DEMARCHE ON U.S.-EU CLIMATE CHANGE COOPERATION

UNCLAS SECTION 01 OF 03 STATE 024257

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: KGHG SENV ENRG EUN
SUBJECT: DEMARCHE ON U.S.-EU CLIMATE CHANGE COOPERATION


1. (U) This is an action request for posts in EU Member
States and USEU. Please see para 10.


2. (SBU) SUMMARY: The March 13-14 meeting of the European
Council, which will bring together European heads of state
and government, will include a major discussion of climate
change and energy. The purpose of this demarche is to inform
that discussion by underlining the importance of continued
U.S.-EU cooperation in achieving a practical, global, and
environmentally effective outcome in both the Major Economies
Process and in the UN Framework Convention negotiations. The
Major Economies Leaders Statement in July will play a key
role in helping ensure a successful outcome for COP-15 by
addressing key elements of the Bali Action Plan. Before the
Heads of Government meeting next week, the United States
wishes to send a clear signal to the EU and its member states
that their calls for Annex I Parties cutting emissions by
25-40 percent as a group will undermine our shared goal of
broadening international participation. END SUMMARY.


3. (SBU) In order to build on the positive momentum from the
January 30-31 Major Economies Meeting in Hawaii, it is
important to be practical and recognize the different
circumstances of countries in meeting the climate challenge.
Deputy National Security Advisor Dan Price, CEQ Chairman Jim
Connaughton, and Special Envoy to the EU Boyden Gray visited
Paris, Berlin, and London February 24-27 to discuss
cooperation on climate change. The U.S. officials told
European interlocutors that setting an impractical goal for
the next round of UNFCCC negotiations would not only be a
recipe for public failure, but would also raise the prospect
of driving major developing countries such as China and India
- whom we and Europe have a mutual interest in attracting to
post-2012 arrangements - from participating in such
arrangements.


4. (U) Recent meetings underscored that many in Europe are
not aware of the substantial new actions embodied in the
Energy Independence and Security Act of 2007. The United
States now has eight mandatory programs. The mandates
embodied in these programs represent a bipartisan consensus
in the United States, and include:

-- Renewable fuels - 36 billion gallons or roughly 15 percent
of fuel supply by 2022
-- Vehicle Fuel Economy - 40 percent by 2020 to 35mpg (miles
per gallon)
-- Lighting Efficiency - 25 to 30 percent improvement by
2012-2014, 70 percent by 2020
-- Appliance Efficiency - 45 new standards
-- Federal Government Operations - 30 percent efficiency
improvement and 20 percent renewable fuel use by 2015
-- Accelerated Hydrochlorofluorocarbons (HCFC) Phaseout
-- Renewable Power - 26 states
-- Building Codes - Federal government promoting new 30
percent model code

(NOTE: Whether and how such mandates, some of which relate to
state - rather than federal - action, could be reflected in
an internationally binding commitment is still to be
determined. END NOTE).


5. (U) U.S. investments in energy technology research have
increased from $1.7 billion in 2001 to over $4 billion per
year and, as a result of the 2005 Energy Bill and FY08
appropriations, there is now $38.5 billion per year available
for federal loan guarantees to promote the deployment in the
United States of clean energy technology. The United States
is joining the UK and Japan in contributing to a Clean
Technology Fund that will help to bridge the financing gap
towards deploying clean energy technology in developing
countries.


6. (U) The United States supports all major economies having
nationally determined mid-term goals that are reflected in
binding international commitments.

-- Such goals should be supported by national plans
sufficiently detailed to provide measurable, reportable, and
verifiable means of achieving the goals.
-- Allowing Parties to determine their own mid-term goals
will further important objectives with respect to a post-2012
outcome. It will promote the Bali Plan of Action's emphasis
on "nationally appropriate" actions. In addition, it will
make it more likely that we can attract broader participation
and build a global, comprehensive post-2012 outcome.

STATE 00024257 002 OF 003




7. (SBU) Recent developments indicate that the European Union
may, in upcoming negotiations, press other developed
countries ("Annex 1 countries" under the UN Framework
Convention on Climate Change) to take on similar absolute
reductions to which the EU has committed; namely 20 to 30
percent by 2020 or 2025. For example, the EU in conclusions
to Bali post-Kyoto negotiations pressed to highlight
Intergovernmental Panel on Climate Change (IPCC) language
suggesting that Annex 1 countries must collectively reduce
their emissions by 25-40% by 2020 in order to achieve the
lowest greenhouse concentration levels assessed by the IPCC.


8. (SBU) Most other large developed countries (e.g.
Australia, Canada, Japan, and the United States) start from a
different baseline than the EU (due in good part to
fortuitous structural changes in the German and United
Kingdom economies before Kyoto was negotiated),and cannot as
a practical matter meet the type of collective targets the EU
appears to be calling for. For example, achieving a 25 to 40
percent reduction by 2020 compared to 1990 levels would
require roughly a 50 percent reduction in US emissions
compared to a business as usual scenario. Even the most
aggressive bills on Capitol Hill (including those supported
by current Presidential candidates) envisage a return only to
1990 levels by 2020, and other compromise bills envision a
more gradual constraint. U.S. national circumstances differ
substantially from those of Europe in other ways as well.
Between now and 2050, our population is expected to grow from
300 to nearly 450 million. The population of the EU25 (EU
Member States excluding Bulgaria and Romania),on the other
hand, is expected to fall from a peak of 470 million in 2025
to about 450 million by 2050, according to Eurostat.


9. (SBU) Many EU member states appear not to recognize that
by insisting that other developed countries take on similar
targets to the EU-wide commitment, the EU would be applying a
more stringent standard to non-EU states than it is to its
own member states. The EU is meeting its current targets by
means of a region-wide reallocation (the so-called EU
"bubble") allowed under the Kyoto Protocol. The bubble is not
a right automatically conferred on the EU under either the UN
Framework Convention or the Bali Action Plan, but rather is a
"flexibility mechanism" agreed by Parties under the Kyoto
Protocol. The "bubble" has allowed EU member states to meet
the overall 8 percent reduction target through a
heterogeneous set of individual targets ranging from a 21
percent reduction from 1990 levels by Germany to 27 percent
increase by Portugal.


10. (U) ACTION REQUEST: Department requests that Posts draw
on the points below and engage host governments and the
European Commission at an appropriately high level before the
March 13-14 European Council meeting. Posts should deliver
the points orally.

July Major Economies Leaders Statement
--------------

-- We are pleased with the evolving cooperation on climate
matters with EU. The Major Economies meeting in Hawaii was
an important step forward; our senior team, led by Deputy NSA
Price and CEQ Chair Connaughton had productive meetings last
week in Berlin, London, and Paris, where we underscored that
it is crucial that the U.S. and EU work together if we are to
achieve a post-2012 agreement that is both global and
environmentally effective. A strong Major Economies Leaders
Statement in July will increase our chance of success within
the UNFCCC by addressing some of the key elements in the Bali
Action Plan. We believe the most important deliverables for
a July Leaders Statement are:

-- A commitment that each major economy is prepared to
reflect its nationally determined mid-term GHG reduction
goal(s) in an internationally binding form.

-- We are interested in achieving agreement on the concept of
making a commitment - not the content, which should be
negotiated after the July Leaders Statement in the UNFCCC.

-- The United States is flexible on the content and timing of
those commitments, but believes that there needs to be
commitment for every major economy, even though the content
of these commitments will vary.

-- In addition, such commitments should be supported by
national plans sufficiently detailed to provide measurable,
reportable, and verifiable means of achieving the goals.

-- In order to promote, rather than deter, broad

STATE 00024257 003 OF 003


participation in a post-2012 agreement, we should allow
Parties to determine their own mid-term goals and reject
trade or other sanctions to enforce compliance.

-- Agreement (by the G8) to assist in funding dissemination
of clean technology needed by developing countries achieve
their mitigation goals as expressed in the post-2012
agreement and linked to an agreement (by all) to eliminate
tariff and non-tariff barriers to clean energy goods and
services.

-- A shared long-term goal for reducing greenhouse gases that
is supported by all of the major economies.

-- Agreement on the importance of (and a template for)
sectoral approaches, both national and cooperative, including
technology roadmaps, shared standards and goals.

-- Recognition of the importance of enhancing work in the UN
and elsewhere on measurement and accounting at the facility
or enterprise level, so we can assure that progress is being
made and commitments honored - and that Bali's mandate that
all mitigation be measurable, verifiable and reportable is
met.

-- Recognition of the importance of addressing deforestation
and its key sources, such as illegal logging.

Mid-term Targets
--------------

-- Within the EU, there is considerable variability in
expectations of member state targets by 2020, in recognition
of different national circumstances both during the 1990s and
since 2000. The EU was allowed this flexibility as part of
the Kyoto Protocol "bubble", so that different member states
- which are themselves parties to the UNFCCC - could work
toward different targets in light of their specific
circumstances.

-- This is a pragmatic approach, and one that the EU needs to
bear in mind as it characterizes its expectations of the
effort for other Parties. The U.S. and other developed
countries are prepared to be ambitious, but neither we nor
any other major non-EU developed country will be in a
position to meet anything close to a minus-20 target by 2020,
compared to 1990 levels. This is also the case with a number
of EU member states, which are themselves Parties to the
UNFCCC. Without an internationally-recognized EU-wide
target, most EU member states could not cut their emissions
by 20 percent without transferring billions of euros via
international offsets.

-- If the EU establishes unrealistic expectations for
developed country mid-term targets (e.g., 25 to 40 percent
cuts for Annex I Parties by 2020, compared to 1990 levels),
it will tend to undermine, rather than support, an approach
that brings the major economies together to move forward on
this issue.

-- Furthermore, we should not focus solely on one pathway for
emissions reductions. The IPCC Working Group III
contribution to the Fourth Assessment Report includes 177
scenarios, and the EU has chosen one of the most extreme.

-- The U.S. is eager to work with the EU in finding a way to
express a shared long-term goal for reducing greenhouse gases
that is supported by all of the major economies, as well as
developing sectoral approaches that will broaden
international participation.
RICE