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Hearing of the Senate Committee on Foreign Relations' Subcommittee on Near East and Asia- International Climate Change Negotiations Panel II


Location: Washington, DC

Hearing of the Senate Committee on Foreign Relations' Subcommittee on Near East and Asia- International Climate Change Negotiations Panel II

SEN. KERRY: Could we ask the second panel to come up? And we're very, very appreciative for your patience. It's a worthwhile engagement, and we look forward to your testimonies.

Tim Wirth, who is a good former colleague of all of ours, and friend and current president of the United Nations Foundation, who, I might add, has been unbelievably diligent and involved, and has traveled near and far in an effort to further these issues and others. And we're very grateful for his work and leadership.

Richard Sandor, chairman and CEO of the Chicago Climate Exchange.

And Jonathan Pershing, director of the Climate, Energy, Pollution Program at the World Resources Institute.

Thank you all very much for being here.

Senator Wirth, would you -- Secretary Wirth, I mean --


SEN. KERRY: Thank you very much, Dr. Pershing.

While -- I appreciate the testimony of everybody, and I just want to try to follow up a little bit. While indeed Bali is a "process," quote, meeting, I assume you would all agree that -- I mean, knowing how these meetings work, you wind up, particularly the interparliamentarians, sitting there and sort of talking substance. And to the degree that they view us as legitimate, genuine, prepared to take on certain tasks, I assume you would agree that would affect how they view a time frame for a mandate or what kind of extent of mandate they're willing to embrace or the timetables, et cetera. I mean, clearly you can't divorce the process from some of their perception of your attitude about the substance. Is that correct or not?

MR. WIRTH: Well, I think the reality is that 2008 will be consumed looking at, you know, all the details that have to get filled in, and there will be a lot of blanks there because everybody's going to wait for 2009. So there -- what 2008 can do is to take the framework -- and Paula Dobriansky laid it out, and that's the one everybody's agreed to -- mitigation, adaptation, technology and finance, and forestation is a major piece of this -- and they will -- they will decide that that's going to be the framework that we work on. But they're not going to fill in the blanks until they see a new administration come in. That's --

SEN. KERRY: Understood. But I mean, clearly the brunt of this negotiation is going to be in '09 --

MR. WIRTH: That's right.

SEN. KERRY: -- in a very short period of time, as I said earlier.

But would you not think that -- for instance, on technology, would you see any -- I mean, do you see some of that discussion taking place?

Do you think it's important for us to be laying out some constructive forward-thinking about where we're at in this? Obviously I know from your testimony, you do, Dr. Pershing. But I'd like to get the others too, but go ahead.

MR. PERSHING: Just a few points about that, because I would fully subscribe to the theory that, they usually say, 90 percent of the agreement happens in the last 10 percent of the time, and that's about right. But it only happens because 90 percent of the work was done at the beginning. And so in this particular instance, I would suggest two possible courses of action.

The first is, this administration has indicated, while it doesn't obviously care a lot about the mitigation side, it's prepared to talk about forests. It's prepared to talk about adaptation and it's prepared to talk about technology. Take them up on it. Let's see what they do with those things. There is enormous scope for very positive action which the world could agree at this meeting, at Warsaw, which is the next meeting, and at Copenhagen, which is the 2009 meeting, all during the administration's tenure and purview. Move on those and reserve these hard political decisions for that last session, when perhaps a more focused and positive viewpoint is in office.

MR. WIRTH: Let me, if I might, Mr. Chairman, follow up on that.

Secretary Paulson's been charged. It's the third time that this charge has been given to somebody, but he's got the charge, you know to put together a technology initiative. Well, again, take him up on it and say, let's move. Now, the response to that will be, well, we're putting in X numbers of billions of dollars more than has ever been done before.

Well, get to the bottom of those numbers. The reality is that we're spending about 25 percent today in research development and demonstration of what we were spending, you know, at the time of the last oil crisis in 1980. Our RD&D expenditures have just plummeted. Now that is a piece to say Paulson understands this. Every single outside group, every single one, will say this is a set of expenditures that has to be made. I haven't met anybody.

I mean, it's, as I say, it's a low-hanging fruit, and that's something that could be done, you know, with the leadership of the Senate working with the Department of Energy. And say, okay, let's go ahead and do this and let's over, say, a four-or-five-year period of time, ramp us back up on a four or five times value. That has to be done.

The National Academy of Sciences report done by John Holdren three or four years ago, you know, is the number-one blueprint for what ought to be done. All the material's there. It's now just a matter of fact of doing it. So take him up on it and let's do that. We could really demonstrate that we're serious.

MR. SANDOR: I would say one thing, from a markets point of view, is to try to create as many linkages as possible. We have a case in point where Baxter Laboratories reduced some of their emissions in Dublin and delivered them in satisfaction of the requirements of the exchange. And I think the goal of any such system has got to be to -- first and foremost, it's to get at the disease, or reduce greenhouse gas emissions at the lowest possible cost, okay? That to me is critical.

That said, and Jonathan and Tim both know that there are many things which we find acceptable that other people may not. Those at this table have found avoiding deforestation to be a very big issue. We account for it. The rest of the world or many parts of it don't like it.

There are issues of equity here. In terms of a market, should it be that Chinese coal mine methane is allowed into the system when it is additional, but Pennsylvania's is not?

Is that a good policy or is the Lugar reforestation project okay in CCX but not okay in an international, even though those walnut trees soak up a lot of carbon?

So I -- the only thing I would urge is that, as a student of economics and somebody who for the better part of 35 years has been working on new products, linkages in homogeneity and not bifurcating the market and making it very, very different, we manage to homogenize wheat and soy beans and Treasury bonds and even the SMP-500. I think the leadership position for us there is to make the market as homogenous, drive the cost of reducing greenhouse gases and keep focused on that.

MR. WIRTH: Mr. Chairman?

SEN. KERRY: Yes, Senator Wirth.

MR. WIRTH: Just one other very specific item which you could do that would have a significant impact -- in the Warner-Lieberman legislation, which I applaud; I think it's really headed in the right direction -- in the Warner-Lieberman legislation, there was initially a set-aside that 10 percent of the funds yielded by the legislation would go to adaptation purposes. Now that was of great interest to a lot of people for reasons Senator Murkowski was suggesting domestically, but also a very significant interest to a lot of the evangelical community and the Catholic bishops very concerned about poverty around the world.

And this was the item in Warner-Lieberman that really got them enthused about the climate legislation. Unfortunately, some place along the road that 10 percent requirement got dropped. It then got added back in again in very much of a watered down way. It ought to come back in its full robustness. That's a statement; that's a statement to make to the developing world we are serious about the adaptation issue. We know that you're the ones that are going to get the most impacted by climate change. We caused the climate change; now we're willing to work with you. That's something that could be done right away to restore that back into the Warner-Lieberman legislation. That is a very -- that's a perfect little vignette about the kinds of things that you can do and make a statement around that that's extremely important on an issue of adaptation and an issue of international negotiation and an issue of morality and equity.


SEN. KERRY: Thank you very much, Senator Lugar.

Dr. Pershing, you mentioned three things the administration wanted to talk about that didn't include finances, which is on the list, are they not?

MR. PERSHING: We haven't seen substantial resources yet attached to those financial proposals. There is, as the undersecretary mentioned, the proposal for the energy fund. There is some financing proposed for it, but I haven't seen any authorization. I haven't seen a strong commitment to it. Other funds that might be required the World Bank estimates anywhere from $10 to $100 billion a year for adaptation. I haven't seen a fund there. The proposals are out there on the technology side for things like capture and storage. The administration talks on the geological side about putting in a billion dollars over a number of years. Well, the current estimates from MIT are about 200 million per plant, so five plants would absorb the entire cost.

So your proposal, Senator, which would ramp up the notion of immediate programs for capture and storage plants, well, that would be something to bring to the table. Currently, I haven't seen from them concrete numbers that would allow me to say yes.

SEN. KERRY: Nor have I, which is I raised it with her.

But Senator Wirth.

MR. WIRTH: Mr. Chairman --

SEN. KERRY: Can you also, as you comment on that, I just like -- and we're going to wrap very, very quickly here -- just what's the ideal -- I mean, I understand the process part of it. But what's the best message that you could say would come out, that you'd be thrilled if Bali did what? (Off mike) -- beyond sort of your --

MR. WIRTH: Well, I'm afraid it's relatively mundane, and I think what -- if I were a member of the Senate observer group what I'd be doing is talking about futures and the growing change of commitment, how the private sector is being involved and really tell people that the United States is moving as rapidly as it is. That is a message that is extremely welcomed, and the more it's said -- you know, there's a lot of skepticism about it, but it in fact is true. And you know, that, it seems to me, is the most important thing to do. I think that that -- the process is pretty much going to take care of itself, and it's pretty hard to make that more than what it is -- lowering of expectations.

SEN. KERRY: But I assume you believe we could help change the dynamics for what follows as they go through the process?

MR. WIRTH: I think what follows is terribly important and understanding what follows. Then, what Jonathan said, I think, is correct -- what happens in 2008 will prepare for 2009. We've talked about a number of things here. You know, one, this whole business of what kind of long-term financial commitment is made for adaptation, what the World Bank's going to do and what the -- what other financial institutions. That's one whole clump of activities -- the clean development mechanism that Richard was talking about, essentially; making that work is another.

The trade issue Senator Lugar talked about and how that plays into the climate change and biofuels issue is one that's barely been touched. You know, there are a number of opportunities out there that are just ripe for working and demonstration -- we're willing to do that, I think, is going to be --

SEN. KERRY: Would it be good if we could set a follow up with you? I'd love to do that in the next days and sort of talk about it a little more. It'd be great.

Yeah, Dr. Sandor?

MR. SANDOR: I would score a lot of what Senator Wirth said. And I would also just add just a little bit to that by saying America -- or Europe is not as far ahead as people think and the U.S. isn't as far as behind as people think. There are a lot of things going on at state levels, at local levels, very big private-sector activity. And we will go forth and invent in the capital markets and take a leadership role there.

SEN. KERRY: Well, that's an excellent point.

And yeah, last point, Dr. Pershing?

MR. PERSHING: Yes, I just had two more things because I would fully subscribe to both Richard's and Tim's comments.

The two things that I would add is that you need to send out a sense of urgency. And the message that we need to bring is that -- it's something like the timetable that I think that Tim negotiated in Geneva, which was the precursor process that set the stage for the negotiation. What we need to have is a sense of timetable but scale. We need to have a sense of magnitude of effect and some standard elements, but we also need to have inclusiveness. That's the message from Bali. If we don't have that, we're really not on the right track.

SEN. KERRY: Well, I thank all of you for your leadership. It's so important to have folks like you who have been banging away for a long time, and I admire each and every one of you enormously.

And you'll forgive me if I particular single out Senator Wirth, who I think, since he left the Senate, has just been uni-focused on this and superb, whether it's been in Davos or at the U.N. itself or in all the other meetings he's convened. I've been to several of them here and there, Washington and Harvard and elsewhere. And boy does that does that add up to help build up energy and ultimately get us a consensus. I'm sort of confident we're going to somehow get there, but we'll get there.

Just to underscore the spirit of sacrifice that this senator has engaged in, I got a BlackBerry about 15 minutes ago that the World Series Trophy was in my conference room. (Laughter.) And I got a BlackBerry five minutes ago saying it has moved on to the House and I have missed it. So there you go, ladies and gentlemen. It's the Boston Red -- but you know, we're going to win it again, so it's okay. (Laughter.)

Thank you all. Thank you for being here. We stand adjourned. (Sounds gavel.)

SEN./MR. : A genuine sacrifice.

SEN. KERRY: That's sacrifice, let me tell you. Missed that World Series trophy.

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