from an environmental perspective, this problem cannot be solved unless developing countries get on board. We encountered significant resistance in Kyoto by some developing countries to meaningful participation in solving the global warming problem. For example, we had sought to include a specific process through which advanced developing or newly developed countries could take on quantified emission limitation commitments and thereby take part in the international emissions trading regime. While a number of developing countries expressed interest in our proposal and supported it in Kyoto, others rejected it, and it was not possible to include such a specific process in the Protocol. Still, developing countries may nevertheless, as a prerequisite for engaging in emissions trading, voluntarily assume binding emissions targets through amendment to the annex of the Protocol that lists countries with targets. Some developing countries believe - wrongly -- that the developed world is asking them to limit their capacity to industrialize, reduce poverty and raise their standard of living. We have made clear that we support an approach under which developing countries would continue to grow - but in a more environmentally sound and economically sustainable way, by taking advantage of technologies not available to countries that industrialized at an earlier time. The Kyoto agreement does not meet our requirements for developing country participation. Nevertheless, a significant down payment was made in the form of a provision advanced by Brazil and backed by the United States and the Alliance of Small Island States. This provision defines a "Clean Development Mechanism," which embraces the U.S.-backed concept of “joint implementation with credit." The goal is to build a bridge - with incentives - between developed, industrialized countries, and developing nations. This new mechanism will allow companies in the developed world to invest in projects in countries in the developing world - such as the construction of high-tech, environmentally sound power plants - for the benefit of the parties in both worlds. The companies in the developed world will get emissions credits at lower costs than they could achieve at home, while countries in the developing world will share in those credits, and receive the kind of technology that can allow them to grow without ruining their environment. The Clean Development Mechanism has great potential, but developing countries will need to do more in order to participate meaningfully in the effort to combat global warming. In determining what developing countries ought to do, we should be aware that the circumstances of developing countries vary widely, along a kind of continuum. Some today are very poor, their greenhouse gas emissions are negligible and are likely to remain so for the foreseeable future. Others, whose greenhouse gas emissions are not substantial, are relatively well off. Some are poor on a per capita basis, but their greenhouse gas emissions today rival or surpass those of the most advanced industrialized nations. Still others have already joined ranks with the industrialized world in the OECD 8 but have not yet fully accepted the added responsibility for protection of the global environment that comes with their new status. Any 'one-size-fits-all' approach to the 'meaningful participation of developing countries' and to satisfy the Byrd-Hagel Resolution is thus unlikely to prevail. We found in Kyoto that even among the industrialized countries it was necessary to recognize the individual national circumstances faced by those differently situated in order to reach agreement, notwithstanding our common purpose. Similarly, any uniform, inflexible approach to the 'meaningful participation of developing countries' is unlikely to prevail. As Senator Byrd said in his letter of December 15, 1997, to the President, and recently restated on January 29 in the Senate: "...binding commitments for developing nations should be paced Recognizing our "common but differentiated responsibilities and respective capabilities" it will be necessary to develop an approach that provides for a meaningful global response to the threat of global warming, while acknowledging the legitimate aspirations of developing countries to achieve a better life for their peoples. To succeed, we will need to ensure that those responsible for a significant share of global emissions accept their responsibility to protect the global environment. We will also need to ensure that those who are able to do so contribute according to their capacities and stage of development. Some Misperceptions Before moving on, Mr. Chairman, let me address a few specific points on which I believe there may be some misperceptions. The first of these is that the Kyoto Protocol will damage our national security or imperil the ability of our military to meet its worldwide responsibilities - this is not true. We took special pains working with the Defense Department and the uniformed military before and in Kyoto to protect the unique position of the United States as the world's only superpower with global military responsibilities. We achieved everything they outlined as necessary to protect military operations and our national security. At the Kyoto Conference, uniformed military representatives from the Joint Chiefs of Staff and the Office of the Deputy Under Secretary of Defense for 57-717 99-2 |