Press Briefing by Council on Environmental Quality Chairman Jim Connaughton and Under Secretary of State for Democracy and Global Affairs Paula Dobriansky on the Second Major Economies Meeting

Via Teleconference

10:37 A.M. EST

CHAIRMAN CONNAUGHTON: Thank you, and good morning to everyone here in the United States, and I think perhaps good afternoon to those of you from across the Atlantic. This is a background briefing in preparation for the next -- on the record, just to give you some background in preparation for the next major economies meeting, which will take place next Wednesday and Thursday in Honolulu, Hawaii, with the technical meeting that will take place on Tuesday in Honolulu, Hawaii.

We are continuing to work with other countries in developing the new post-2012 energy security and climate change arrangement. And again, as you know, we agreed in Bali that we want to try to complete that work by 2009. And to further remind you -- the President I think laid it out pretty simply in his speech in September -- that it's the work we do this year that makes reaching international agreement in 2009 possible. And that underscores the importance of the major economies process, the aim of which is to focus on a few key areas from the Bali road map where the major economies can make a detailed contribution to be brought into the U.N. negotiations.

So I wish to underline again that the purpose of the major economies meetings is to support the collective effort to negotiate a new international agreement. Some of the areas that we think will be high on the agenda for the major economies to focus on include discussions about a long-term global goal for greenhouse gas reduction that's consistent with economic development objectives, the role of national plans that set mid-term goals to advance the global goal, and sort of a good assessment of the variety of binding market-based and voluntary measures that could be environmentally effective and measurable.

As you know, in Bali, one of the key focal points was, are all the major countries willing to take actions that are measurable, reportable and verifiable? And I think we'll be getting into that discussion a little bit, what that means.

Third, and this is really an innovation in this context, is collaborative technology development and deployment strategies; so not just R&D, but also how you get the technology into the market for key sectors. This was specifically recognized as a new area for discussion in the Bali road map. And the idea here is to, you know, in our view is to focus on the sectors that matter most in terms of their present and future contribution to greenhouse gases.

So for example, low carbon fossil power generation is critical because coal -- power from coal represents more than 50 percent of future emissions; surface transportation; land use and forestry; the other near-zero carbon energy sources such as efficiency, nuclear, wind and solar; and then perhaps some industrial sectors.

An example I gave in my testimony yesterday was the aluminum sector has actually already come together on a shared set of targets for absolute reductions in some of their key emissions, and then for some technology advancement to help with their efficiency. So there's an example of a sector that already is now well organized, and will make specific progress, by the way, on the same targets and the same timetable among developed and developing countries. So I think that's an interesting feature of that.

The fourth element is financing for the adoption of existing clean technologies and the development of new ones. With that, the U.S. and the EU have joined in a new proposal in the WTO to eliminate the tariff and non-tariff barriers on climate- beneficial goods and services. Then we are going to be looking at improved measurement and accounting systems, so we can more effectively track progress. The U.N. has a very good set of methodologies. What we're talking about is enhancing and improving upon those; really building on the substantial work that's now taken place around the globe. And then robust programs to address adaptation, forestry, and technology access for all U.N.-member countries.

To remind you, the President announced this initiative last May, before the G8 meeting. This approach has now been largely endorsed by the G8 leaders in June; by the more than 20 leaders in APEC this past summer; and Ban Ki-moon, the U.N. Secretary General, has expressed his interest and support for this effort, all in recognition that this will help accelerate the discussions and negotiations in the U.N. setting.

I just want to quickly recap for you what's occurred in the last six months, really, in America, as an important contribution domestically to the global effort. The President was pleased to sign an energy bill that he called for, that can largely be described as one of the most important climate -- pieces of climate legislation to have emerged globally. That energy bill has five new mandates: one on vehicle fuel efficiency, which will produce about a 40 percent improvement; the second on alternative fuels, which would produce about -- I think it's 10 percent replacement of gasoline by 2022; the new requirements for appliance efficiency and actually a nearly unrivaled provision with respect to the efficiency of lighting systems.

Along with that came a new legal requirement for the efficiency of federal government operations, which largely adopted an executive order that the President issued last year, which includes a 30 percent improvement in the energy efficiency of federal government operations, and I think it's a 20 percent replacement of our gasoline use with alternative fuels.

The reason why that one is particularly interesting and important, the federal government operations, is the U.S. government is one of the world's largest energy users. In fact, our energy consumption is larger than many countries, many small countries. The U.S. government is also one of the world's largest users of fuel, and so this new directive with respect to federal government operations is a good example of the government itself being able to lead by example, with -- actually with metrics that are quite stringent.

On top of that, you're well aware of our technology programs. Our budget on technology development, research and development, is now approaching $4 billion annually, with the bipartisan support of the Congress. And we are taking advantage of that U.S. investment through a whole series of multilateral technology partnerships with other countries. And I think you'll continue to see further progress across the board, whether it's on transportation or power generation, and within that, biofuels, other alternative fuels, electricity, hydrogen, low-carbon coal, nuclear -- we're really covering the full landscape.

I think our only disappointment this year in the budget was the Congress's zeroing out of the fusion commitment, in which we're -- we're in an international partnership with a handful of other countries on the long-term high-beneficial payoff effort to develop a brand new form of energy for the globe. We are hopeful that, with further discussions with Congress, we can restore that funding, and be a part of this incredibly important task of looking to the future. So I think I'll stop there.

Paula, do you want to contribute in and perhaps mention a little bit on the international partnerships, in particular?

UNDER SECRETARY DOBRIANSKY: Thank you, Jim. I just had just a few points I just wanted to make -- to add on to what you said, starting with I think the point mentioned at the outset, that the major economies process is designed to contribute to and advance the U.N. framework convention on climate change negotiations. I think it's important, also, since you took the time to go through the key elements that we are going to be discussing at the major economies meeting, I think it's important to note that in the document itself, of the Bali road map, these six elements, among others, are ones that are addressed, and which we will be very practically addressing the areas that not only are called for and identified, but in which, for example, as you said, the road map calls on parties to develop a shared vision for a long-term global goal. It does call upon developed and developing countries to consider nationally appropriate mitigation actions, and so forth.

And that brings me just to one other piece, which I thought would be worth also mentioning here, is that we agreed in Bali to work toward an agreed outcome at COP15 in Copenhagen, in December 2009. And basically in this time ahead there was agreement to have a body created called the Ad-hoc Working Group on Long-Term Cooperative Action under the Convention. And the areas that you've identified are ones that all countries are being asked to provide submissions into.

So the major economies meeting comes at, I think, a very important time in a very practical way in which it can provide not only a forum for getting into some very key areas, but the areas in which we are all being asked to feed back in to the U.N. framework convention, and to give our respective work programs, if you will.

And finally, I'll just add two last things. One is that I believe the meeting of -- it hasn't been set -- of the Ad-hoc Working Group will be sometime this spring, in either March or April.

In terms of international partnerships, our international partnerships are very significant, very robust. They cover so many different areas, from the Asia-Pacific Partnership on Clean Development and Climate, which involves India, China, among other countries, and in which we're very focused on the issue of power generation and on looking at very specific, time-relevant ways of dealing with energy efficiency; we have the International Partnership for a Hydrogen Economy, which also has been moving forward, and in which we are seeing some very visible manifestations of that, even here in the United States, in terms of where we've been and where we are; the Carbon Sequestration Forum, in which there has been very significant work done in the area of carbon sequestration, and in which our collaboration has been very important. There's been a great deal of interest in this, particularly in Europe, and in our conversations with many of the European countries.

We also have the Methane to Markets Partnership. We also do work in the nuclear area for all the partners in that realm -- the International Thermonuclear Experimental Reactor, in terms of fusion. And finally, let me also add there's also the REEP Initiative, which focuses on energy efficiency, and also renewables. And finally, we have bilateral initiatives with some 17 countries.

So it's been very robust, and there's been a lot of work that's been done, very concrete work done in these areas. Thank you, Jim.

CHAIRMAN CONNAUGHTON: Great, thanks. A few that have -- following points. We'll be hosting a world ministerial on renewable energy here in March, here in Washington, D.C., so we're looking forward to that. I would also observe, the energy bill has been estimated -- the one that just passed -- estimated to cut our greenhouse gas emissions by at least 6 billion tons by 2030. I think it was Chairman John Dingell who suggested it could be up to 10 billion tons by 2030. So you'll see a slow of the growth of emissions in those sectors, a stopping and probably then a reversal of emissions in the five categories that I outlined for you. So that's a big deal.

Also, I think only a few of you covered the fact that we reached agreement last year under the Montreal Protocol with key developing countries, that included China and India, on a legally binding, sector-based reduction of HCFCs, which are also potent greenhouse gases. The estimates for the greenhouse gas savings, depending on the substitutes, put it in the range that could equal or exceed the amount of reductions the Kyoto Protocol would deliver through 2012. So just to give you a sense of the scale, we already -- we have a new international agreement in the context of the Montreal Protocol that's going to substantially confront greenhouse gases in a particular sector.

So I think you're seeing a convergence and an emergence of some very practical and specific efforts to tackle greenhouse gases -- some of it producing absolute reductions, some of them slowing down reductions -- I'm sorry, some of them slowing down increases, and some of them advancing technologies. So you see this mix -- this mixed approach, and I think you'll continue to see more of that.

Okay? We're ready for questions; we'll do two in the room, and then two from the phone, and then come back to the room.

Q: The President is making his State of the Union address right before Hawaii. How important will climate change be, and also, can we expect him to talk about the need of some kind of economy-wide, quantified, target of greenhouse emissions? And a separate note, are you issuing a statement, or can (inaudible)?

CHAIRMAN CONNAUGHTON: First, we don't comment on the State of the Union. The President does a pretty good job of telling the world what he thinks for himself. I would observe that over the course of the last year, the President gave two major addresses -- one in May and one in September on climate change and the importance of confronting climate change.

In addition to those two major addresses, the President, in his bilateral meetings and in his multilateral meetings with world leaders, personally gave statements related to our need to improve energy security, and to confront climate change. And I think he did so -- I think the number is eight different times -- with leaders of the -- there's the G8, the APEC leaders, or bilaterals; it could have -- it could be plus or minus one or two.

So this has been very prominent in the President's speechmaking. It's been very prominent on his agenda in public conversations with world leaders. And I would also let you know, in his personal conversations with world leaders, it has been among the items at the top of the agenda for regular conversation. So the world leaders and the President are very, very engaged, and I think you'll see that continued engagement all the way through this year, regardless of setting.

In terms of the outcome of this meeting, we are coming together after Bali to now work specifically on how we can contribute to the U.N. negotiating process. So we have not decided yet what the form of any communication from this particular meeting will be; that will be for the participants to decide. I think we are orienting ourselves, though, at this point for the leaders coming together later this year.

At the last meeting, you saw we produced the Chairman's Summary, and that was really to set the stage for upcoming meetings in Bali. It could be the case that we just go ahead and start our work and a text will ultimately be produced at the time of the leaders' meeting. We may have some intermediate communications in writing. We'll just have to see how that goes. But I would -- as you're working on your expectations, I'd really be looking forward to the leaders' process with maybe a few intermediate things in between. We just don't know that yet.

Q: Are you planning to bring specific proposals to the table here, and if so, what are they? In Bali, obviously, the Europeans were even threatening to back out of Hawaii, and they were ultimately convinced to go, being assured that, well, something will actually happen, as opposed to just more conversation, but there will be actual specific proposals on the table.

CHAIRMAN CONNAUGHTON: We have outlined the areas for discussion. We have a number of ideas that we're going to be sharing, sort of as an opening matter. We know that other countries are bringing some ideas to the table.

There is not a formally or publicly declared set of ideas that I'm aware of from any country other than what you've already seen from Europe and Japan on a long-term goal. So I think these will be iterative discussions, which the initial goal will be to lay out a variety of options without holding any country to a particular proposal. And so I think we're trying to do this in a collaborative way, rather than in the more classic "you bring your number, I bring my number, and we start kicking them around."

So you'll see we have a quite substantial agenda. The aim here is for the leaders to ultimately reconcile differing viewpoints. So we don't want to prejudge that for the leaders.

UNDER SECRETARY DOBRIANSKY: May I just add to that? I just wanted to say that, given the timing of the meeting, the meeting comes after Bali, and it will -- it's coming before the first meeting of the Ad-hoc Working Group on Long-term Cooperative Action as part of the U.N. Framework Convention processes. And I think it really affords us to actually use this. And I know, as Jim itemized, we will be using the meeting to look at these different specific areas, the areas in which the Bali road map calls for our looking and defining how we go forward.

So each of us are going to be required to provide submissions into the U.N. process, and I think what you will find is, given the discussion, it's on very specific areas, areas that will make up the foundation for the post-2012 arrangement. So in that sense, I think you're going to see, as we go along, this is a very specific discussion, which will be focusing on specific areas in which I think you can and will see very tangible outcomes.

CHAIRMAN CONNAUGHTON: All right, let me take this answer to one more level of detail, just so you have a sense of where we are coming from. The G8 leaders themselves said that they would commit to giving serious consideration to the proposal for a 50 percent reduction by 2050. The non-G8 countries in the MEM have not made that kind of a commitment. They have committed under Bali to a discussion of a long-term goal.

So I think there will be a balance of use in that discussion, but that's what we'll be working from. We've been part of the G8 process, and we've got a lot of questions about the 50 percent proposal, in terms of feasibility. And we've raised a lot of those just very technical and economic issues, and that's what we have to talk through. Other countries have been very resistant to have any kind of a conversation about this at all. So we have a broad bandwidth of perspectives on that.

On national plans, the U.S. actually is -- has leapt ahead with the passage of the energy bill last year, and with the implementation measures we're now putting in place with the 2005 energy bill. So actually going into Hawaii, and then shortly after Hawaii, when we have our new budget, I think you'll see a lot of very consequential and specific proposals from the United States, many of which will be public early as specific things we'd like to do.

We already have -- so, for example, we have a clearly defined objective on vehicle fuel efficiency through the mid-term now. We have a clearly defined national mandatory objective on alternative fuels that runs through the mid part of the 2020s. We have the efficiency mandates, all of which run us through the mid-term. So that legislation contains the mandatory side of commitments in a big portion of our emission-producing sectors.

In addition, as you know, we are working on the clean technology fund. Stay tuned for what we'll be saying with respect to that. And we're working with some other countries to build out what that's going to be. So I think the broader -- the bigger announcement will come later, but at least the U.S. thinking on this, you'll hear from us shortly about that.

And then the EU proposal, jointly with the United States on tariff barrier elimination, is very specific. We're calling for essentially an immediate elimination of tariffs on about 40 goods and services that the World Bank has identified as being most beneficial in terms of addressing greenhouse gases, and then a much longer list of 180 or more that would be negotiated over a longer term, in the context of the WTO as well. So very specific. And I can point you to any of these particular items -- none of this was on the table a year ago.

So I'm trying to think if I left -- and then I think -- watch for our budget on issues related to adaptation and forestry as well. We'll have some program ideas identified there. We hope that by doing this, other countries can calibrate off of some of our ideas, and we can begin to get specific discussions about shared efforts.

Okay, let's go to the phone. Operator, please.

Q: Hi, Jim, can you hear me?

CHAIRMAN CONNAUGHTON: Yes, I can.

Q: Hi, this is a question for you. I was covering the Senate Foreign Relations Committee meeting yesterday where you testified with Senator Kerry and a couple others. And there was a question there about a cap and trade system for greenhouse gas emissions, like the legislation that's making its way through the Senate right now. And your response was -- they were asking about whether the Bush administration would endorse such a proposal, and your response was sort of a theoretical analysis of when it's better to use and command and control versus market-based approaches. Can we get a sort of yes or no answer on whether this bill, if it makes it to the President's desk, would be signed?

CHAIRMAN CONNAUGHTON: No, you can't get a yes or no answer, because there is no bill that's advanced sufficiently in the congressional process for us to weigh in yet. So until activities on the Hill progress further, we don't really have a vehicle to comment on.

We are providing substantial technical assistance and technical analysis of the various bills, both the energy information administration and the EPA -- and outside third-parties, not governmental, are providing us substantial input into that.

So we are constructively engaged. I have been in regular conversations with the members of the House who are looking at this set of ideas. We have not had significant engagement with the Senate yet. There really hasn't been as much outreach on the Senate side yet, but we do look forward to continuing the conversation, as I indicated yesterday.

I should highlight though, we just signed a bill that has two market-based mandates -- one with respect to cars, one with respect to fuels. It has two technology-based mandates, with respect to efficiency, and with -- of appliances, and with respect to efficiency of lighting systems. And then, of course, the mandate for federal government operations, which is a management mandate.

And so I do wish to continue to underline that this administration has not only called for but the President has signed legislation imposing mandatory, mid-term outcomes that will reduce our greenhouse gases. The other feature that I highlighted at the hearing yesterday was because we now have those five new mandates, and then you have the state mandates on renewable power, and the state mandates on building efficiency, as the Congress looks at new climate legislation it's going to have to take into account now the existence of these other mandatory pieces of legislation, most of which were not in place in 2000 when this conversation began. And so a big piece of the congressional conversation is a little bit outdated, and needs to be brought up to date, so that we are taking rational policy action.

Q: Got it. Quick follow-up just on the specifics -- the meeting in Honolulu, you mentioned that one of the more detailed proposals you would be going over are the elimination of tariff barriers that you've agreed upon with Europe, and you mentioned the 40 technologies that the World Bank has listed as especially relevant. Can you name just one or two of them?

CHAIRMAN CONNAUGHTON: Sure. There's renewable energy technologies, efficiency products, like industrial motors -- would be two good examples. We think we should probably add to the list some of the lower-carbon fossil technologies. These are more expensive, and tariff elimination would help the sales -- two-way sales, actually, between -- among countries.

I would observe right now in America we have a -- our two-way balance of trade on these technologies is, we sell about $15 billion worth of these technologies, and we purchase from overseas about $18 billion. So we purchase more than we sell. So this is a two-way benefit. The World Bank has estimated that with the elimination of tariffs, global trade in lower-carbon technologies could increase by up to 14 percent per year. So we are talking about a very easy thing to do, that should have been done years ago, that could produce massive economic benefits, massive productivity benefits, and massive greenhouse gas reduction benefits.

Q: Jim, how are you?

CHAIRMAN CONNAUGHTON: Good, thank you.

Q: Good. You mentioned the budget. Is there any plans in the works to, I guess, combine some of the things that you talked about, specifically on the coal side? Are we going to see a boost in fossil energy -- a major boost, talking about in fossil energy R&D?

CHAIRMAN CONNAUGHTON: I think we'll communicate our views on the budget when we're ready to communicate our views on the budget. By way of background though, for everyone around the room, in the course of the last two years, there's been a very intensive effort with MIT, a group at MIT, a group at the Electric Power Research Institute, and then some of the international sort of technical development bodies, to frame up what they think it will take for us to accelerate the effort to prove the concept of lower-carbon coal technology.

And so just as a bit of a teaser, I would say that we have taken on board a lot of those recommendations -- some of them are slightly different, so we've had to try to work our way through that -- taken on board those recommendations, because we do believe that one of the most important things the world community must do together is do what we can to prove that concept of lower-carbon coal power generation technology, and to do so as quickly as is feasible. This will take some time, but we shouldn't be waiting 50 years or 60 years to see if this is a good concept.

That's just by way of background.

Q: I guess as a follow-up to that, if carbon capture and storage is not fully proven, in terms of the commercialization of it, then is there any chance that the White House is going to be pushing for some sort of even a utility-only cap, carbon cap?

CHAIRMAN CONNAUGHTON: I can't comment on that at this time, because you're working through about three or four levels of "ifs." I do want to observe that because emissions from coal will account for more than 50 percent of future emissions, we have to figure this out quickly. If we cannot find a commercially feasible approach during this research and demonstration period, then the world is going to have to make some pretty aggressive decisions on ramping up nuclear energy, ramping up renewable energy, and it makes the imperative of alternative fuels even greater.

We need all of that now to begin with, but if we can't prove the coal concept, we'll need even more. And right now, if you look around the globe, the rate of commitment to new nuclear is nowhere close to what it needs to be, even if you assume that we'll deal with the coal situation. The rate of uptake of renewables is encouraging, but again, renewables are a more limited opportunity; they will not provide the core base load power that we need, but they're certainly a great and increasing percentage of the supplementary power that many areas can benefit from. And we just need to confront that reality.

I don't know how many of you've seen my gigaton chart. If you haven't, I'll get it to you, and be able to talk to you specifically about that. But if you're talking about any kind of an ambitious, long-term goal, we need more than 25 gigatons of reductions. One gigaton is quadrupling the amount of renewable power we have on the globe today. One gigaton is 270 coal-fired power plants, with zero emissions. And we're trying to work, over the course of the coming years, to build a handful of these things with lower emissions, not zero emissions.

Just to give you a sense, doubling the amount of nuclear power generation on the globe gets you three gigatons -- doubling. So that's going from 400 facilities to 800 facilities globally. And we are not on that trajectory right now at all -- and we need 25 gigatons, as I've indicated. So this is the kind of conversation we're going to be having in the major economies process, if -- look at the real, hard facts and see what the level of global activity is. Simply stating goals is inadequate to the task. In fact, in my view more important is the bottom-up structures of cooperation, and the bottom-up program development that will make the ramp-up that we need possible.

Q: The European Union unveiled its vision this week for climate change. Have you any comments on that? For example, you mentioned nuclear -- I think nuclear was left out of the package entirely. And also President Barroso from the European Commission said that if there's no agreements, no international agreements on these type of targets, that basically he would feel justified in imposing tariffs on imports from countries that have not applied binding targets. Do you have any response?

CHAIRMAN CONNAUGHTON: Three elements to your question. So, first, when you look at the plan that was announced by Europe, what is remarkable to me is how similar many of its aspects are to what's being done in America and Japan and the other major developed countries. They're looking at specific objectives when it comes to renewable power, looking at specific objectives when it comes to efficiency of power generation, specific objectives on biofuels. It's the commonality that I find most striking, rather than the differences.

I would observe that some of the goals that the European Union have announced -- for example, for biofuels -- are less ambitious than the goal that America has just adopted. There are other goals, for example, on renewable power, that Europe has adopted that are more ambitious than the current portfolio in America. So this is just an example that we need to tailor our solutions to different national circumstances.

I think it is unfortunate but understandable that nuclear was omitted. I think that reflects a decision that there are some member states that are not comfortable with nuclear, although most are, and I think I see that really as a reflection that that's really going to be a matter for each individual member state to decide.

What I find interesting about that is that's kind of similar to the position that we've taken here in America, that when it comes to renewable power mandates, we think it's best for each state to decide for itself what the right mix should be, because it's tougher to set a nationwide objective that would be fair.

So there's another example of commonality of approach. The EU adopted a devolution approach, but the member states decide on nuclear, which is akin to the approach we preferred for renewable power mandates.

Finally, on the issue of trade barriers, the most constructive way forward is for the major countries of the world to focus on technology innovation and trade liberalization to get the technologies into the marketplace.

Trade barriers are not the answer, because all they do is create litigation and delay, conflict and confrontation. This is a shared effort. We need to respect the needs, especially of major developing countries, to lift their people out of poverty, and bring the kind of welfare and quality of life that we enjoy in America and Europe to their people. And so I think we are much better off removing barriers to trade, removing barriers to innovation, and accelerating the market uptake of these goods and services, rather than creating these threats.

The administration is firmly supportive of open trade, and acceleration of innovation as the way forward. I think there's a divide in our Congress on that point. And I think it's very important to know that there is a -- the administration has a different view than some in our Congress, and the views of some in our Congress that echo some of the statements coming out of Europe are not shared by this President or his administration.

Q: The American culture, they have very different concerns from -- in terms of (inaudible) developing countries because they may have not had the (inaudible) technology; they have to feed the people first. Will this meeting in Hawaii address this problem, or will developed countries provide any technology assistance to developing countries?

CHAIRMAN CONNAUGHTON: There is a strong consensus and recognition of the hard work of the developing countries to find ways to feed their people, lift them out of poverty, and provide new opportunity -- and that is well understood and well accepted. We are in a new place, especially among the major economies today, though, than we were 25 years ago when many of these positions were originally taken.

China, India, Brazil, South Africa, and Mexico have dynamic and wealthy economic sectors, whose growth is predicated on new investments in technology and infrastructure. That is markedly different than areas of these countries which are still highly impoverished. And so we have to begin to look at our problem in its many perspectives.

So for example, you know, China is holding massive amounts of foreign reserves that go to core investment. And so one of the questions we will have, working with China, is how can we seed deployment of these massive amounts of resources toward the purchase of new generation technologies?

We know that all countries are willing to make these investments because right now, if you look at China or India or Brazil, they are investing in state-of-the-art telecommunication systems. And they're doing it with their own investment, and using -- building their own capacity to do that, with good support from developed countries. One can hope and expect the same kind of outcome when it comes to clean energy systems. So we are prepared to help, but also, the major developing countries are in a good position to leap ahead, as well.

Now I want to draw a sharp distinction then between the lesser developing countries and the small island developing states. Their core issue is gaining access to more energy of all kinds, and affordable energy. Their CO2 footprint is tiny, and will remain so. So I think with respect to those countries, we need to focus on greater access to technology of all kinds, and as affordable as possible.

So I hope you see from my remarks we need to look at this from three different baskets. There's countries that are -- there's a lot of wealth in the energy side of a lot of countries, and there's a lot of poverty in the energy side, with respect to the smaller countries, and we need to be quite sophisticated in how we think about this as we set up future arrangements.

UNDER SECRETARY DOBRIANSKY: Jim, if I may just jump in on this point, if I can. And that is to say that our approach, as I think you've indicated, has been very much an integrated approach, and one in which we look at the importance of energy access, energy security, looking at the needs not only in urban areas, but especially in rural areas, and how countries produce and consume energy. But you have, particularly in the major emerging economies, you have the challenge of dealing with the need for energy access, particularly in rural areas.

The approach that we have had, through such international partnerships like the Asia Pacific Partnership, is grounded on looking at access to energy, looking at the growth of a country's economy, and how you do that, and how you apply your economic assets to environmental stewardship. We see all of these three points interrelated, and I think Jim's response to you underscores that. I had just wanted to reiterate it.

I also had wanted to mention that I, unfortunately, have to jump off. So back to you, and just thank you.

CHAIRMAN CONNAUGHTON: Great, thanks, Paula. I guess I really do want to underscore this point, that the wealthy parts of our countries can afford new technology, and the poorer parts have a harder time -- and that's really where we need to begin to draw the lines.

It is also the case, very different today than 25 years ago, there is a lot of technological know-how in the major emerging countries. China has some of the smartest innovators in the world, who themselves are developing new technologies, developing intellectual property that they want to see respected and valued in the global marketplace. And so the conversation is changing in real terms, although the public policy conversation hasn't quite caught up with that. And I think that's going to be something that you should all be exploring in the coming -- in the next couple of years, that shift.

One of the best indicators of that is the one I gave you, which is we buy $18 billion a year from overseas, and we sell $15 billion a year. That itself tells you of the dynamism of this new clean energy technology market. And so it does not -- it's no longer a one-way equation. It's clearly a two-way equation, and we need to make the most of that.

Q: Jim, a couple of things which I know are going to be very big subjects over the next couple of years, leading up to Copenhagen. One is the baseline year for any future targets, such as 2020 or 2050. I believe Japan may be mooting 2000 as a possible baseline year, and I think the U.S. in Bali were happy to settle at 2005, while Canada were proposing 2006. I think this has fairly big implications for people, particularly Europeans who've been operating on 1990 levels and could probably seriously undermine the clean development mechanism, which is something you've not mentioned yet.

And the other issue is obviously sectoral targets. These are going to be heavily discussed over the next two years. And do you think these should be internationally derived, or should these be left as national agenda items?

CHAIRMAN CONNAUGHTON: Wow, you gave me everything. Let's see. Let me start first on the baseline question. That's something for all of you to watch. I'm a pragmatist, so I care about how we're actually doing from year to year. And I find that the baseline discussion to be a unfortunate distraction because it's so artificial. And so -- you know, I could give you all the stories of why 1990 so unfairly advantages some countries and so unfairly disadvantages other countries simply by quirk of history and timing.

And so I think it would be useful to move out of the philosophy of negotiating a baseline to your personal country advantage, and moving into the philosophy of what is the rate of accelerated improvement in each area that we can make, over what period of time. So I'd much rather see a forward-looking set of commitments rather than a sort of backward, anchored set of commitments.

Of course, you need to be able to compare, but we also need to be much more sophisticated in our points of comparison. China and India have raised a very important issue, that we need to understand sort of energy intensity, or CO intensity, in terms of population. But it's equally important to understand CO2 intensity in terms of energy use.

And so both matter, but both tell you different things. In a country like China, where there's a lot of people who don't have access to energy, you actually want more energy per capita. But in the areas of China that are massive energy consumers, their intensity is much, much worse than countries like the United States and countries of Europe. And so you need to be able to compare both because -- and China has recognized this, which I applaud; they've got a big push on efficiency, recognizing the difference in their rate of efficiency from some of the major developed countries, and we're working to help them with that. I think it's just great.

So on that whole point about baseline, you all should pay close attention to it because we need to move beyond the gaming of this and have very practical, forward-looking discussions.

Now, your other question was on -- let me --

Q: Well, I mentioned the CDM, but you had not mentioned it. And the other one was on the sectoral targets, should these be internationally derived or left to be derived at the national level.

CHAIRMAN CONNAUGHTON: Let me talk about CDM, because it can be understood in the context of this new international clean energy fund we're talking about.

The International Energy Administration Agency has estimated that $20 trillion is going to be spent on energy and associated services and systems between now and 2030. I think last year the CDM was somewhere upwards of $3 billion euros -- maybe a little bit more than that. So you have to evaluate $3 billion euros, $4 billion euros against the $20 trillion that's going to be spent in this sect, in this category. So CDM is an important, useful way of providing assistance between countries; but it is not and cannot and won't be the only way. And that was recognized in Bali.

So when you look at the section in the Bali road map on finance, there was global consensus that we need to look at all of the financing streams, of which CDM is one part. That's very important, because even as we develop the New International Clean Energy Technology Fund, which will be substantial, and a really nice complement to those who are using the CDM mechanism, we still have a much more substantial private sector finance stream that we have to understand and find ways to orient in a market economically sensible way.

So all of this becomes important. And again, I hope all of you will challenge -- the participants in the discussion, challenge the participants to look at the whole picture, not just individual slices of the picture. The same is true in adaptation. Adaptation -- you'll hear a lot of discussion of an adaptation fund, just like you'll hear discussion of a forestry fund. But any of these individual funds is a fraction of the scale of the problem that we're trying to tackle.

So it is inadequate to deal with those funds alone. They're very important, but looking alone we can't count ourselves successful by only having these individual funds. It's how we deploy those funds, how we leverage the private structure and the infrastructure investments and affect good, progressive thinking on the part of political leaders, within their sovereign contexts, that will provide lasting success.

Q: Listen, I've got a very easy question for you, and I do have a follow-up to it. One is, what's the level of participation you're seeing in Hawaii? And I hope you're happy about that. And I'm sorry that Paula is no longer on the call, because with all that other robust international framework, is the major economies process something you really want to continue?

CHAIRMAN CONNAUGHTON: We have a very high level of participation. I think but for one or two officials who have parliamentary duties, every one of the leaders will be back for this meeting. And I think that's a good indicator of the strength of the leaders' commitment to this process.

We also -- you need to understand the way these meetings have been sequenced with the meetings that the U.N. will be conducting -- and then we have the G8 as well. So we have leaders' reps in the major economies process. You have the U.N. negotiators who will be meeting, starting probably in April. So we're going to try to have a few meetings before the U.N. reconvenes in April, and that will help orient people's thinking.

So rather than waiting until April, where people aren't doing very much, we're actually putting a lot of thinking into our shared discussions before April occurs. And then there will be a ministerial-level -- I guess, no, it's sub-ministerial-level, subsidiary body meeting at the U.N. in June. So that will be above the technical experts' level. And then the G8 will meet in July. So you can see how these things are sequencing together.

The major economies process right now is oriented towards supporting a leaders' outcome, when the leaders get together later this year. What happens to it after that is just for the major economies participants to decide. It all turns on the structure of what occurs there, and the U.N. process. I think there's been -- I think I would encourage all of you to go back and look at the history of the creation of the framework convention in 1992, and the history of the creation of the Kyoto Protocol in -- ultimately in 1997. You will see that both of those processes were advanced by a series of contact group meetings by smaller numbers of countries pursing particular issues. That is standard procedure for these large U.N. processes -- that you have these smaller groups playing supporting roles.

What distinguishes the major economies process is these groups are at the leaders' representative level. Typically these groups are at a lower level. And so that's the only difference, is the fact that the leaders are really getting themselves around this issue rather than relying on -- and they're direct representatives, rather than going down three, four, five, six levels. And so some of what I hear about the major economies process is just misinformed. I mean, historically we know how these processes work and how they're advanced.

In fact, the Berlin mandate that gave rise to the Kyoto Protocol -- as I recall, I think it was eight countries that really got together to outline the Berlin mandate, and they did it in a hurry-up mode. It was done very, very rapidly. And we're trying to be much more methodical and more broadly inclusive, and then spread that even broader as ideas unfold. There is no agreement, ultimately, until the ultimate agreement at the end of 2009. And so I don't think folks have anything to be concerned about there.

Okay. Thank you, everyone. Stay in touch.

END 11:30 A.M. EST