SENATOR KERRY DISCUSSES U.S.-CHINA CLIMATE CHANGE COOPERATION ON COPENHAGEN WITH CHINA'S VICE PREMIER LI KEQIANG

C O N F I D E N T I A L SECTION 01 OF 03 BEIJING 001424

SIPDIS

STATE FOR SPECIAL ENVOY STERN
STATE FOR EAP/CM-HABJAN
STATE FOR OES, OES/EGC, OES/ENV, EAP/CM AND EB
STATE PASS TO CEQ SUTLEY
USDOE FOR INTERNATIONAL
EPA FOR INTERNATIONAL/MKASMAN
NSC FOR LOI

E.O. 12958: DECL: 05/29/2019
TAGS: ENRG, SENV, KGHG, CH
SUBJECT: SENATOR KERRY DISCUSSES U.S.-CHINA CLIMATE CHANGE
COOPERATION ON COPENHAGEN WITH CHINA'S VICE PREMIER LI
KEQIANG

Classified By: Classified by: A/DCM William Weinstein for Reasons 1.4 (
b),(d)

Summary
--------------
1. (SBU) Senate Foreign Relations Committee Chairman John
Kerry met Chinese Vice Premier Li Keqiang May 27 for a wide
ranging and frank discussion on climate change cooperation.
Li seized on Kerry's proposal for deeper cooperation on green
technology research, calling this "immediately realistic."
Both sides agreed that energy policy is tied to climate
change, and that there is a great potential and market for
increased cooperation on energy conservation, emissions
reduction, and other areas. In response to Senator Kerry's
proposal that China commit to continued reportable,
measurable, and verifiable emissions reductions at the
December 2009 United Nations climate change meeting in
Copenhagen, Li pledged that China would participate
constructively and seek a positive and reasonable outcome.
Li said that China is seeking to overcome the financial
crisis partly by restructuring its economy to promote
sustainability. End Summary.

Cooperation Can Redefine Bilateral Relations
--------------
2. (SBU) Senator Kerry began the meeting by noting President
Obama's belief that the world needs to "change its energy
base" to chart a path to more sustainable economic growth.
Energy policy will be vital to growth now, just as the
communications revolution was at the end of the last century,
and is the key to successfully addressing the global climate
change, he added. Energy policy cooperation also could
redefine a closer, positive U.S.-China relationship.

Cooperation Would Require Three Commitments, Bring Benefits
-------------- --------------
3. (SBU) Kerry added that he understands China's resistance
to accepting mandatory targets at the United Nations Climate
Conference, which will take place in Copenhagen in December
2009. Instead, he outlined a new basis for "major
cooperation" between the United States and China on climate
change, one derived from the principle of "common but
differentiated responsibilities." Specifically, all
countries would agree that they share a responsibility for
decreasing emissions, but whereas the United States and other
developed countries would accept mandatory targets,
developing countries like China would instead continue to
"work hard to reduce emissions." This would require China to
commit to: (a) defining mutual responsibilities to ensure
success; (b) continuing to decrease emissions; and (c)
agreeing to make emissions reductions measurable, reportable,
and verifiable.

4. (SBU) This new framework would show to U.S., Chinese, and
international observers, including the U.S. Congress, that
the United States and China together were taking concrete
steps to address climate change and that solving the problem
did not require a confrontational approach. U.S.-China
cooperation would make the Copenhagen event a success, he
commented. If the two nations that account for almost half
of CO2 emissions move in unison, the other 15 countries that
together account for 30% of emissions would follow, he said.
Sustainable energy investment also benefits economic growth,
he concluded.

China Committed to Successful Copenhagen, on its Terms
-------------- --------------
5. (SBU) Vice Premier Li Keqiang responded that the strong
U.S.-China relationship provides a firm basis for
cooperation. The two countries should work together to
"elevate" the relationship and make it more "dynamic." Li
said China is actively preparing for the Copenhagen meeting,
will participate in a positive and constructive way, and will
work to ensure a positive and reasonable outcome. China
already agrees on the need to decrease emissions to protect
the environment, sustain development, and achieve

BEIJING 00001424 002 OF 003


modernization. Regarding the specific modalities, those
would be subject to negotiation and international consensus.

6. (SBU) Li added that negotiations need to account for the
complexities of global trade and development. For example,
China manufactures and exports a solar energy battery to
developed countries. When in use, the product is energy
efficient, but its production is energy intensive and
polluting. Negotiations also must reflect per capita and
historical emissions, he said.

China Seeks Immediate, Concrete Bilateral Cooperation
-------------- --------------
7. (SBU) At the same time, there is room right now for China
and the United States to work more closely on climate change,
Li said. Joint research on green technologies is
"immediately realistic," he said. The two countries should
have deeper cooperation, not just dialogue. Both sides agree
that energy policy is tied to climate change. There is a
great potential and market for increased cooperation on
energy conservation, emissions reduction, and other areas, Li
said, specifically acknowledging several ideas that Senator
Kerry outlined. Li added that cooperation on advanced
scientific research would be valuable. China seeks to
connect Chinese researchers with foreign counterparts, he
noted. Li added that China encourages the purchase of U.S.
technology and products and that China wishes the United
States would lift high technology export restrictions. Li
said that he hopes China and the United States will soon be
able to point to specific advanced technology demonstration
projects.

China Wants to Balance Growth and Sustainability
-------------- ---
8. (SBU) Li explained that China is seeking to overcome the
financial crisis partly by restructuring its economy to
promote sustainability. This restructuring includes
encouraging environmental protection, emissions reduction,
energy efficiency, and technological upgrade. Efforts to
tackle the crisis should be linked to climate change, he
said. As the United States pursues a "green New Deal," China
will also do its part to encourage green technologies. At
the same time, as a developing country, China must balance
this goal with the need to continue to maintain growth and
increase living standards, he explained. At this stage in
China's development, he added, China's aggregate emissions
were likely to continue to rise, but China was taking
effective measures to ensure that its energy intensity per
unit of GDP was declining.

United States Ready to Move Forward on Concrete Projects
-------------- --------------
9. (SBU) Senator Kerry responded that the United States is
ready to move beyond rhetorical agreements on bilateral
climate cooperation and "put flesh on the bones." He added
that the United States hopes that China is ready to discuss
how to bring to life specific ideas when State Department
Special Envoy for Climate Change Todd Stern visits Beijing in
June 2009. For example, the United States has solar
technology that efficiently and cleanly provides enough
energy to replace some of China's most polluting coal-fired
power plants. He also mentioned two technologies under
development in the United States that capture and use carbon
dioxide to manufacture building materials and jet fuel and
another breakthrough in the field of solar energy. The
United States and China should jointly explore projects like
these, Kerry said. Li responded that Kerry's visit had
helped to set the stage for those discussions.

10. (SBU) Senator Kerry added that before the United States
passed the Clean Air Act in 1990, companies had lobbied
vigorously against the measure. In the end, it cost far less
and took less time to achieve its goals than expected because
those who objected to the law had failed to account for the
fact that a decisive signal from the government can set the
market to work in exploring and creating efficient new

BEIJING 00001424 003 OF 003


solutions to problems.

11. (SBU) As for the Copenhagen meeting, Kerry cautioned
against getting sidetracked on topics like per capita
emissions when net emissions is what impacts the planet. The
United States is not asking China not to generate the energy
it needs, but to work together to meet energy demand in a way
that costs less in the long run. If China and the United
States committed at Copenhagen to account for the cost of
carbon, it would lead to major, beneficial change in the two
economies. China already has in place the workings of a
system to measure, verify and report emissions reductions, he
said.

Sustainability Promotes Growth
--------------
12. (SBU) On the balance between growth and sustainability,
Kerry said the United States agrees that global growth is a
key priority, but he urged Li not to separate economic growth
from the energy challenges to which they are integrally
linked. He added that China could ignite external demand by
buying more products from the United States. Buying products
that benefit China's environment would also decrease
emissions and give China credit at the Copenhagen meeting.
More importantly, Kerry said, economic growth data do not
account for pollution costs. Growth figures reflect the cost
of burning coal, but not the resulting acid rain,
agricultural impact, diseases, poisoned waters and toxic air.
The United States has spent billions of dollars cleaning up
its mistakes. There is no limit on China's growth, but China
can choose to grow in a new paradigm and avoid the costly
mistakes other developed countries have made.

Comment: China Ready to Expand Cooperation
--------------
13. (C) Vice Premier Li is widely expected to take over as
Premier from Wen Jiabao in two years. In his current
capacity, he oversees the National Development and Reform
Commission of the State Council, the Ministry of
Environmental Protection and other agencies that play key
roles in setting China's climate policies. His overall frank
exchange of views with Senator Kerry and straightforward
expression of interest in concrete projects should be taken
as a signal that China has caught on at a top level to the
new U.S. administration's identification of climate change as
a key bilateral priority. At the same time, as is the case
in many other topics, when it comes to multilateral
discussions, China is not ready to make "concessions" until
it knows what it can secure in return.
PICCUTA