Press Briefing by Chair of the National Economic Council Gene Sperling, Assistant to the President for International Economic Policy Dan Tarullo, Deputy National Security Advisor Jim Steinberg, Staff Secretary Todd Stern, Chair of Council on Environment Quality Katie Mcginty, and Deputy Secretary of Treasury Larry Summers

The Briefing Room

1:15 P.M. EDT

MR. MCCURRY: We are bringing before you a parade of administration officials, harmoniously and vigorously united together -- brown and green alike, they march out, and all colors in between.

The President's global climate change team is here with you, including all of the following and more: Gene Sperling, Assistant to the President for Economic Policy, Chair of the National Economic Council; Dan Tarullo, Assistant to the President for International Economic Policy; Jim Steinberg, Deputy Assistant to the President for National Security Affairs; Todd Stern, Assistant to the President and Staff Secretary and really the shepherd of all of our global climate folks at the White House; Katie McGinty, the Chair of the Council on Environmental Quality; and Larry Summers, Deputy Secretary of the Treasury.

They are here at your disposal, but we are going to do the following. We'll start with Gene giving a little overview of the policy directions the President has now put in place as we head to Kyoto. Katie will tell you a little bit, expand a little bit on the specifics of the policy. And I guess Jim and Todd can talk about the negotiating process that we foresee looking ahead to Kyoto.

Mr. Sperling.

MR. SPERLING: The President, the Vice President and everyone in the administration who has worked on this issue feels very strongly that this is perhaps the major environmental challenge of our generation. All of us believe strongly that the science compels action; that the science, based on the scientists that came together from over 150 countries, makes clear that there has been a discernable human influence on the climate with potentially disruptive effects for our future; and that the United States must play a leadership role in addressing this environmental challenge.

The President today puts forward an ambitious, but sensible and sound approach for addressing this. He sets timetable and targets of reaching 1990 levels by the period of 2008 to 2012. Our policies will be based on five fundamental principles, that we be, one, guided by the science; two, that our approach be market-based and common sense; three, that we should first look for the win-win, positive solutions that exist before us; fourth, that there must be global participation, that this is a global problem that requires a global solution; and, fifth, recognizing the uncertainty in engaging on a long-term we need to have common sense, economic and scientific review periodically.

The President puts forward a proposal today that one can see in three stages. The first stage is where the President says, here are the things America can do without waiting, without, we think, conflict in addressing this problem. And if you look on the materials we've handed out, on the third page, it runs through the specific items from the tax incentives to the industry action to the early credit. These are the things this President is committed to doing as soon as possible. This is what we can do without waiting. This is what we can do right now to utilize the opportunities that are before us. And it very much fits the principle that to the degree there are under-utilized energy efficiencies that exist right now, it would be irresponsible for us to not first do everything within our power to make sure that our industries and our people utilize those efficiencies and get the gains that are before us.

The second period would be, in having a five-year review, would be to look at 2004, to evaluate what has worked; to do more of what is being effective; to take account of what new things we have learned on the science, the environment and the economics; and to go forward and to start planning for the third stage, the binding stage, between 2008 and 2012. It is at this stage we would call for a broad-based emissions trading system, both domestically and internationally, that we believe would ensure that we hit the binding targets that the President has set out.

I should stress that by the time a President and the Congress would have to implement this, we would have under our belt a decade of experience, a decade of innovation, a decade of technology, a decade of science and economic review. So this is a strong approach, but it is handled in a sound and sensible way that recognizes both the uncertainties we face, but both -- that we have an imperative to reach the binding target that the President is setting forward.

If you look in the materials we have, we try to give some examples as you go through on some of the places where the President feels very strongly in the area of electricity, in the area of cogeneration, others where there is, we think, significant waste and, therefore, significant opportunities using existing technologies and energy efficiency, and our hopes for where there can be innovation and breakthroughs, the type that you heard Secretary Pena talk about yesterday, that can put us on a path.

There will be many people who will suggest that down the road, in 2008, that this would be difficult to implement. But as with so many other issues -- entitlement reform and others -- the thing we know for sure is that if we act early we make it easier to deal with a long-term problem. It is only when we wait too long and too late that the choices become too difficult. We have before us the opportunity to deal with these things in a way that this country is best at -- through innovation, through technology, through mobilizing this country, through using the powers of the market. And this President is committed, that without waiting, he is going to try to mobilize those forces to go forward and do our part in dealing with our generational responsibility in addressing this environmental issue.

MS. MCGINTY: Thanks to my partner, Gene. Good afternoon. I just want to underscore a few of the points that Gene made, maybe elaborate briefly.

First of all, today President Clinton is exercising strong leadership in putting forth a bold plan to take on the challenge of global climate change. Four points that I think are worth underscoring and emphasizing: The President's exercise of leadership today will, first and foremost, get this country moving today to begin to secure the opportunities we have before us to reduce emissions, to improve the environment and to seize economic opportunity in doing that.

How? One, through a very innovative new initiative on tax incentives to encourage investments in energy-efficiency, renewable energy, in encouraging the turnover of older, less efficient capital stock -- things like that. Second, through a program of designing and affording credit to industries who are willing to step up to the plate and take action early -- earlier than any of the periods that are being discussed in the international arena. The President will want to work in partnership with industry, affording them credit for taking early action to reduce emissions, through new investments in the important technologies that the United States can develop and has the opportunity to lead the world in developing.

And, fourth, and importantly, by unleashing the forces of competition in the electricity markets. Today, electricity generation and transmission is governed by rules that in some instances are 70 years old. That antiquated system has stifled some of the most efficient and effective technologies we have that can dramatically reduce greenhouse gas emissions from the electricity sector. The President is putting that forward today, something we can begin to move forward on that can help us to reduce emissions and seize tremendous economic opportunity.

The President has underscored in previous statements on this issue that today we throw out two-thirds of the energy we generate. These policies are about capturing those inefficiencies, enhancing the economy and the environment at the same time. So the first principle, through the President's leadership, we are getting to work today.

Second, the President's leadership increases our ability to bring the entire world to a binding, but realistic and achievable set of goals in reducing greenhouse gas emission -- binding first. Why? Because our experience since 1992, the Rio Earth Summit, shows us that simply voluntary actions aren't sufficient to meeting this challenge. The voluntary actions have achieved some reductions, but not enough, and we have continued to see emissions grow.

So the President is saying it's time to give the issue the seriousness it merits; binding reductions are very important. But those reductions should be realistic and achievable. What the issue really demands is action, not the pie in the sky kind of rhetoric we've heard, nor the doomsday scenarios we've heard, either -- 1990 levels by the year 2008 to 2012 is significant, first; it represents a reduction in U.S. emissions on the order of 28 percent from where we would otherwise be in the year 2010. But it's realistic and achievable. As Gene underscored, the President is seizing on this decade of opportunity we have from 1998 to 2008 to find those ways to harness market forces to help us get this job done.

That leads to the third principle. The President's leadership here is about harnessing market forces to help us to achieve environmental objectives in a cost-effective way and in a way that helps us build new industries. We have great experience in this country in using market forces to reduce the costs of achieving environmental goals.

The Clean Air Act has provided us with a wonderful example. We've reduced the emissions that cause acid rain by more than 40 percent of what was required under the law for less than a tenth of the price that was predicted. How? Because we used innovative means, a marketable permit scheme, where firms can trade among themselves the right and the obligations to reduce emissions. We've reached targets that way, but in a much more cost-effective manner. So the President is exerting leadership here by saying we will put those market forces to work to help us take on this objective.

Fourth and finally, the President's leadership is also about recognizing that climate change is a global challenge and it, therefore, requires a global solution. The United States has put proposals on the table that can help encourage the participation of developing countries -- our initiative on joint implementation, for example, where U.S. businesses can act in partnership with developing countries jointly to reduce emissions.

And today the President will emphasize this important principle again and underscore that for the U.S. to undertake binding obligations, we will secure the participation of developing countries in this effort as well. And as you saw last week, the President has made this a priority as he has spoken to leaders around the world, and was joined last weekend by President Menem as President Menem recognized also that developing countries have to be part of the solution as well.

So with these four principles, the President is putting us on the road today to take on this challenge in a way that will significantly reduce U.S. greenhouse gas emissions, that offers us the promise of seeking and achieving a global agreement on this issue, and that will unleash market forces so that we can secure new and important economic opportunities as we pursue our goals.

Thank you.

MR. STERN: Let me say just a couple of things briefly on the international context. Gene and Katie have already alluded to a number of the more salient factors involved in the negotiation. As you know, international attention to climate change did not begin last month, and it won't end at Kyoto. As important as Kyoto is, this is part of an ongoing process that the world community is going to have to engage in over the course of the coming decades.

I think what has changed in the relatively recent past is the attention that the leaders of the world themselves are paying to this issue. It has, over the course of the last six months, been a topic of conversation in numerous presidential meetings, of our President with his counterparts from around the world. As Katie alluded, in just the last few days, the President has been on the phone with a number of his colleagues from other industrialized countries talking about Kyoto, about the approach that we are all taking. He has also, I might add, been consulting in follow-ups to the climate change conference with industry leaders, environmentalists, and others to discuss how we move forward in a realistic fashion.

The second point I would make is factual. As you probably are aware, our negotiators are in Bonn this week and will be there next week in the final set of formal discussions before the Kyoto Conference itself. The positions that the President announces this afternoon will be tabled by our negotiators and they will pursue those positions over the course of the next week and a half.

Third, I just wanted to re-emphasize some of the key negotiating instructions, position, what we have laid out as our position this afternoon, which are relevant for the international negotiations.

First, Gene mentioned the target and timetable itself, the 2008 to 2012 period returning to 1990 levels of emissions.

Secondly, as I think Katie mentioned, flexibility is of key importance. It is an essential component of the President's domestic agenda on climate change; it must be an essential component of the international agenda on climate change. That means international emissions trading; it means international joint implementation proposals and mechanisms so that the most cost-effective means of reducing emissions are available to all the countries of the world to seize.

Third, the President will say this afternoon, as I think both my colleagues have mentioned, that the United States cannot assume binding obligations in this area without developing country participation. The developing countries of the world will, over the course of the next couple of decades, become the most significant, in quantitative terms, emitters of greenhouse gases. That is notwithstanding the fact that, to date, the developed countries have been. Thus, as a matter of science as well as policy, we simply cannot solve this problem without the participation of developing countries.

Now, in pursuit of that, we have made quite clear, Katie alluded to the President's discussions with President Menem -- this has been the subject of numerous consultations at a staff and ministerial level as well, and this will be an important component of our negotiators' positions taken in Bonn and all the way to Kyoto.

I think I'll stop there. Who is running the questions here?

Q: The word "bold" isn't very -- the environmentalists don't think this is very bold. You haven't mentioned -- emissions. It's a real retreat, is it not?

MS. MCGINTY: Let me say, first of all, that many in the environmental community have spoken very favorably, especially to the President's insistence that we are going to get to work now. The President's idea that we will offer incentives to industry to step up to the plate and take early actions to reduce emissions is a proposal that is very important to the environmental groups and that they support wholeheartedly.

Would they like to see additional reductions, reductions on the order of what the European countries and others have been talking about? Certainly. Would some in the business community like to have seen less reductions? Certainly. But what the President has put together here is an ambitious plan that will reduce U.S. emissions by 28 percent in the year 2010. It's an aggressive plan to move us forward.

Q: -- on developing countries -- you talk in terms of assuring that developing countries must participate in whatever regime results. But I don't hear you saying that there would have to be some point at which they accept binding obligations. Would there be, perhaps at a later date, perhaps on a case-by-case basis different standards, but are you going to propose in Kyoto that there be binding totals and limits on the developing nations?

MR. STERN: As I said a moment ago, our position is one of the indispensability of participation. The nature of that participation is to be defined obviously in the course of negotiations. I think it is useful, however, to refer to President Menem's own observations on the subject last week where he did make reference to the need for developing countries to take on obligations on emissions as well.

Q: How is this package tailored to meet the requirements on the Hill and to win the ratification you'll need for anything coming out of Kyoto?

MR. STERN: That's the next briefing. (Laughter.)

MR. SPERLING: Well, I think that there is no question that, despite what some, for honorable reasons in the environmental community might have preferred, I think in what was considered the range of potential options the President did pick will probably be perceived on the Hill as the most ambitious within that range.

But the President is also I think providing people assurance that what he is going to be presenting to Congress -- what we will present in our budget in detail further -- is the type of things that we think the country should be able to rally behind, which is the focus on R&D and technology, tax incentives to encourage more use of renewable energy sources. I think that this is the type of mobilization that I think many people would consider win-win, market-based solutions. And the fact that there is review in different stages I think reflects the concern that people would have that we would, in the year 1997, seek to say that we knew exactly how a decade from now exactly what would be the right -- what energy prices would be, where the technology would have been. I mean, most people, if we were to look back 13 years wouldn't look very good at predicting the Internet and other things.

So I think when you're trying to deal with something like this and have binding targets, it is a sensible approach to assure people that you are going to try to do all of the positive things that people can rally around first, and see how far you can get there and assure people that you are going to be reviewing the science and the economics periodically, so that when the time comes that you do put forward an emissions training program you do have a decade of experience and review behind us.

And, ultimately, Congress and the President, at a later time, will ultimately have to pass things and have that judgement. So I think the President has put a sensible path that I think should also be reassuring to people on the Hill that we are taking a sensible path. I don't know what the specifics the President has put forward, people should find particularly objectionable.

Q: Gene, you make it sound as if this plan, 30 percent reductions, is almost entirely painless.

MR. SPERLING: Well, let me go back five years on our budget. There were people who said at that point that if we did not do something dramatic -- dramatic reduction on Medicaid or Medicare, dramatic increase on discretionary budget -- if we didn't do those things we would never get near balance.

Now, we put forward what we thought at the time was a prudent plan to go forward, under the notion that it would not make sense to rush to do things that may not be necessary, that you should try to do things in a prudent, sensible, market-based way. As it's turned out, that plan and the subsequent growth of the economy has led us to arrive at a goal. Looking back five years, having done more controversial, more painful things would not have made sense when we were able to reach that goal.

The President takes the approach here that there is tremendous -- as Katie described, tremendous inefficiencies out there. There is tremendous potential to alert the American public and to work with industry to capitalize on the inefficiencies that are out there. And by alerting the public and making the public more conscious, you do start to create the market for more people to think that there is profit to be made and reason to research and to do more. And to give you a chance to have a positive cycles.

Now, in the years 2008-2012, when you're in that binding period and you have emissions trading, that is the period where there could be arguments as to what the possible impacts would be on energy. But the truth is, it's pretty hard for any of us to know. And so I think the President, in providing a sensible path, in going forward and making sure that we are doing all of the win-win, positive things first, that down the road Congress and the President will have to evaluate whether those have been enough and whether we have to take more strenuous steps.

Q: So no increase in energy prices?

MR. SPERLING: The plan that we have as you look forward does not include increased energy prices. I think that one has to acknowledge that one you enter the emissions trading period in 2008, that there will probably be costs, those emissions. But how much and what the price of energy will be and what kind of success we've had at having other efficiencies by then is, again, very hard to predict. I doubt people would have predicted the tremendous real decrease in gasoline oil prices we've had.

Q: Do you have a target for the five-year period after 2012 for those reductions?

MS. MCGINTY: The President will indicate that the United States proposal includes both a binding target of reaching 1990 levels emissions between the year 2008 and 2012; and that then in the next five-year period of years, that emissions should be reduced below 1990 levels. And the extent to which they should be reduced is an issue that we will take up in the international arena and have discussions there.

MR. SPERLING: I'm just going to let Larry follow up on mine, and then we'll take the next question.

DEPUTY SECRETARY SUMMERS: Thank you, Gene.

If I could just add, this is a helping-hand approach, rather than a heavy-handed approach to working to reduce energy consumption. It doesn't provide for mandated increases in prices on energy over the next decade. And it does contain a number of provisions that are likely to work to reduce energy costs.

Those provisions include measures that will support the introduction of technologies that will increase fuel efficiency, such as vehicles that have more miles per gallon. Those provisions include measures that by encouraging energy conservation will reduce demand for energy, which will tend to reduce its price worldwide. And those provisions include electricity restructuring, which by harnessing competition in an important network industry has the potential to bring down the costs of energy to consumers, just as we've seen in telecommunications and in airlines, and that on fairly conservative estimates could mean as much as $20 billion to households.

So this is an approach that is, as Gene has emphasized, one that is very much focused on doing all we can over the next decade to exploit win-win solutions that can come from harnessing market forces to do things that are both good for the economy and good for the environment.

Q: Can I stay on this question of cost for a second? What you guys are saying is we're kind of hazy in this 2008 to 2012 period, we can't know for sure. But I seriously doubt that the administration's economic team would have signed off on these 1990 levels without doing a hard analysis that said, based upon our knowledge now we predict that this scheme would mean energy cost of X by the year 2008 or 2010 or 2012. Are you saying you don't and haven't done that? Or if you have, what are the numbers?

MR. SPERLING: First of all, I think we were pretty clear that, as Larry said, there is not a mandated energy price increase between the year 1998 and 2008. We're acknowledging that in the binding -- in the emissions trading period that it can't be ruled out that there could be some effect on energy prices. We're saying that part of that is going to depend on what the success of the variety of different efforts, many of the nine steps that the President has had there.

Q: Well, what I'm saying is, haven't you guys done an analysis that say best case scenario it's X, worst case scenario it's Y. And if you have, won't you share that with us?

MR. SPERLING: I think I'll let Larry speak. First of all, there is -- you know, I've been around here five years. If you want an econometric model to show you something 13 years out, you can do anything you want. You can show anything that you want. What we're trying to do is --

Q: We'll keep that in mind the next time you -- (laughter.)

MR. SPERLING: What's that? The next time that we predict what a particular policy right now will be 13 from now with an econometric model, you can be free to show that to me, and I would say you'd have a hard time showing a time in the past that we've tried to predict 13 years out in that sense. But we have certainly been locked in doing a tremendous amount of economic analysis. When you look at the things there, you will see, for example in the five-lab study, that there is, from the Energy Department, there is very careful analysis on what the potential is for reducing metric million tons of carbon through the efficiencies in the three main sectors -- the building, the transportation, and the industrial sectors.

As Larry said, and this really is the first time today that the President will be and is announcing that he will be supporting an electricity restructuring proposal, there is certainly in that area a tremendous amount of waste because there is not incentives to capture the full amount of energy that is used.

We have gone through all of this analysis, but I think that what we have tried to do, and I think what the economic team has worked to stress, was to recognize where there is really is uncertainty, that rather than to try to pretend that you can draw a road map from here to Los Angeles with every street and turn in it over the next 13 years, is to try to have a process where we have the ability to incorporate what we are learning, what we are seeing, what works. That is, I think, the soundest and most realistic approach for us going forward.

We clearly think that if things -- if this country mobilizes the right way, that we can get there without having a significant price increase, even after the year 2008. One of the things that will be a key element, and I can let Larry speak to that, is the success of having a truly international system with international trading. Where you allow for the most market efficiencies, where people have the ability to seek out the places where there is the greatest capacity to reduce carbon greenhouse gas emissions at the lowest price, that will be one of the most key elements in determining how much we can do this in a cost-effective way.

And that's one of the points one has to understand in climate change. When you reduce a million metric tons of carbon, when you reduce carbon emissions anywhere in the globe, it has the same impact. And so having a system develop over time that allows that to happen will be absolutely critical and vital to what the costs are. If you assume that that will work very well, extremely well, then you can have very, very, very, very low cost impacts. If you assume that it won't, then it would be more difficult.

And I think, again, what we've tried to do is incorporate a process where we can constantly review that and where the country can make adjustments accordingly.

Q: I just want to get back to something you didn't finish. Do you have a targeted number, or any range --

MS. MCGINTY: We're not specifying a number at this time.

Q: At what point would you get around to specifying a number?

MS. MCGINTY: To hearken back to what Gene has outlined, at this point the President is outlining a very clear plan that takes us, not from today to tomorrow, but a clear plan for the next decade, for the five years that follow that decade, in that five years to hit 1990 levels on average between 2008 and 2012, and beyond, to say we need then to move to reduce emissions below 1990 levels. We're not going to specify that specific target today.

Q: When will the period come when you begin to specify?

MS. MCGINTY: It's still under discussion.

Q: Is it within the next year or is it --

MR. STERN: The point I think that Katie just made is we're not going to start negotiating in public. That's why we have negotiators who go to Bonn and then to Kyoto.

Q: How does the $5 billion in tax cuts on R&D break down? And over what period of time would that be? And when you might get something like that before Congress?

MR. SPERLING: That will be in our fiscal year 1999 budget. We met, the team working on this, with the budget team, including Frank Raines, and we tried to almost do an early budget review so that we could make sure that we have room in our budget for a significant initiative. And so what we are comfortable doing this time is announcing that there will be a $5 billion, or at least a $5 billion in R&D and tax incentives. What the exact composition is of those will be announced with the rest of our budget.

Q: Over what period of time will that $5 billion --

MR. SPERLING: That's $5 billion over five years. So at least $1 billion a year of additional funds beyond -- or tax incentives beyond what we have currently.

Q: If I could follow up, Gene, you said that most of those ideas, or many of them, will come from this report from the President's committee on science and technology. So could you at least outline a few or highlight a few from that report that are likely to be in your package?

MR. SPERLING: We are announcing almost, as you see, almost every element we have now. It is not our intention to announce the specifics of every single thing we're going to do now, quite honestly. This is something the President cares very deeply about. He wants to return to this, and we will roll out the details of our plan periodically. But also, you have to understand, we do our budget review in the first two weeks of December, and so we will have time and opportunity to spell out in detail as we present our budget the exact specifics. Certainly, the -- recommendations will be highly considered and certainly many of those will make it into our budget.

Q: How flexible, Gene, are you going to be in the negotiations this week, next week, up to Kyoto, with regard to your binding target proposal for the industrialized world? Is this a take it or leave it proposal from the United States, or are you flexible enough in these pending negotiations to perhaps strengthen the binding targets the President outlined today?

MR. SPERLING: This is our position; this is a position that the President has worked on himself. He has developed this plan himself. He took this from a variety of different recommendations, all of this, gave him -- he pulled different pieces and put together a strategy that he feels comfortable with. This is our position. And when I say that we're not seeing anymore, I'm not commenting one way or the other on what would happen in negotiations. This is our position and this is where we stand.

Q: Gene, what has happened since the time the President set the year 2000 as the goal? What's changed since then?

MS. MCGINTY: I think this is an important point. We have a lot of attention to this issue now because Kyoto is on the horizon, but the fact is that the President has been hard at work on this issue since 1993. First, he reversed the position of the previous administration and signed the United States up to the goal of reducing emissions to 1990 levels by the year 2000. He followed that immediately with a 50-point plan to help us to achieve that goal.

Now, that plan has delivered very significant reductions in emissions from where they otherwise would have been. Did it get us or are we on track to get to the year 2000? As we articulated more than a year and a half ago, we are not on track to do that. Why? One, economic growth has been quite robust and more robust than even we had anticipated in the beginning of 1993. Two, oil prices have proven to be lower than were anticipated in early 1993. But, three, and most compellingly and importantly, is that the Congress had as part of its anti-environmental agenda, had not funded the President's initiatives in energy efficiency and renewable energy. Now, despite those three factors, the President's efforts have delivered significant emissions reductions from where we otherwise would have been, on the order of about -- for the jargon -- on the order of about 40 million metric tons of carbon emissions.

You will see today major utilities in the United States standing up and saying that the President has outlined today a very sensible and very strong policy to move forward on reducing greenhouse gas emissions. Many of those utilities have been working in partnership with us since 1993, with the President's leadership. They have signed up voluntarily and have voluntarily reduced their emissions significantly.

So we have been at this consistently since 1993. Kyoto presents us an opportunity with taking this issue now to the next steps where we can join together with the world community, looking beyond the year 2000 and the steps that have to be taken then.

Q: Are the utilities that began participating in '93 going to get credit for those reductions?

MS. MCGINTY: One of the points that the President wants to emphasize today is that we will build a program to provide credit for those who will take early action. As part of our effort to do this, to undertake this effort in partnership with industry, we will work with them, we will work with members of the environmental community to put the details of that initiative together.

But the idea is simple: We want to incentivize industry to take action now to reduce emissions -- not to wait until the year 2008 to begin. If we have a marketable permit scheme in the year 2008, for example, then what we would be talking about here is working with industries so that they could get credits to play in that tradeable permit scheme that would be set up in the year 2008 for the actions that they take to reduce emissions now. That's one of the ideas we would pursue.

Q: Does that have budgetary impact, the provision of credits --

MS. MCGINTY: Budgetary in what sense?

Q: Does it cost any money off the budget? Is it a tax incentive? I don't understand your credit.

MS. MCGINTY: No. The notion of a marketable permit system is that you provide permits to various actors in the economy and they have a choice: They can reduce their emissions to the level required, or if it's more cost effective for them, they can purchase permits from other players in the economy who have not only met their target, but gone over and above it. And the idea is simply that those who take actions now won't be penalized for having taken action early, and that those reductions in emissions that they achieve will be recognized when the binding period comes into play.

Q: -- this document, it does indicate here, we reject the European proposal for more stringent early reductions. Would you remind us of the reasons for that rejection?

MS. MCGINTY: Well, I'll first of all remind you of what the European policy is. Overall, the European Union has called for a 15 percent reduction from 1990 levels by the year 2010. Now, the reasons that that approach is not appropriate for the United States, that we feel is not realistic or achievable, is also related to why we believe our plan is significant, but realistic and achievable.

The President's plan will reduce U.S. emissions by 30 percent from where they otherwise would be in the year 2010. That's an ambitious undertaking. To go further and add to it 10 or 15 percent additional reductions, we don't believe is realistic or achievable in the time period that we are looking at. It just underscores the fact that what we've tried to do here is a very significant and ambitious plan, but one that is built on the opportunities that we know that are out there, that can enable us to get started now and seize some economic opportunities; that's what the President's target represents.

Q: What's the number now, from this point to back to 1990 levels? I've heard between 15 percent and 20 percent. What is it from today's date?

MS. MCGINTY: Well, in the year 2000, business as usual, it would be 13 percent. But do we know today -- I think it's about 7.5 percent -- 7.5 percent. Today I think we are on the order of about 7.5 percent above 1990 levels of emissions.

Q: -- you expect emissions in the United States to start --

Q: What's the point of having an economic review of how we're doing five years out if we're committing to binding targets? I mean, if you're saying we absolutely will meet these by this date, and your economic review says, geez, you know what, it's going to cost a lot more money than we thought it would? There's no opt out, is there?

MS. MCGINTY: The notion of economic reviews as scientific reviews is just common sense. We are putting forward here some very ambitious ideas that we think can deliver both environmental and economic results. But we want to make sure we are seizing all the best opportunities that are out there, and the point of that review is to make sure that all the best ideas are ideas that we are implementing.

Q: If you don't envision a clause that lets you out -- is what I'm asking, is there any clause that lets you out of this? If it says this is going to cost a lot more than we thought and we can opt out or not, is it really binding?

MS. MCGINTY: It is a binding treaty and it's very important to the President and a principle that he has consistently put forward is that we are now moving into a period where binding emissions reductions are absolutely required, certainly.

Q: So there's no -- if five years from now we say it's going to cost a lot more money --

MS. MCGINTY: Look, there's no treaty in the world that would require a country to bankrupt itself. And this treaty is no different than any other treaty in the world in that respect.

Q: When does the United States expect to stop increasing its greenhouse gas emissions and start decreasing them? How will we know if we're not performing, because the track record so far is one of saying you are going to meet targets and then missing them, saying you were going to review them and then postponing them. When are we going to actually turn the corner and start cutting down?

MS. MCGINTY: Well, let me just say that the whole point of the series of efforts that we have announced today is to enable us not to wait until the year 2008, but to move forward now. We are going to do our level best through providing the tax incentives we've spoken about, by designing a program that affords credit to industries for taking early action, by investing in new technologies to begin to turn those curves just as soon as we can. But we are moving as ambitiously and as aggressively as we can toward that target period.

Q: When do you expect U.S. greenhouse gas emissions to start going down?

MS. MCGINTY: From where they would otherwise be, we would hope --

Q: To stop going up. They're going up. It's a very simple question.

MS. MCGINTY: You may be on a level of technical detail that I can't provide.

Q: Can anybody say when the emissions are going to start going down?

Q: The EU has put forward a much stricter proposal and the developing countries in Bonn just signed a statement saying they support the EU proposals. So how good do you think the chances are of getting a treaty out of Kyoto?

MS. MCGINTY: Well, let me underscore, this is a very difficult undertaking, and the President is addressing it with tremendous seriousness of purpose, as was referred to here before. He has worked this issue very hard with leaders from around the world. Now, I just say and underscore that U.N. processes operate often, and this one does, on the basis of consensus proposals and moving forward on a consensus basis.

What we are trying to do here is not only hear the voices who want to go much quicker, much further, much faster, but recall that there are many voices out there, too, many countries who are saying much less, much slower, if not, nothing at all. And what we are trying to do is provide that leadership that can hopefully take those two extremes of the debate and find that common ground that would enable the world to move forward in a reasonable and effective way in the years post-2000.

Q: I don't understand the global thing. Could I just ask for clarification on what the President today envisages in the treaty with regard to global obligations from the developing countries? Would it necessarily be binding targets and timetables, or could it take another form?

MR. MCCURRY: That's been asked and answered.

Q: That's not been answered.

MR. MCCURRY: It's been answered as well as it's going to be answered.

Q: The previous proposals on developing countries, do they still stick? That is, some may -- that the large developing countries should graduate into commitment, into binding targets? What's been going on the last six months, does that still hold?

MR. STERN: Well, I'm not sure exactly what you're referring to, but what I think you are bringing up is the nature of the problem, which as I said earlier, there is general agreement that the problem of global warming, of global climate change, is not going to be resolved without the participation of developing countries. What, when and exactly what participation will mean is obviously what our guys are going to be doing in Kyoto, and therefore, it is premature to indicate exactly what that means.

What we can say, and what the President will say this afternoon is we will not assume binding emission reduction obligations without the participation of the developing countries.

Q: On the post-2012 role, you all are saying you are not taking a specific target. But yesterday environmental groups say that they were told there would be a five percent reduction as a goal and then that was abandoned last night. Can you say why that -- the President backed off that as a specific target?

MS. MCGINTY: That is a number that some of the environmental community have suggested. We just have not arrived at a number and are not prepared to discuss one right now.

Q: They said the administration told them that. That's not true?

MS. MCGINTY: It's a number that I've heard them discuss.

Q: But you all never told them that?

MS. MCGINTY: No.

THE PRESS: Thank you.

END 2:04 P.M. EDT