Report from Bali and The Way Forward

3:00 P.M. EST

MODERATOR: Ladies and gentlemen, thanks for coming to the Washington Foreign Press Center on the week leading up to Christmas. We're very pleased to have Ambassador C. Boyden Gray, who is the U.S. Ambassador to the European Union and has just returned from Bali. And since it's 3 o'clock in the morning in Jakarta at the moment, he has my admiration that he's standing here and ready to talk to you about what occurred in Bali and where we're going from here.

So thank you, Ambassador.

AMBASSADOR GRAY: I didn't get much sleep in Bali, so I'm not really sure it matters what time it is. The hard part is to try to remember whether it's 3 o'clock yesterday or 3 o'clock tomorrow.

Yes, I really would like to answer any questions you have, but just a couple of preliminary remarks. We did have a very good result coming out of Bali, in our opinion. The high points are we got engaged with the emerging nations for the first time, and that is the critical achievement. And we will see how the negotiations go in terms of what commitments they actually will make, but I think this is a big, big, big, big breakthrough.

And there were, in addition, signed -- progress on reforestation, forest protection and on intellectual property. And these are two also very important achievements.

We do, I think, plan to share the technology with the developing countries, but I think the important thing to remember, collateral thing to remember, is that all of the drama about intellectual property transfer only underscores how critical this intellectual property is to begin with and the fact that we have a lot of it. We can't -- that is, the U.S. and indeed Europe also to some extent -- cannot be accused of doing too little or nothing, when at the same time we are being accused of not making provision for all the intellectual property that we've developed.

And the fact is that we need to find clean coal, we need to find cellulosic ethanol breakthroughs, biofuels, diesel as well. And we need to find the quantification measurement metrics for saving the rain forest and -- because those three are really the three main sources of global warming gasses.

So on that note, I will stop and answer any questions you may have.

MODERATOR: If you could please remember to state your name and media organization.

QUESTION: Thank you. Kaori Ida with NHK Japanese Public Television. There was a lot of attention on the 25/40 percent reduction, but I was wondering if the U.S. was more concerned about the litigation with regards to developed countries and developing countries. What was the biggest sticking point to you?

And also, just from curiosity, I was waiting for Dr. Dobriansky until 3 o'clock, 4 o'clock a.m. every day. Was the U.S. expecting such kind of negotiations?

AMBASSADOR GRAY: You've got about three or four questions in there. I may have to come back to you and remind me what you just asked me.

What was the sticking point with the emerging countries? Well, interestingly, one of the major objectives was OPEC, who didn't want any -- which didn't want any limits whatsoever, and then had what I thought the audacity to demand compensation. I don't know why OPEC is considered developing anyway; they're pretty wealthy, as far as I know. But for them then to ask for compensation because oil consumption would go down if Bali were successful, I think is sort of interesting.

But at the end of the day, it worked, it worked out. And we have, I think, the enthusiastic participation of China and India and some of the other developing countries. What I think we need to do in the future is draw some distinctions between the G-77 -- they're not all the same, some are very small, very poor countries that don't emit much greenhouse gas, and also like some of the island nations are more exposed -- and they should not have to do the same -- carry the same burden as the more advanced emerging nations, to say nothing, of course, of the developed world. So there need to be these distinctions made as we move forward.

On the 25/40, we were surprised by that. The 25-40 figure is the most draconian of the 177 sort of scenarios in the IPCC report. And it was not -- it's not the EU negotiating position. The EU negotiating position is based on their own policy, which is 20 percent reduction unless the developing world takes on commitments, in which case it'll go to 30 percent. But at the time the Europeans were pressing this, we didn't know whether the developing world would be participating. So in effect, as this was happening, the European position was at best 20 percent, but they're talking 25 to 40. It didn't make any sense to us. And I remember watching the night before the last day, I guess that would have been Friday night, I'd wake up -- or not go to sleep -- and watch to see what the hourly news was, and at about 4 o'clock BBC broadcast an interview with the British Environmental Minister who was then saying that the European position was 20/30, as I have described. So that I took as a signal of what the EU position really was. So we were surprised by the 25/40 and who knows. And of course, in the negotiations some sector may end up agreeing to a curve of that magnitude.

I think the only observation I would make is that some of the technology that's critical will be or will not be just about to or just about not to be coming online at about 2020, especially the clean coal demonstration projects will be, you know, up and running only for us at 2012 at the earliest, Germany probably not till 2015, and we will not have the evaluation and the commercialization of that until about this time period, and you can't jump the gun and freeze out that technology. And you know, and the deadline, there's nothing in the IPCC report which says 2020 is the deadline for that number. And had the Europeans pressed 2030 or 2035, who knows what -- and that may come up in the negotiations. That's what's Bali is all about is to set up the negotiation. Now, you had a third question in there.

QUESTION: (Inaudible) under the 3:00 -- 4:00 am negotiations?

AMBASSADOR GRAY: I think that happens invariably -- every one of these. And had the plane tickets been scheduled for Friday at noon, rather than Saturday at noon, we would have had an all-nighter Wednesday night and Thursday night, rather than Thursday night and Friday night. It's just the nature of -- watch Congress in operation this week and you'll see some all-nighters, I think, as they run up against the Christmas holidays.

QUESTION: My name is Christian Wilp from N-TV German New Channel. Ambassador, some people find it quite unusual just a day after Bali, right away some serious concerns about the agreement. Does it mean that the White House didn't really back the outcome of Bali or what do you --

AMBASSADOR GRAY: I think if you read the statement carefully, there's a lot of concerns about the agreement looking backwards at the five days. It's really guideposts, you know, concerns about the future, making sure that it's understood that we do expect this differentiation to develop. We do expect more of the advanced countries than we do of the less advanced. And we do expect them, though, to make commitments that are commensurate with their capabilities. So I mean, that's the basic thrust of the concerns expressed. It's not a -- it wasn't a rap on the agreement that was reached. We are only now starting to negotiate and this is a -- these are guideposts for negotiations, not for the agreement.

QUESTION: Brian Beary from Europolitics. I have a technical and a political question. You were talking about intellectual property. Could you just explain in layman's language, what are the issues that are at stake here? I would have thought that technologies like clean coal and et cetera and cellulosic and that they would be transferred for free to the developing countries. And secondly, on the more political side, do you think that this was in some ways a pure disaster for the U.S. because we had the images of, you know, the Papua-New Guinea delegate saying America, get out of the way and then Paula Dobriansky doing a 180 degree turn. And then we had Senator John Kerry saying -- releasing a statement saying the Bush Administration is increasingly out of touch. Their days in power are numbered.

AMBASSADOR GRAY: Well, we have Papua-New Guinea, we have Kerry, what other --

QUESTION: Intellectual property.

AMBASSADOR GRAY: -- on this. Intellectual property, what else did you mention? That's pretty good. On the intellectual property, if it's required to be given away for free, it won't be developed, at least not by the private sector. The U.S. has huge investment in this. And what is invested by the federal government will generally be made available on reasonable terms. But -- and that's, you know, in total, 37 billion. Now, some of that is research. I mean, some of that is measurement, measurement of how do you account for a chronic change, some of it's money underwriting the IPCC process, but some of it is raw research. Some of it is very, very basic research. And to commercialize that and make it available in a forum that could be used, will take the private sector efforts and they're not going to do it if there's no return at all.

But there is also a huge investment by the private sector, especially in the United States, but also to some extent in Europe. The Danes, for example, have the best research on second-generation biofuels. A couple of companies there are really leading the pack. And they will not make their stuff -- they're not going to give it away, otherwise the investors will never get repaid and they won't invent anything new. They'll just stop, if they think they're going to be -- going to have their work sort of taken from them.

Silicon Valley -- our Silicon Valley is investing billions now in these various technologies and would stop tomorrow if they thought that this process would come and take it all for nothing. So the key is how to find -- how to do this in a way that is reasonable and it makes it accessible on reasonable terms. And I repeat, the U.S. Government itself is not going to try to make money out of this. Our investment is not a profit-making venture and is being made without regard to the return. But that's not true for private investors who may end up finding better stuff than the federal government does. That's happened before and one always hopes it'll happen again.

Papua-New Guinea, it was a dramatic moment. I'm not sure we handled it as well as we could have. It's not as though the U.S. backed off after being criticized. There was an important point that was being -- that we had to have clarification on. And we got the -- in fact, it was a change that had to do with whether the phrase "measurable, affordable, quantifiable" was going to apply not only to our intellectual property and AID efforts, but also to the developing country commitments to the whole world for their actions. And once we got clarification that the modifying -- that phrase, "measurable, quantifiable, affordable" applied to both sides, then we said, fine. We could have explained it better, but that's why I'm here, I guess, is to maybe try and explain it now.

As for Senator Kerry, I mean, you and Vice President Gore, they'll take -- this is -- we're entering a political year and I think all is fair in love and war or we can take their political sort of flights of rhetoric. But what Kerry -- the real message of Senator Kerry was that you must engage the developing world, otherwise, we will not -- we, the Senate, no matter who's President, no matter who controls the Senate -- will not accept, will not approve -- ratify a treaty. And we know this going back 10 years, the 95-0 vote against Kyoto in the Senate during a Democratic presidency. And the same thing could happen again. And so the Senate -- the leading Senate climate change bill, the Lieberman-Warner bill, actually requires for us to accept imports from the developing world requires comparable reductions. Now, that standard comparable reductions is actually more demanding, more strict than what we agreed to at Bali. I repeat, the Administration's agreement as Bali is less demanding than it's in the leading Democratic bill and the Democratic Senate. And so that's just to try to underscore to you that this -- whatever Kerry is going to say politically or the Vice President -- former Vice President, this is really not a partisan issue.

When it comes right down to it, we all in the United States live with the same economic realities as Europe does -- that is we have jobs at stake, we have corporations, we have unions. And we have competitive pressures with the developing countries. And we do expect them to do their fair share, unless we lose all of our jobs to countries with less -- with dramatically less possibly burden.

And one final point for us -- this is not true really of Europe, but for us in California -- as much as 20 to 25 percent of the most deadly pollution in California is -- comes from China -- fine particle pollution which is deadly. I mean, there are a lot of people who die prematurely because of it. It's very expensive to clean up. And we are getting this now from China and it's not very healthy. And all of this effort to clean up CO2 and other will also clean up the other pollutants and that will be a very, very good outcome.

MODERATOR: Lambros.

QUESTION: Lambros Papantoniou, Greek correspondent, Eleftheros Typos, Greek Daily Athens. Ambassador Gray, how do you assess the EU policy vis-à-vis between independence of Kosovo in connection with the U.S. policy?

AMBASSADOR GRAY: I don't want to get into Kosovo, if I can avoid it. I'll just say simply that I think that we are working very closely together and there is no daylight between us in how we're going to approach the question of Kosovo's independence. So -- but I really don't want to say anything more about that. This is a discussion of climate change. If you want to talk about air quality in Athens, I can do that. But I'd prefer to stay on the question of climate change, not Kosovo.

MODERATOR: Go ahead.

QUESTION: Kaori Ida with NHK again. Today's title is Report from Bali and the Way Forward. I was wondering if you can talk about the way forward. I understand that the Major Economies Meeting is happening next month in Hawaii. How do you see the results of Bali feeding into the Major Economies Meeting?

AMBASSADOR GRAY: Well, it's a good thing we have a Bali agreement because if we hadn't there would have been no major economies follow-through. You know that the Major Economies Meeting is really based on the framework, the idea, the process of the Montreal protocol, where what was then thought to be a manageable group of countries, 60 in our case, here in the climate change we're 190 or something, but 60 was thought to be unmanageable. And so the U.S. pulled aside a dozen or so countries that produced 80 or 90 percent of the CFCs and said let's see if we can work out the details of an agreement in a smaller group, a subcommittee if you will and then take it back to the full committee for further refinement. And that worked very well. It was about six to nine months before an agreement was reached and it was done by breaking down not only the larger group into a smaller one, but then with the smaller one, it was broken down even further in the sectoral review committee -- subcommittees to try to focus really with the laser beam on isolated problems.

The insight which I heard from the lead Indian negotiator who we had a little Montreal Protocol dinner in Bali, and he made an observation which I had not thought about and which is so simple that it's so obvious you don't -- you sometimes lose how profound it is. What he said was, and if you think about this is true, that for every sector whether you're talking about broad sectoral transportation versus electricity generation versus reforestation versus intellectual property, he said -- and we'll break down the industrial side and the cement, steel, cars, whatever -- however you break it up, for each sector, there are only about 10 countries that really matter -- different ten for each sector, but there are only about 10. And that's really profound because it means that if you take it sector by sector, you have a manageable group working on this and I think you can move very, very fast with that kind of intense review. Imagine trying to get 10,000 people at Bali to focus on each of these sectors, it's just -- it's not doable and but breaking it down is doable. And I want to point out that the Montreal Protocol has produced many, many multiples of Kyoto in terms of greenhouse gas reduction.

People often accuse -- you know, we're not doing anything in the United States and we did lead the way on this 20 years ago. Some figures have it as high as a 10-x multiple, five times is probably safer. The U.S. just about six months proposed an acceleration which the world agreed to just a few weeks ago, which will produce another equivalent of Kyoto. We have more on the way that will produce one or two times Kyoto in the middle of Bali, the Senate gave the President a huge victory by agreeing to his 20 and 10 transportation sector plan from the last State of the Union. This is huge. That's a gigaton. That's about 20 percent of the total reductions of the first phase of Kyoto. It's a huge unilateral action on our part, so it's a very high standard.

I was on the phone yesterday with the European Commission on a different but not totally unrelated subject matter and we talked about these energy issues and he said -- he volunteered, I mean, he didn't -- it wasn't forced, he volunteered. He said you Americans are setting a very high standard for us in Europe. So I felt good about that and especially the acknowledgement by the EU that we are providing a good example. They're now struggling with, as you know, the transport sector, as we speak, I think. And so it was very timely to have the Senate Energy -- the Senate act on the energy bill, as Europe comes face-to-face with their own transportation sector, which is the fastest growing sector, by the way, of the developed world, greenhouse gases.

QUESTION: I'm Anne Engelke with German Radio. I was just wondering about how -- is this going to be the Secretary's or, you know, who's going to talk with each other?

AMBASSADOR GRAY: Well, the secretary as you know, I was thinking about that (inaudible) asking your question. But there must have been a dozen or more environmental ministers and other cabinet level cabinet secretaries from European countries, plus Dimas, the EU environmental minister -- commissioner in Bali. And I -- we didn't have a single cabinet level person in Bali ourselves. So we were, as far as you guys are concerned, outclassed media-wise. I don't think we were outclassed substance-wise. But in terms of who could talk to you guys, we didn't have enough to go out and -- I'm just kidding -- no, I'm actually not seeing that's actually partly true.

What will happen, we hope to get the sectoral working groups up and going. And the Europeans are becoming more and more disposed towards working this way and I think that's what will be the major -- I hope will be a major outcome of the Honolulu meeting and then there'll be another one in France, hopefully at the end of the next month. But I hope to get the -- we hope to get these working groups -- get these sectors really developed, as I was explaining, so we can break it down into manageable bites and start working from the ground up to build, you know, what will ultimately be, you know, an international --

QUESTION: And then there's going to be the big meeting here in Washington in the summer?

AMBASSADOR GRAY: There's a summit. Yes, I don't think -- I don't know any details. I don't think any details have been set. But the leaders -- I think the President wants to have all of them come to try to capture the benefits of the momentum coming out of Bali and these two -- at least two major economies meetings that are coming up in the early part of next year.

QUESTION: Can I ask another follow-up to something you said before? When you were asked by the colleague about Papua-New Guinea and he said -- or New Guinea and you said that you could have done it better, how could you have done it better -- a reaction in Bali?

AMBASSADOR GRAY: Well, I can explain why there was an objection. That's all. I mean, the way it looks to the television world was we said no and then all of a sudden, because there was a protest we said, yes, but there was a change that occurred which allowed us to say yes and the change was not insignificant. But we didn't explain it and that's -- you know, that happens in a situation like this. You sometimes lose sight of the fact that you've got cameras watching. The -- I think the thing is difficult for is that the kind of clarification or change that we were looking for was one of probably 50 of similar import that occurred routinely -- that occurs routinely in any kind of negotiation of this kind. This one happened to be on world television. That's the difference. And that's, you know, I mean, that's just in a sense, you could say bad luck.

MODERATOR: Ambassador, thank you so much. And thank you all.