ENGAGING GERMANY ON ENERGY AND CLIMATE: CEQ CHAIRMAN?S

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E.O. 12958: N/A
TAGS: SENV ENRG ECON EAIR GM
SUBJECT: ENGAGING GERMANY ON ENERGY AND CLIMATE: CEQ CHAIRMAN?S
MEETINGS WITH
GERMAN OFFICIALS AND GERMAN PRIORITIES FOR ITS G-8 AND EU
PRESIDENCIES



1. SUMMARY: White House Council on Environmental Quality Chairman
James L.
Connaughton met with senior German officials from the Environment,
Economic, and
Foreign Affairs Ministries as well as the Bundestag (parliament) and
Chancellery
to discuss environment and energy policy as Germany prepares to take
over the EU
and G-8 presidencies in 2007. The meetings took place following the
High Level
Dialogue on Climate, Clean Energy, and Sustainable Development
October 24-25 in
Helsinki. Comments from interlocutors at all agencies indicate
Germany
approaches climate change as an integrated policy approach with a
recognition of
the economic potential of exporting clean technologies to India and
China.
Germany?s goals for the EU and G-8 presidencies will include a focus
on energy
efficiency and promoting, clean energy technologies, biodiesel and
clean coal.
Interlocutors agreed with Connaughton these are areas where the U.S.
and Germany
can and should cooperate. German officials were eager for follow-on
discussions
that would lead to further cooperation. Officials from the
Bundestag, Ministry
of Foreign Affairs, and Chancellery explained that Berlin remains
committed to
the Kyoto Protocol, and to the
post-2012 framework discussion.


2. Connaughton used his meetings to make key points on clean coal,
biodiesel,
energy efficiency, and international climate change negotiations.
Connaughton
also made a presentation on U.S. climate policy at the Friedrich
Ebert
Foundation, highlighting U.S. domestic and international policies
that advance
the development and deployment of cleaner and more efficient
technologies that
reduce greenhouse gas emissions, improve air quality, and lead to
greater energy
security. German public opinion of U.S. environmental policy is
generally very
critical and Connaughton did some much-needed public outreach in an
exclusive
interview with Die Zeit, a leading national newspaper. END SUMMARY

CLEAN COAL


3. On the topic of clean coal, Connaughton shared with his
interlocutors U.S.
plans to commercially deploy advanced coal power technology,
including
FutureGen, the world?s first integrated sequestration and hydrogen
production
research power plant. He said the federal government will shortly
announce
approximately USD 1 billion in tax credits to encourage commercial
construction
of advanced clean coal plants. Connaughton encouraged Germany to
pursue a
parallel strategy on a similar scale to that of the U.S. so that
both countries
would test different clean coal technology platforms and learn the
true
economics of the technology. He noted China has been reluctant to
invest so
heavily in clean coal, but transatlantic cooperation on this issue
could change
things. If we are successful in lowering clean coal?s capital costs
and
accelerating commercial deployment, he suggested, we will be in a
stronger
position to urge China and other developing countries to adopt the
technology.


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4. Officials from all agencies acknowledged the U.S. and Germany, as
two of
the largest coal users and the leading innovators of clean coal
technology, have
a common interest in promoting clean coal at home and abroad and the
G-8 could
provide the forum to do so. Foreign Ministry Director General for
Economics and
Sustainable Development and G-8 Sous Sherpa Peter Ammon said clean
coal will be
a ?centerpiece? of the German presidency and recommended forming a
contact
group. Johannes Kindler, Deputy Director General for Industry,
Energy, and
Telecommunications at the Chancellery asked Connaughton to convey
Germany?s
interest in bilateral cooperation on clean coal to the President.
Kindler said
the time is ripe for U.S.-German cooperation on clean coal at the
government and
industrial levels and noted GE has expressed interest in cooperating
with
Munich-based Siemens. For its part, he said, German industry is
eager to
cooperate with U.S. counterparts.


5. Clean coal cooperation was also advanced by Ministry of
Environment State
Secretary Matthias Machnig, who said the U.S. and Germany should use

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the G-8
sherpa process to explore promoting clean coal in third countries.
He cautioned
that there is still serious public concern about the safety of
underground
carbon storage which poses a challenge to investment in clean coal
technology in
Germany. Machnig noted a public endorsement of the importance of
clean coal by
Chancellor Merkel, an East German and former Environment Minister,
would send a
powerful political signal in support of this technology to the
international
community. He suggested that if the German public knew that by 2020
all new
power plants would have to be equipped for carbon capture and
sequestration
(CCS),innovation would take off. While acknowledging the G-8
cannot articulate
such a specific goal, he said it would be very useful if G-8 leaders
emphasized
the importance of speeding up the commercial deployment of clean
coal
technology.


6. In Connaughton?s meeting with Parliamentary State Secretary Peter
Hintze
at the Economic Ministry, Andreas Obersteller, Deputy Director
General for
Sustainable Energy, Efficiency, Coal and Mining, explained clean
coal is part of
Germany?s graduated process of increasing energy efficiency. The
first step is
making existing traditional power plants and new plants more
efficient. He said
there are already new German power plants (i.e., 2000 MW plants
currently being
built by RWE in North Rhine Westphalia) that are utilizing the best
available
technology and are more efficient than their predecessors. Building
clean coal
facilities is the next step after achieving greater efficiency in
traditional
power plants. Connaughton pointed out, and Economic Ministry
interlocutors
agreed, that Germany?s G-8 presidency would be an opportunity to
articulate to
the public the role of clean coal in this process.


7. Speaking on behalf of the Bundestag Environment Committee, Deputy
Chair

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and Left Party member Eva Bulling-Schroeter told Connaughton that
the Bundestag
also sees clean coal as an increasingly important part of Germany?s
approach to
climate change.

ENERGY EFFICIENCY


8. Connaughton suggested Germany use its role as G-8 president to
shift
attention to a greater focus on energy efficiency. He noted energy
efficiency
is a good way to engage China on greenhouse gas emission reductions,
given
Beijing?s goal of increasing efficiency by 20 percent by 2010.
Connaughton
explained that Asia Pacific Partnership (APP) task forces are
currently
identifying targets and projects for investment in energy efficiency
in each
industrial sector under the APP.


9. Interlocutors at the Chancellery and MFA emphasized energy
efficiency will
be on Germany?s EU and G-8 presidency agendas. The Environment
Ministry?s
Machnig also stated it would be helpful if the U.S. made clear, in
the G-8
context, its strong interest in energy efficiency and suggested
identifying
specific areas for cooperation.


10. At the Economic Ministry, Obersteller commented that Germany?s
approach to
energy efficiency, in contrast to that of the European Commission,
is market-
oriented. As an example he explained Brussels is considering
mandating
(currently voluntary) carbon emissions reductions in the automobile
sector but
Germany advocates consumer labeling of vehicles so people know how
much fuel a
car consumes before they buy it.

BIOFUELS


11. Connaughton noted the U.S. is focusing on the development and
deployment
of second generation biofuels, including ethanol and biodiesel. He
mentioned to
interlocutors the U.S. has a mandatory target of producing 7.5
billion gallons
of biofuel by 2012. The U.S. may produce as much as 12 billion
gallons, he
explained, depending on market demand. On biodiesel, he noted
German biodiesel
standards favor rapeseed while U.S. standards favor soybeans and
emphasized that
harmonizing standards is essential for the development and global
interoperability of biofuels and other key new energy
saving/emissions cutting
technologies.


12. The Chancellery agreed that biofuels is an area ripe for
U.S.-German
cooperation in the context of their upcoming EU and G8 presidencies.
Kindler
suggested the U.S. and EU bolster their clean technology sectors by
working to
jointly set standards and efficiency criteria. In comments made
before MFA
State Secretary Georg Boomgaarden joined their meeting, Ammon told
Connaughton
he wants to see more U.S.-German cooperation on biofuels. He noted
German
companies, such as DaimlerChrysler, are pushing forward on second
generation
biofuels and biomass-to-liquid (BTL) development and emphasized the
need for the
U.S. and German governments to engage industries in their bilateral

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discussion.
He also pointed out that biofuels makes sense as a fuel source for
the U.S. and
Germany, who both want to put surplus agricultural production
capacity to good
use.

INTERNATIONAL PROCESS STILL KEY


13. While showing strong interest in cooperating with the U.S. on
clean coal
technology, energy efficiency, and biofuels, interlocutors from the
MFA,
Ministry of Environment, Chancellery, and Bundestag nonetheless
expressed
Germany?s unwavering commitment to international discussions on
climate change,
both through the Kyoto Protocol and the discussions on a follow-on
agreement.


14. Connaughton stressed the importance of engaging China and India
on climate
protection as part of a broader agenda, including energy security
and
environmental quality. He noted that China and India rank climate
change lower
than energy security and air pollution and are not organized around
the goal of
reducing greenhouse gas emissions. Connaughton explained that the
Asia Pacific
Partnership was created in part to help promote such a dialogue.
He said the
EU made a mistake at Montreal by assuring China and India that they
would not be
obligated to make emissions reductions in a post-2012 regime and
stressed that
the U.S. will not join an international framework in which
developing countries
have no commitments. Connaughton explained the U.S. supports a
dialogue among
all UN members within the UNFCCC but a more focused discussion among

environment, economic, energy, and industry interests of the 15-20
leading
emitters of carbon dioxide would be more effective in coming up with
real
solutions. He noted British Prime Minister Tony Blair started this
kind of
?leadership dialogue? on climate change at Gleneagles.


15. MFA State Secretary Boomgaarden?s first comment in his meeting
with
Connaughton was that it is important to have the U.S. ?in the boat?
in post-2012
discussions, along with India and China. Boomgaarden said he is
optimistic
clean coal and other technologies can become economically viable.
He stressed
the importance of the Kyoto process and the inherent value of
approaching
climate at the international level and of having specific goals for
carbon
emissions reductions. Boomgaarden acknowledged U.S. reticence to
commit to a
target for absolute carbon emissions reductions, but pointed out
that the U.S.
has targets in other areas. He said on aid to Africa, for example,
Americans
are comfortable with setting a number goal.


16. Boomgaarden, however, acknowledged the value of a smaller-scale
discussion
on climate among key industrialized countries. He said it was
useful that UK
Prime Minister Tony Blair started the G-8 dialogue on climate at
Gleneagles and
noted the G-8 process is an easier way to engage ministries of
Economics/Energy
than within the UNFCC. He concluded by reiterating the need for a
minimum

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binding goal such as preventing a global temperature rise of more
than 2 degrees
Celsius above pre-industrial levels. There are different ways to
achieve such a
goal, he said, but stressed ?the discussion doesn?t make sense
without the
context of binding goals.? Ammon qualified Boomgaarden?s remarks by
commenting
it doesn?t make sense for the U.S. and Germany to have a ?religious
war? about
how to approach climate when there is so much the two countries have
in common,
such as interest in engaging China, which will soon be the biggest
emitter of
carbon dioxide.


17. Members of the Bundestag from all parties similarly advocated
strong
support of the Kyoto process. Dr. Axel Berg, Social Democrat member
of the
Economic Committee, said that while he is ?no great fan? of Kyoto,
he does not
see Kyoto commitments and support for technological innovation as
mutually
exclusive. Both the U.S. and Germany want to sell clean coal
technology to
China, he continued, and Germany wants to use the Clean Development
Mechanism
under the Kyoto Protocol as a mechanism to do so. Michael Kauch,
Left Party
member of the Environment Committee, supported Berg?s comments but
noted that
the German public?s impression of U.S. environmental policy is
tainted by the
U.S. refusal to discuss Kyoto.


18. Machnig touched on the topic of international cooperation on
climate by
raising the issue of adaptation. He said there needs to be a signal
at the G-8
level that we take the concerns of developing countries seriously
and will
support their adaptation to climate change. Connaughton agreed but
explained
the U.S. sees adaptation as part of a broader, sustainable
development agenda.
Machnig insisted on the importance of signaling to the developing
world that we
support adaptation by putting money into the World Bank Energy
Investment
Framework for this cause.


19. This message has been cleared by CEQ.

TIMKEN, JR