This session was part of a CFR symposium, Countdown to Copenhagen: What's Next for Climate Change?, which was made possible through generous support from the Doris Duke Charitable Foundation, the Alcoa Foundation, and the Robina Foundation.
This session was part of a CFR symposium, Countdown to Copenhagen: What's Next for Climate Change?, which was made possible through generous support from the Doris Duke Charitable Foundation, the Alcoa Foundation, and the Robina Foundation.
MICHAEL LEVI (David M. Rubenstein Senior Fellow for Energy and the Environment, Council on Foreign Relations): Thank you, Kay, for the kind introduction.
Good morning. It's a delight to see so many people here this morning. Let me start by echoing Kay's thanks to the Washington meetings team for putting this together, as well as to my research associate, Katherine Michonski, for her role in this.
I'd also like to thank the Doris Duke Charitable Foundation, the Alcoa Foundation and the Robina Foundation for their generous support both of this event and of the broader work on climate change here at the Council.
A few quick program notes. I won't go through the whole thing in detail. You have it in your -- in the schedules. You may have seen in the news that the secretary-general decided to blitz Washington lawmakers this morning and this afternoon. Janos Pasztor has to be with him for a very important meeting this morning, so, unfortunately, he won't be on the first panel; but we still have three fantastic panelists for you. And on the third panel, Eileen Claussen wasn't able to be with us, but Frank Loy, who was undersecretary of State for Global Affairs from 1998 to 2001, will be on the panel instead.
I won't talk about substance right now. I just want to say very quickly that climate change has become a big international affairs issue, a big foreign policy issue, but without an enormous amount of discussion between the communities that are focused on climate change and the community focused on foreign policy. That's an unfortunate situation, and can lead to ineffective strategy on the part of the United States.
And that's a big reason why we've pulled this symposium together today. It's a big reason why we are working on a broad range of climate issues at the Council. I hope that this meeting today will help bring the best ideas from both worlds together and improve policy for the United States and the world.
Enjoy the day.
LANE GREENE: Good morning, everyone. Welcome to this meeting here at the Council on Foreign Relations.
My name is Lane Greene. I am the climate and energy correspondent at The Economist Magazine, and I will be moderating this session, with a very distinguished international panel we have this morning.
Before we begin, a few program notes from my share. I have to remind you to please completely turn off your cellphones and Blackberries. Don't just put them on vibrate, because they can interfere with the sound system here in the building.
As a reminder to all of you, this meeting will be on the record, so your questions and answers will be for public consumption, including on the Council's website afterwards.
So I would like to begin by looking broadly at the prospects for a global deal in Copenhagen. As you heard, Michael's article in the fall issue of Foreign Affairs refers to salvaging a deal. And there's quite a lot of pessimism abroad out there about the possibility. And maybe it tells us something that our panelist from the U.N. can't be here today because he is running around, grabbing members of Congress by the lapels and trying to get them to take this seriously and to move forward with a cap-and-trade bill and with a serious negotiating position for Copenhagen.
So at this point I'd like to start to my right, with Jose Goldemberg -- he is an emeritus professor at the University of Sao Paolo -- to speak to the issue from his perspective, prospects for a global deal.
We'll move then to his right, to Atul Arya. And Atul is the chief adviser for energy and climate at BP.
And then, on to Sun Guoshun--and Mr. Sun is the first secretary here at the Embassy of the People's Republic of China.
So if I could ask you each in turn briefly to give your viewpoint about what are the prospects for a deal in Copenhagen.
JOSE GOLDEMBERG: Agreement?
GOLDEMBERG: And I think the reasons are the following. The climate conference signed in 1982 was basically an exhortation to countries to do something, and no serious commitments were taken there.
Then in Kyoto, an effort was made to tighten the bolts into this. And commitments were adopted by the industrialized countries, but the developing countries were left without any boundaries on their emissions. That was reasonable 15 years ago, because emissions of developing countries were small. That's not true any more. The emissions of developing countries today represent 50 percent of the total emissions, and they are growing at approximately 5 percent a year; while the emissions of the Annex I countries, or industrialized countries, have not declined very much, but they have been stable. And therefore, something has to be done about it. However, the developing countries assumed the position that they got away with it, and they don't want to give up. That's basically the essence of the negotiations.
As you might know, I am now in Sao Paolo. I'm not in the federal government. I was in the federal government for a while, in 1992 actually, but -- and what is happening, basically, is that the people negotiating agreements -- not only in Brazil, but in most developing countries -- they assume basically four things.
The first one is the following, is that the -- this is the historical responsibility of the rich countries. Then, there is the question of, they will not do anything unless they have transfers of technology and money.
And these are, to some extent, ideological ideas.
And then there is the ideological idea also that a market is something that's not very clean and that people -- governments have to do it. So to use the market mechanisms, for example, to avoid deforestation is seen as something that is not very good.
Those basically are ideological ideas, because the idea of historical responsibility is just flawed. You know, one-half of the emissions have been made in the last 30 years -- one-half of all the emissions since 1700 have been done in the last 30 years. So if you are talking about historical responsibility, you have to consider what happened in the last 30 years. It was not a crime to emit before. And the developing countries are emitting now. So if you talk about historical responsibility, they're going to be responsible more than the industrialized countries.
And then there is the question of lack of understanding. And this is really happening in a number of developing countries. They are sort of bound to the idea that the development goes hand in hand with growth of emissions, which is the old thinking and was dissipated in 1973 here in this country. Now, many of these countries still believe that, to grow, they have to use fossil fuels, and trying to keep them from using fossil fuels, it's an imperialistic ruse. And it's really lack of understanding.
And the combination of ideological arguments and lack of understanding I think is what's really driving the negotiations. For example, the federal government in Brazil has decided not to adopt any mandatory targets. They will -- they will try, or at least they are trying, to make these voluntary statements, which -- if you have been in government -- and many people here have been in government -- look, unless you have targets and timetables to do it, you won't do it. You know, that's what history shows. Any administrator knows that.
And so the idea of voluntary commitment is a very loose idea. The -- even on deforestation, which is a very serious problem of Brazil, what will be done are statements to the -- voluntary statements, unilateral statements. However, the -- sort of the light at the end of the tunnel is that the home -- my home state, the state of Sao Paulo, which has 40 million people and 30 percent of the economic activity of the country, has adopted targets and timetables by law.
A law was signed; actually it was signed yesterday, adopting targets of reducing emissions by 30 percent, by the year 2020, below the level of 2005.
That's not a federal commitment. It's a state commitment, like the State of California did here in the United States a while ago. So that's the situation. And I don't think it's going to change.
People are sort of enamored with the idea of numbers, you know, these national activities which are voluntary. And I have a pretty dim view of the effectiveness of these.
GREENE: Very interesting.
Atul, maybe you can speak next. And also I should mention he's based in London, so can give something of a view from Europe.
ATUL ARYA: Okay, thank you.
So for your question about -- the prospects for a deal, I would say, are fairly low. If you think about the deal as made up of the substance of the deal -- which would be the targets, the timetable and the actions to deliver those targets -- and then think about the second part of the deal -- which is the mechanisms for delivering all of the substance -- it seems to me that there's been so much focus on targets in particular.
And getting an agreement on that, a broad global agreement where all the major players agree to some kind of a target, is very, very low. There could be more progress on the mechanisms rather than to keep talking and hope for something beyond that.
Having said that, you know, business as usual is also not acceptable. People realize that there is a climate emergency coming on us. And therefore action is really necessary.
So there will have to be some, if I could say, third way which will have to be -- which will have to be created either before or after Copenhagen. And we can think about some elements of that which will be promising, which we can build on going into the future.
Now, for Europe, it will be a huge disappointment, because Europe has been waiting for this deal to happen for a long time. And in particular after the election of President Obama last year, the hopes went up very significantly.
I think there was such euphoria in Europe that they felt there was almost certainty of a deal. And Europe interestingly, or the European Union in particular, has put pretty much all the cards on the table.
They have a very aggressive target, European target, which is 20 percent reduction in greenhouse gas emissions, from a 1990 baseline, by 2020. And they want -- they are willing to go up to a 30 percent reduction if there is -- there is a deal in Copenhagen, which is even a more ambitious reduction than 20 percent.
They are willing to put money on the table. A couple of weeks back, when the leaders met, they talked about a fund around the order of a hundred billion euros per year is the amount of money they feel is needed by the developing countries by 2020. A hundred billion euros per year by 2020 will be needed to deal with adaptation and mitigation.
And they also came up with some other numbers. I'll very briefly quote them. They said that between 22 (billion) to 50 billion of this hundred billion euros would have to come from public funds. And the EU proposed that they would give 20 to 30 percent of this 22 (billion) to 50 billion euros for their contribution, with expectation that other OECD rich countries would provide their fair share. That would include Japan and the U.S., of course, and other OECD countries.
So these are very ambitious numbers, particularly in the current economic climate.
And the one idea which they came up with which I believe has legs and merit would be what they call a fast start fund of something around 5 (billion) to 7 billion euros per year for the next three years, so from 2010 to 2012, while we are still in the negotiation and in fact Kyoto is still in effect, and that fast start fund would go to get us started on technology transfer and doing mitigation actions and also adaptation actions in the developing countries. And they also said that they would be willing to -- Europe would be willing to put their fair share into that 5 (billion) to 7 billion euros. It's a more palatable sum that a hundred billion euros in the current climate.
So in short, Europe is ready for a deal, wants to have a deal, realizes that it is very, very difficult to get a deal.
One of the last points, briefly, is, within the EU, though there is high-level agreement but underneath the surface there are significant differences -- particularly the new members of the European Union who are coming from Eastern Europe who have much heavier industry, more coal-based power generation, and they are worried that they will have to pay a disproportionate share of cost because now they are members of the Union and they are neither willing nor ready to actually do that.
So we can come back to what could be elements of a compromise deal in Copenhagen while I stop there.
GREENE: Wonderful. Thank you very much.
And Mr. Guoshun, maybe you could speak to the perspective from Asia. And in particular, of course, the president of the United States is traveling to China soon and to other countries in Asia, and this is pretty much item number one on the agenda. So if you would also like to speak to -- speak to that, that would be great as well.
SUN GUOSHUN: Yeah. Thank you.
Good morning. It's a great pleasure for me to participate in this symposium.
It is clear that climate change poses a great challenge to the global sustainable development and living conditions of humankind. It requires cooperative and proactive actions by the international community to address it.
The Chinese president, Hu Jintao, said during the U.N. climate change summit that it is an urgent and long-term task for all countries to address climate change and achieve sustainable development.
The international community has high expectations for the Copenhagen conference. After many years of negotiation -- not actually just from Bali in 2007; actually, it's from Montreal in 2005 -- so after so many years of negotiation, it is expected that major agreement can be reached in Copenhagen.
You know, from a development point of view, the agreement should reflect, you know, the principles of the UNFCCC and the Kyoto Protocol, and, you know, the Bali Action Plan, the Bali road map, especially, you know, the common but differentiated responsibilities -- principal and respective responsibilities.
As Jose Goldemberg has just pointed out, that, you know, that is very ideal (sic) to developing countries, although maybe the situation has changed a little bit between now and 1992 or 1997. But, you know, the division or the per capita emission of developing and developed countries, the income level has not changed greatly. You know, so for example, in the U.S. the per-capita emission now is 24 or 25 tons. And in developing countries, maybe the average is two to three tons. Of course, China is a little bit higher, about five tons.
So this basic situation has not changed greatly. So nowadays I think it is very clear that developed countries should demonstrate leadership and take the need to reduce GHG emissions. So this is the first point.
And the second, each country should commit to engage in long-term and cooperative actions to address climate change, guided by the ultimate objective of the UNFCCC.
And thirdly, developed countries should commit to significantly reduce their emissions in the midterm and ensure credibility of efforts between them. I think that will be very important to demonstrate leadership.
And fourth, with assistance of financial resources, technology transfer and capacity building, developing countries should also make contributions to address climate change and take nationally appropriate mitigation actions to, you know, significantly deviate from the business-as-usual emissions scenario.
And fifth, the mechanisms with regard to financing, technology transfer, capacity building, deforestation, need to be established to facilitate the implementation.
And sixth, commitment with respect to mitigation and provision of financial resources, technology transfer and capacity building need to be transparent.
So we think these are the major elements of any agreement which is going to be reached in Copenhagen. Meanwhile, we recognize time before Copenhagen is limited and maybe we have not enough time to reach agreement on every detail of the agreement in Copenhagen, so we can make arrangement to complete the negotiation and conclude a legally binding agreement in Copenhagen so as to facilitate the negotiation and to complete the negotiation as soon as possible. So we, in this respect we hope that there will be positive outcomes from Copenhagen.
Having said that, I would like to introduce a little bit of the actions taken by the Chinese government to address climate change.
China attaches great importance to the issue of climate change and has taken a series of strong legal -- legislation, policies, measures and actions to address it.
This includes mandatory national targets for reducing energy intensity, developing renewable energy and increasing forest coverage for the period of 2006 to 2010.
Reaching the target for energy intensity alone means that China can save 620 million ton of coal equivalent, equal to capturing 1.5 billion tons of carbon dioxide.
At the U.N. summit, President Hu Jintao put forward proposals on how the international community should work together to tackle climate change, amongst a host of major steps that the Chinese government will take in the future.
So China will continue its efforts to reduce carbon intensity of its economy, develop renewable energy and increase forest carbon sink and join hands with the international community to combat climate change.
President Obama is going to visit China. And he will meet with President Hu Jintao. I think the two sides are working very hard to, you know, reach some kind of common ground, to address climate change.
And we hope that we will jointly make contributions to addressing climate change. And we hope that President Obama will have a very successful visit to China.
If I can stay with China for one moment--you mentioned that your president, Hu Jintao, announced at the U.N. in September that China would pursue a carbon intensity target. I don't know if you missed that distinction-- that meant that China would go from the last five years of an energy intensity target, which is using so-and-so amount of energy for every dollar of GDP, to a carbon intensity target, which is a certain amount of carbon emissions per unit of GDP. And so the president committed to reducing by a considerable amount or a notable amount the carbon dioxide produced for every dollar of Chinese GDP.
So returning to China and maybe to President Obama's visit to China, when might we hear from China what that reduction, in the next five years, will be in the carbon intensity of the Chinese economy?
SUN: You know we are working on the 12th five-year plan. You know, now it is the 11th five-year plan, which covers 2006 to 2010. So now we are working on the 12th five-year plan.
And I do not have any information on the exact figure of that plan for cutting carbon intensity of the Chinese economy. But I hope that -- you know, a figure which will, you know, considerably cut emissions and also will, you know, facilitate a low-carbon development of the Chinese economy.
GREENE: The question may be then if you don't know the figure now, will the world know that figure before Copenhagen? Is it something that the Chinese will use, as part of their offer to international partners?
SUN: Personally I do not think that there will be any specific figure in Copenhagen, you know, under the, you know, current situation. Because you know, major developed countries weren't likely to offer their figures, to cap emissions, in Copenhagen.
So I personally think maybe it will be very difficult for China to offer their figure as well.
Looking around the world again, one of the hopes for Copenhagen is that if there's not a single global deal that combines absolutely everyone, absolutely every one of their targets, that a series of mini-deals might be possible.
And in fact, that might be possible -- you mentioned that the mechanisms might be agreed on, even if the actual targets are not.
So I'd like to get into a little more detail on what some of those smaller deals might include. And one of the biggest issues for your country, of course, Jose, is deforestation. Brazil and Indonesia are the third- and fourth-largest greenhouse-gas emitters in the world, thanks to the fact that when you cut down trees they decay and they release greenhouse gases, and quite a lot of them. So deforestation is one of the -- it's kind of rising up the agenda as one of the hottest topics. So maybe you could give us some perspective on what the prospects are for some kind of a deal on deforestation. Both Brazil and Indonesia have made -- have made offers on that regard.
GOLDEMBERG: Yes. I think there is a possibility of getting something done on that. However, it's still a problem, as far as Brazil is concerned. You know, what became quite popular are the discussions on avoided deforestation and -- by which people would be remunerated by keeping the trees there. And then, as I mentioned before, those were an ideological discussion, you know. It's really purely ideology, you know.
The federal government is -- adopted the position, which I think will change until Copenhagen, that they will only accept avoided deforestation if the money is a handout like the Norwegians did. The Norwegians did that. They did put hundred-million dollars as a gift. It's a philanthropic activity. And this was the way the government was working. They were expecting that a lot of people would put philanthropic money in order to do that.
Now, that was really -- it didn't happen, and I don't think it will happen. The amounts of money needed for any scheme to avoid deforestation are going to cost billions of dollars. And what people have been proposing is that that should be part of a market, you know. And I think that if that is accepted by the government, and including Indonesia, then I think there is a possibility of moving forward.
But -- and I was really surprised, you know, when I engaged in conversations with some of the people in foreign affairs, in which they argued that if you -- it has to be through philanthropy. Otherwise, you have the zero-sum game, you know, because the -- to avoid deforestation in the Amazon Forest would be only a gimmick to allow the Europeans and the Americans and stuff to keep emitting. You know, which I think is really a preconceived idea, because the Europeans are -- in my view, the Europeans are doing a serious effort. You know, the fact that the mechanisms didn't work so well, because of the bubble in East Europe and so on does not mean they will not work. But that is the situation.
I think there, there could be some progress. But one thing that I don't understand -- and maybe you can enlighten me -- is Indonesia is very quiet. You know, Indonesia would be a partner which could help on that.
GREENE: Maybe if I could put that to you, Atul, you mentioned that these mechanisms might be a subject of priority, even if the final targets aren't made. And, Jose, you referred to the idea that a European or American carbon emitter could buy an offset in Brazil and pay Brazilians not to chop down trees, so that that coal plant could continue emitting carbon dioxide.
There are a lot of -- there's a lot of creative thinking going on out there about how to harness markets to make their -- to get the reductions that the world needs most cheaply, most efficiently.
What do you -- what do you see as the best thinking and the ones most likely to make it into any deal in Copenhagen?
ARYA: I would agree that forestation would be -- is a -- is an important area. And, as we know, it's one of the lowest-cost ways to reduce emissions. So from a business perspective, I would say it's kind of a no-brainer that, you know, forestation, we have to come to an agreement, and mechanisms, particularly in terms of verification, and how do we do that, accounting for that. So I agree with Jose that there will be -- my expectation is there will be some deal on that.
Moving to other areas, I think one area where, again, there is a high likelihood of some progress is CDM, because we sort of, I think pretty much universally, agree that the CDM as designed originally had deep flaws, and people know what those flaws are, and they are --
GREENE: That's the U.N.'s Clean Development Mechanism, for those who may not be familiar with --
ARYA: Clean Development Mechanism, sorry, yeah. And right now, CDMs cover only 1 percent -- I'd say less than 1 percent of global emissions. So they have really not made any difference to reduction of carbon emissions.
But there is an opportunity -- if you -- if you believe that the markets are going to be an important instrument to solve the emission problem, then the CDM are an -- are a key component of the market, along with -- along with cap and trade.
With cap and trade, it's rather different in the sense that it will probably start mostly in the -- in the OECD or in the developed countries to begin with, and then maybe move on down the road to other countries. So I see progress on that.
I think financing, and the area where, again, there could be a lot of progress, is public-private partnership to deliver these NAMAs. And I heard the two different views on NAMAs here. But these national plans for dealing with mitigation -- the role of private sector in this is quite undefined right now, as to how can private sector play into that. But a lot of creative thinking is going on.
And I'll just give you one example. Just this morning, IEA, International Energy Agency, came out with their new World Energy Outlook. And one figure caught my attention when I read it, in there, was called the 450 ppm scenario, which is taking -- stabilizing emissions at 450 parts per million. They predict that energy efficiency will have to be around 57 percent of that by 2020, and 67 percent of mitigation by 2030 will come from energy efficiency -- more than any other mechanism; more than renewables, more than nuclear, any other mechanisms, is energy efficiency. And, as we know from the work of people have done, there are lots of low-hanging fruit in energy efficiency.
ARYA: So, again, there is -- there is ripe area for making progress on that. So those are a few areas.
Lastly, I think adaptation. Pretty universal agreement that a lot more needs to be done on adaptation, and the EU in their declaration last week said we need to move forward and use some of the financing mechanisms to -- you know, it's sort of a win-win for everybody to work on adaptation.
GREENE: I think that part of the -- part of what you're saying is that there's going to need to be a lot of cooperation. And Jose was saying that there's this sort of ideological position on the part of some of the developing countries that this should be a handout, it should be a gift; it's a parity -- you know, give us money, give us technology and we'll decide best how to use it.
Meanwhile, the politics of the developed countries, the rich countries, Europe and the United States, is that they want to see that this is actually causing verifiable reductions in emissions. They want to see the money used as efficiently as possible and not just spent however local governments decide to spend it.
So I put it to you, to Sun Guoshun, how do developed and developing countries work together if we take as a starting point that the rest of the rich countries are not simply going to give money away and hope for the best, and the developing countries have an understandable -- have understandable questions about sovereignty, about their right to develop and so forth? How do we get past the sort of zero-sum thinking where the rich countries think they can dictate and the developing countries say absolutely not?
SUN: As I said that, you know, common sense is a common tenet faced by all countries. We think that it will be very important to cooperate between developed and developing countries.
For example, China and other developing countries and other major developing countries are in the first development stage, so now we have a matter for a project with regard to infrastructure. So if we can use the most advanced technology -- and we will have -- they will have a good lock-in effect in the future.
But if we do not have access to advanced technology, and maybe we can only use the ordinary technology, it will have a bad lock-in effect on emissions.
So this why we hope that, you know, from a point of protecting our climate, we can engage in, you know, active cooperation between developed and developing countries on, you know, technology transfer and also, you know, the provision of financial resources.
With regard to technology transfer, actually, developing countries do not ask for technology free of charge. Actually we just want to -- you know, to have the technology at an affordable rate and we also we will attach great importance to the protection of IPRs.
So at least the Chinese government is -- has determined to protect the IPRs. Maybe you -- sometimes there are -- it exists that there are short -- some shortcomings. But you know, we will, you know, improve the protection of IPRs during our development. There is no question about that.
GREENE: Okay. Moving -- sorry. Go ahead.
GOLDEMBERG: Yeah. Can I ask you something? The question of technology transfer is haunting negotiations since 1992. And in the beginning the developing countries were talking about transfer free of charge.
The problem is the following; technology does not belong to governments. Governments cannot do anything about it. You know, I mean, it's companies that do it, you know. And the way they transfer technology is setting up subsidiaries or whatnot.
So, you know, I just fail to understand what the problem is. I mean, how can you tell General Electric that they should supply less, you know, very modern technology to generate electricity from coal using very efficient machines? You know, if you look at the data, you know -- excuse me for quoting them -- you know, the average efficiency of thermal generation in China is around 30 percent. If you go to Japan, the average thermal generation is 40 percent. So immediately you have a huge lung (sic) of possibilities of reducing emissions.
But, you know, this technology exists. It's available. And you know, you have to deal with the people that have it, you know. I mean, if -- I mean, if Sudan -- you know, with all due respect, with all due respect, you know, would come and ask for support, probably people will say: Look, go to AID or whatever, you know. But you know, in large countries like ours, you know, which have modern technology, you know, the problem is not the lack of technology, really. And I mean, it's the lack of the political will of doing it, you know.
And you know, I'm sorry for quoting something for China, but the thermal generation in China is one of these low-hanging trees -- tree --
GOLDEMBERG: -- fruit, you know, which could do an immense amount of good. And you know, still you are installing one thermal power plant per week, you know. Well -- and this is using the sort of old-fashioned technology. You know, the market has to do it. You know, I mean, there are some things about the market which are not good, but there are a number of things with markets that work. For example -- informatics, you know, that works, you know, and it has worked all over the world. So it should work with energy efficiency too.
SUN: Yeah, I agree with you. You know, technology transfers should be conducted through the market. But the government can make arrangements; can, you know, set up a kind of mechanism to -- you know, to facilitate the transfer of technologies.
For example, if there is a mechanism and also, you know, there is a fund to facilitate that, I think -- and also, you know, the companies such as GE or Mitsubishi or as other companies maybe compete, and beat. If -- you know, if they are at the same level of energy efficiency, and if one company can offer the technology with a preferable price, maybe that company can -- you know, can win the bid and, you know, aid developing countries with assistance of financial resources. So we can use that technology.
And maybe another point is that, you know, with the assistance of international fund, you know, Mitsubishi or GE can set up joint ventures in Brazil or in India or in China or in any other country, you know, to bring down the cost of the equipment, so as to enable developing countries to use these technologies on a large scale. So that will be beneficial to the protection of our environment.
ARYA: Yeah, I just would like to add a couple of thoughts on this. I'm a technologist by training, and I think that the discussion on technology transfer is very narrow. And I'll offer sort of two reasons for that.
One is that not all technologies are equal. What they are talking about in terms of gasification technology for power generation is very different to, say, energy efficiency or solar photovoltaic or wind technology -- very, very different. So that the rules for transfer have to be dependent upon what technology we are talking.
And the second thing is, not all the recipients are the same. So China can protect IPR, but that doesn't necessarily mean that every country, developing country, in the world has the same IPR protection.
So we need -- we need regulation on that.
And also, one other thing is that there is going to be a reverse technology transfer from the developing countries into the developed -- we are already seeing that, actually, in the matter of wind and solar, for example. Big manufacturing activity is happening in the lowest-cost places, like China. And that is going to come back into Europe and into the U.S. And that should be perfectly fine, because our objective at the end of the day is to use lowest-cost mechanism to reduce carbon.
So I think we need to broaden the discussion. And I -- one of the gaps in the discussion is that, as Michael said in his introduction, is the -- is the discussion is at the level which needs to be broken down into slightly more detailed discussion on technology transfer and financing as well.
GREENE: And we could easily talk about that all day, I think.
ARYA: I -- exactly.
GREENE: Before we go into questions, I'd like to ask one more of my own, and this will -- this will bring us to the next panel, where we talk primarily about the United States. Let's look at the interface between the process of the cap-and-trade bill through Congress and the international negotiations.
As everybody here knows, we've had a bill pass through the House of Representatives. It's now being banged out in the Senate. But there's no one who thinks that it will be signed by President Obama by the time of Copenhagen. That's just three or four weeks away now. So what, from your perspective personally and maybe from your regional perspective, is -- does President Obama need, going to Copenhagen? Or is there just frustration that he's not got enough if he hasn't got a bill and only, say, the threat to regulate GHGs directly via the EPA?
GOLDEMBERG: Look, we are going to hear from Representative Markey later on. But let me tell you what is attractive in the law that was approved by the House of Representatives, from my perspective. Two things: first one -- cap-and-trade. As soon as United States enters into a cap-and-trade, you can trade with Brazil and others that will go into that. You know, without caps, you don't have trade. That's the problem, you know. This -- the problem with the MDL -- the Clean Development -- the Clean Development Mechanism, you know.
GREENE: Yeah, CDM --
GOLDEMBERG: It be -- can be paradise for bureaucrats, you know, technocrats, you know, because you have to look at very small projects, you know, and spend six months looking at these things before you approve them. And there is no trade, you know. I mean, trade would go much faster. But cap-and-trade works to some extent in Europe.
So this is the first draft of the U.S. law. And the United States is a huge market.
And the second one is an article that exists in the law, which says the following: that the United States will be allowed to tax over the border. I don't know the expression, border --
GOLDEMBERG: Tariffs. For the carbon content of something that comes into the United States. For example, so if there are two countries that export dolls to the United States, the dolls exported from Brazil -- and Brazil is an exporter of dolls --
GREENE: Okay. I didn't know that (laughs).
GOLDEMBERG: -- will have the very low carbon content because of the hydroelectric power of Brazil; and dolls coming from China or other places will have a larger carbon content. That, I think, is an interesting feature, because it will force the countries that don't want to enter into an agreement to do it because of the advantages that the industry will have.
And curiously enough, the industry, or many sectors in the Brazilian industry, are favoring --
GREENE: Carbon tariff?
GOLDEMBERG: Cap-and-trade. That this is why the state of Sao Paulo, which is a highly industrial state, adopted the law. You know, it doesn't change things in the international negotiations, because it's just a state. But industry, you know, they complained a little bit, like all industries, you know. (Chuckles) But finally the law was approved.
GREENE: Again -the reduction target in Sao Paulo was what by 2020?
GOLDEMBERG: Twenty percent below 2005 by 2020.
GREENE: Okay. So just so the room knows, that's the same target that the Senate Kerry-Boxer bill considers for the United States. So Sao Paulo is as ambitious as Kerry-Boxer is, and has already done it.
ARYA: Since I'm neither a negotiator nor representing a political organization, I think our perspective is that we need -- we need stable policies. And having a cap-and-trade is very important because that would allow industry to invest with confidence. So the fact that the bill passed the House of Representatives and it had all -- you know, a number of issues with it, but still it passed, is an important signal that the U.S. is serious. Going into Copenhagen, if the U.S. can demonstrate what tangible actions domestically it is going to take, that will -- that will go a long way.
I would disagree on the tariffs, because I think the tariffs -- the energy sector in particular -- you know, we trade energy around the world, not just of hydrocarbons but all kind of energy around the world. And it has -- the system has worked since Second World War because of the free trade. If you put tariffs, it is going to create a number of difficulties. And, of course, there is WTO issues related to that. So that will be a problem.
SUN: Yeah, thank you for that question. We -- you know, we have a kind of contradictory, you know, opinion to the U.S. legislation on climate change. On the one hand, we welcome, you know, climate-change legislation in the U.S. Congress. I think that sends out a positive signal to the international community that the U.S. is serious about addressing climate change.
You know, on the other hand, we have concerns, because, you know, the bill actually has very limited reduction in the mid-term. Just to see, the Waxman-Markey bill has 17 percent by 2020 on the 2005 level. You know, in 2005, the U.S. total emission is 7.2 billion pounds. You go to almost 25 or 24 pounds per capita. So if you only reduce that amount, it equals only 3 percent on the 1990 level. So the per-capita emission in the U.S. is still so high. Actually, there is no apparent reduction from the 1990 level, which is far lower than the commitment under -- set for U.S. under the Kyoto Protocol.
So I think that will be very difficult for the international community to accept that. Because, you know, if everybody in the whole world maintains more than 20 tons-per-capita emission until 2020, I think the world -- the world would have been destroyed already. So that's not convincing to the international community.
So that is one of our major concerns. And another one is that, as you point out, the border measures. You know, of course, maybe there were -- you know, we are concerned about the interpretation -- whether, say, a country "A" or country "B," you know, has taken reduction measures which is comparable or equal to the effort of the U.S. So it's subject to the interpretation. We do not know what will be the result of the judgment of the U.S. on the actions and measures of other countries. And also, this, you know, may be against the provisions of the WTO, you know, which actually encourages free trade between all countries.
You know, if the U.S. imposes a kind of border measures, maybe other countries also take, you know, countermeasures. For example, if a developing country, you know, levies a per-capita emission for products from developed countries, I think that the world will run into great difficulties with trade. So I think that that is also a concern of ours.
And also, you know, we -- we know that the Waxman-Markey bill has set aside 6 percent for avoidance of deforestation and 1 percent -- or 2 percent -- for adaptation and technology cooperation.
And we believe the percentage for -- you know, for technology cooperation and adaptation is to know -- according to the experts, you know, actually much more financial resources are needed to help developing countries to adapt to the adverse impacts of climate change.
So if the U.S. only set 1 percent for that, I think there will be very little money for the international -- or for developing countries, you know, to help developing countries to adapt to climate change, and it will not make significant difference. Thank you.
GREENE: Thank you.
Okay, well, with that, I'd like to open the floor to questions. Please raise your hand, wait for the microphone to arrive to you. When you ask your question, please state your name and your affiliation. Please limit yourself to one question, so we can get as many in as we can. And we will end on time at 10:00. And also, please do ask a question; don't make a long statement and then tack on "don't you agree?" -- (laughter) -- and count that as your question.
Yes, right here. Wait for the microphone.
QUESTIONER: Thank you. I'm Stephen Kass, from Carter Ledyard and Milburn. My question is for Professor Goldemberg. You said at the outset that you believed it was a myth that developing countries needed to increase fossil-fuel emissions in order to support their future development; that it could be done without that in any significant measure. I wonder if you could expand on that a little bit, please.
GOLDEMBERG: What's the last part? What's the question?
GREENE: Could you repeat the last part of your question?
QUESTIONER: I wonder if you could expand on that and explain that statement --
QUESTIONER: -- since it is contrary to the assertion of so many countries. Thank you.
GOLDEMBERG: Okay, you see, for a very long time, people thought that increases in GDP went together with increases in energy consumption. So if the GDP grows 5 percent a year, energy consumption would grow 5 percent also per year, or even more. In some developing countries, it went more.
Now, the coupling between energy and GDP has been broken since 1973.
This is what data shows, you know. And what the prime minister of China just said is that it has not only been broken as far as energy and GDP, but between carbon and GDP.
And actually, China is doing very well on that. The GDP -- I looked at the data last week. The GDP in China since 1990 increased by -- ninefold, nine times. And the carbon emissions grew by approximately threefold. So there is a decoupling.
We have problems in developing countries in explaining that to people. Conventional economists, you know, in -- for example, in the Brazil government don't understand that. There was a huge discussion in the last few weeks on Brazil's adopting targets, because if Brazil grows 6 percent, which is the dream of the politicians, then emissions will grow by 6 percent too. It's just not true. It's a question of adopting the correct technologies. So that's the point.
GREENE: If I can just -- another way of putting it is that it's one of the ways in which a zero-sum solution -- or non-zero-sum solutions can be unlocked. In other words, if you're producing more GDP but you don't increase your emissions by the exact amount, then everyone can grow and we can meet the climate targets. If we accept the logic that they grow in lockstep, then one person's gain has to be someone else's loss almost by definition, so.
ARYA: Can I just add a comment on that? I think the equation is really straightforward, as you all know that we have to reduce the energy intensity of GDP and we have to reduce the carbon intensity of energy. We have to be able to reduce the carbon emissions.
But I think what is missing in what you said is that, yes, China has done a great job of doing that, but the number of people is so large that even after doing that, in terms of the absolute number, the emissions are going to increase. And I would agree with you that, in terms of the absolute number, the amount of fossil fuels we're going to use are very likely to increase rather than decrease for the world as a whole -- even though we could do a very heroic job of reducing both the energy intensity and the carbon intensity. I mean, that's the unfortunate reality we have to live with.
GOLDEMBERG: So it's not enough to decouple.
ARYA: That's right.
GOLDEMBERG: But it's a good step forward.
GREENE: Yes. Ma'am, in the aisle.
I'm Kassia Yanosek from Hudson Clean Energy Partners. We're a private equity firm investing in renewables. And my question is around technology and finance. I was wondering if the panel could speak to a bit more granularity around the need for large amounts of capital flows to be made into this -- into the commercialization of technology and where these discussions are going in Copenhagen. And I'm particularly curious around any sort of bilateral discussions that are being made, specifically around programs to --
GREENE: Well, if I can glom a question onto that and give you a second longer to think, the World Economic Forum, for example, has suggested taking the development finance that you mentioned to -- for mitigation and using it as sort of a seed capital to guarantee private investment into green technology in an India or a China or elsewhere. So instead of just Country A gives Country B money to build a wind farm, Country A -- the developing countries put that money into a pool and use it through some kind of new bank to make it so that private money can be multiplied far beyond that hundred billion --
ARYA : Yeah.
GREENE: -- so that we can really talk about serious capital. Is that something that you think is promising? Where are those discussions headed? We're talking -- we're still at a slightly academic level when we talk about it, but it could be -- I think it's a promising solution.
ARYA: You're right that the World Economic Forum has been very actively looking at this possibility of creating some sort of a mechanism, potentially a bank, where the developing -- sorry -- the developed countries, as you say, put money in, and that sort of becomes a financing mechanism. So it's not sort of a handout, but it's a -- it's a lot of money sitting there for the private sector then to come in and offer either matching funds or projects, which could be -- then be project finance, one of the issues being, particularly in the last couple of years or 18 months, that financing has evaporated.
So that would be -- it looks very promising, but I think it's early days. And the trick is that you have so many different parties involved in the conversation; to get everybody to agree always takes longer than that. But I am optimistic that that could -- that could happen.
I really don't know whether it's a part of the negotiation itself in Copenhagen.
GREENE: Sun Guoshun, would you like to speak to whether that's something that China would consider promising?
SUN: Yeah, I think it will be, you know, promising, but I do not know what is the real progress under the negotiation of the UNFCCC.
You know, I think, as Arya has already said that, you know, I think maybe the money, you know, will be in a fund.
And if there is a project and there is, you know, companies who is interested in this project and also it is feasible to, you know, cut GHG emissions, and I think the fund can finance this kind of project and, you know, to facilitate the reduction of GHG emissions and to bring in the most advanced technology.
But I'm not sure how to -- you know, this is about existing advanced technology, but how to, you know, create new technology, you know, or more efficient technology to bring down the GHG emissions, I have no idea about that kind of, you know, joint development and research cooperation.
GREENE: Sir, in the brown jacket.
QUESTIONER: Bill Courtney. I'm a retired diplomat. I'd like to ask about verification of compliance with an international treaty. In the arms-control world, international inspections are used. For example, with the Chemical Weapons Convention, there was an organization set up by the treaty to carry out international inspections, including to challenge inspections. To what extent in an international climate change agreement do you think it will be necessary to have international inspections? And sometimes these issues can be relevant for U.S. Senate ratification of an agreement.
GREENE: Did everyone in the back hear that okay? To what extent will verification and compliance be necessary to make these leaps forward possible? And sometimes these are necessary even for U.S. Senate ratification of treaties.
Maybe -- Brazilian deforestation is a case where compliance has come up. Maybe you could speak to that. Verification --
GOLDEMBERG: Yes. As you know, the climate convention and the Kyoto Protocol have no clauses for noncompliance. You know, it's sort of open. You know, if people don't fulfill their obligation - the (inaudible) countries, nothing much happens.
This argument has come back with deforestation. There is a problem -- before you talk about deforestation, there was a problem which was much easier to solve, which was afforestation, you know. And the -- and the Marrakesh Conference, one of the COP -- one of the Conference of the Parties of the climate convention in Marrakesh, I think in the year 2001, that issue was discussed.
Because afforestation is a technology that's here on the shelf. It's not like carbon capture and storage. It's something that people know how to do it. You know, the United States knows how to do it; the Canadians know how to do it. And a lot of developing countries know how to do it too, because the paper and pulp industry depends a lot on that.
And therefore the proposal was put forward that afforestation should be considered as one way of -- qualify to the CDM, to the Clean Development Mechanism. And it would mean a lot of carbon, because in each hectare -- one hectare is a soccer field -- you know, you can capture a hundred tons of carbon, 400 tons approximately of CO2.
And that was not approved because of the problem of compliance, because people argued that, if you plant trees, then, I don't know, maybe the ants will eat the trees, or a fire will come and all that -- which I think were all pretty ridiculous arguments, because it's the same problem with the insurance of your car. You know, you insure your car because something might happen to it. You know, and then if it burns in an accident, then the company -- the insurer will give you another car.
GREENE: (Audio break) -- chops them back down, how do you handle that? I mean, it's not -- it's not a -- it's not a -- it's not a frivolous question.
GOLDEMBERG: Wouldn't insurance cover that?
GREENE: I -- honestly, it has never occurred to me.
GOLDEMBERG: Okay. Well, anyway. (Laughter.) That's the answer I think to..
SUN: May I?
GREENE: Sir. Yeah, please.
SUN: Yeah, I think the issue of verification is very important. I think, you know, actually, you know, under the UNFCCC and the Kyoto Protocol, there is a system of, you know, reporting through the national communication.
Of course, it does not have teeth, that's true. But, you know, under the Kyoto Protocol, if a party does not fulfill its reduction commitment, you know, it will carry to the next commitment period with a -- 35 percent increase?
MR. : Yes.
SUN: So that maybe is the penalty. With regard to, you know, verification, you know, to measurement reporting and verification, you know, actually, under the Bali Action Plan, there is clear provision on that. You know, of course, with all the commitments, it should be, you know, measurable, reportable and verifiable.
And with regard to the nationally appropriate mitigation actions of developing countries, you know, under the Bali Action Plan, it says that it will be supported and enabled by assistance of financial resources, technology transfer and capacity building. Both should be in a measurable, reportable and verifiable manner.
So I think, from point of view of a developing country, if the assistance from developed countries with regard to financial resources, technology transfer and the capacity building are, you know, measurable, reportable and verifiable, I think the commitment for developing countries -- for developing countries to cut energy and -- or cut the intensity of their economy, I think, will also be measurable, reportable and verifiable. I think, you know, both should be measurable, reportable and verifiable. Thank you.
GREENE: Gentleman in the back.
QUESTIONER: Martin Klingst, of the German weekly Die Zeit.
Mr. Sun, I agree with you and your concerns regarding the low targets of the Kerry bill or the Waxman-Markey bill. But you know, there are always two ways to make policy: you can scapegoat somebody, or you can lead by good example. And by leading through good example, you could also put shame on the others. So what is Chinese offer going to be -- concrete offer going to be, in Copenhagen? (Laughter.)
SUN: Thank you for the question. (Laughter.) As I indicated earlier, you know, it will be, you know, very difficult for China to offer some concrete proposal in Copenhagen, you know, under the circumstances that there may not be a major agreement in Copenhagen.
It's not, you know, to -- or to humiliate one country or another. I think, you know, it is the effect that, you know, the per-capita emission in developed countries, in U.S., is much, much higher than developing countries. If, you know, the Chinese government is to convince the Chinese people to make commitment to reduce GHG emissions, people in China will ask why, you know, developed countries should keep such a high per-capita emission under the background that the international community should address climate change. If we -- you know, if the high emissions -- high historical emissions of developed countries -- it's not, you know, to take into account for the moment, but you still keep a very high per-capita emission. So this is not acceptable, you know, for developing countries.
Taking for the Waxman-Markey bill as an example, you know, I had a very rough calculation. You know, even after 2000 -- 2050, the per- capita emission in the U.S. will be more than five tons. So, well, you know, until 2050, the per-capita emission in the U.S. will be the same as, you know, the Chinese current emission, and will be much, much higher than the per-capita emission of African countries and India and other countries.
And people will see -- will ask -- the U.S. Constitution, you know, clearly provides that men are created equal, and why the U.S. should be superior to the Chinese and other developing countries' people?
So we do not -- we cannot offer a very satisfactory answer to the Chinese people and to the people of other developing countries. Thank you.
GREENE: Jose, do you want to say something to that?
GOLDEMBERG: Look, again, you know, probably among the people here in this room, I'm one of the few ones that were in the initial discussions on the climate convention. The climate convention is not a convention on equity, on the inequity of -- there are lots of inequities in the world. So you know, people are rich, people are poor. Inside countries there are people rich and poor, and you know, it has been so for 5,000 years.
The purpose of the climate convention is to avoid the disastrous consequences of changing the composition of the atmosphere. It's a very simple convention. Actually, from a technical viewpoint, it's a very narrow convention. You cannot expect the climate convention to solve the problems of equity in the world, you know. And I think that's part of the rhetoric which makes negotiations difficult. You know, I mean, you can use those arguments for any international convention, you know.
And the climate convention is a very specific one. I mean, you read the preamble of the convention, and the purpose of the convention is to avoid the changes in the composition of the atmosphere to a level that will not disturb civilization.
So you know, I concur completely that we should work for equity in the world, but not use the climate convention as a weapon to do that, because it's just not going to do it, you know.
So I have full sympathy, and I come from a developing country in which the income per capita is also low. People are doing other things to improve it, you know. But you know, to burden the atmosphere because of that, you know, I think is a very bad idea, you know, because if the atmosphere becomes unbearable, you know, we're all going to suffer.
SUN: Yeah, I -- sorry. I quite agree with you. I think you are quite right. You know, but, you know, people have this, kind of, in mind all the time. For example, why did the U.S. use the 2005 year as a base year? Because that year is the peak year of U.S. emissions, with 7.2 billion tons. If without that amount of emission, you know, allowance, is it possible for Congress, you know, to assign or to allocate emissions to -- you know, to this company, to that company? No, it cannot.
So it's not just, you know, a kind of protecting of the environment. It has, you know, economic interests. You know, everybody -- I read some of the newspapers. Everybody, you know, is asking for free allocation of allowances. Why? If you have free allocation of allowances, you do not have to pay much for your emission. So that's why. And I think, you know, we have to address that. And people have concerns about that. That's a truth.
GREENE: That's a great line of questioning. I think we'll take another question. Ma'am?
QUESTIONER: Hi. My name is Beth Keck, and I work at Wal-Mart. I'd like to go back to the area of deforestation, which you have pointed out is a great area for pinpoint solutions. And if you look at deforestation, a lot of it's caused by commodities -- palm oil, soy, the raising of beef cattle. And so I was interested in your perspective on the responsibility of consuming countries -- you know, palm oil is consumed in lots of products here in the U.S., Europe; soy is being absorbed very quickly in China -- as a responsibility of the consuming countries. And then your perspective on the responsibility of the private sector in terms of their oversight of their supply chains.
GOLDEMBERG: I'm not sure I understood the question well, but the power of the private sector is immense. But you have to change the consumption patterns of people, you know. And to change consumption patterns of people is something very difficult to do.
The comparison I make is with Christianism, you know? It took 300 years for Christianism to assert itself in Roman Empire, you know? These things take a long time. When it's done, it's very effective.
Let me give an example. One of the reasons -- one of the main reasons for deforestation in Brazil is cattle. Actually, you know, it's an interesting number, you know? There are as many heads of cattle in Brazil as people, 200 million. It's the largest herd of cattle in the world. And they are driving deforestation.
Recently, your company -- you know, Wal-Mart and others, you know, decided that they were not going to sell meat that did not come from certified places, which -- places that not led to deforestation. You know, immediately, that had more effect than anything the government had done in the last few years, you know?
Because, you know, the situation in the Amazon is sort of -- reminds you of the Wild West, you know. People just go, and there is an absence of the state there. You know, it's a huge area. And, of course, the private sector is very important.
So I would praise what your company and others could do. But, you know, to tell people that they should not eat beef, you know, is a very tall order, you know. But one should try, you know?
GREENE: Have a salad for lunch and just skip every other hamburger.
GREENE: I'll just say that I spent some time reporting in Brazil, and flew from Sao Paulo to -- up to the Amazon region, and you just see fire after fire after fire after fire. You really realize there is no state. It really is the Wild West. And just anybody can chop down trees.
And what happens is this long chain where Americans -- and the American Congress passes an ethanol mandate that says we have to produce so and so many billion gallons of ethanol. That means Iowa farmers make corn ethanol; that means corn is displaced and somebody else grows corn. That means some people switch to soybeans; that means some Brazilians switch to soybeans, and they move into pastureland, which causes the ranchers who pasture there to move further up into the Amazon and chop down the trees.
So there are a lot of unintended consequences in our legislation. In our best intentions, when we try to do something good, the economy is very complicated and the science of this is very complicated, and getting people to think through all of the links of that chain, I think, is quite difficult. As a journalist, it's one of the challenges we have in trying to get these things across.
QUESTIONER: I couldn't resist. I --
GREENE: Identify yourself ?
QUESTIONER: My name's Boyden Gray and I used to be ambassador to the EU and White House counsel.
And I helped negotiate, you know, climate stuff when I was in Brussels. And I -- this business about the rain forest in Brazil and corn ethanol in the United States is a constant puzzle to me. I mean, in the first place, corn ethanol has been capped at 15 billion gallons, basically where it is, together -- so there's no future for it. So why do people keep discussing it?
And what I don't understand is why a corncob that's fed into a car and displaces oil from the Mideast causes destruction of the rain forest, but a corncob fed into a cow, which wasn't genetically raised to absorb that corn, doesn't do any harm at all.
GREENE: I think one of the things you're saying is that it might -- I mean, it does. Cattle raising --
QUESTIONER: Well, then let's stop all corn, then, and cut out corn syrup and corn-fed beef and -- in the United States, and then, you know, cut out obesity and, you know, E. coli and do a lot of other things --
GREENE: (Chuckles.) Well, I'll turn that over to -- I'll turn that to Jose, who is one of world's pioneers on ethanol. And Brazil, of course, makes most of its ethanol from sugar cane. It's scientifically or physically a lot more efficient than the use of corn. But do you want to speak to corn, sugar and maybe the future of other kinds of ethanol?
GOLDEMBERG: I didn't understand the question. Maybe you could rephrase it.
GREENE: The question was, you know, if -- he doesn't understand why corn being used in a car was bad -- even though it displaced oil from the Middle East -- but corn being fed to cows was okay. I think the emerging consensus is maybe it's not entirely okay. But do you want to speak to corn ethanol, as a general proposition?
GOLDEMBERG: Well -- yeah. Look, the reason why corn ethanol is not a good idea is because you need a lot of energy from coal or oil to produce it. You know, if you go to a place where corn is converted into ethanol, the plant imports a lot of energy. And when you do it with sugar cane, you don't have to do it. You don't have to import anything, because the stalk from sugar cane -- because it's a characteristic of the plant, the stalk has enough energy to produce the energy needed. So sugar cane plants are self-sufficient in energy -- almost self-sufficient, and corn is not.
The way technically one describes that is to say that the energy balance -- I mean, for sugar -- ethanol from sugar is very good, and the energy balance for corn is very bad. And you know, EPA has done that, CARB in California has done it, and they all agree.
Actually, you know, I'll give you a personal insight. That's how I got into the -- in the ethanol business, you know.
Twenty years ago I wrote a paper which makes that calculation. It's a very simple calculation, you know. But it's -- it stands until today. You need little fossil energy to produce ethanol from corn. And you need a lot of fossil energy to produce ethanol from corn.
GREENE: Okay. We have time for just one more question. I'd like to remind you at this point that this meeting has been on the record, so anything you've said is already out of the gate. Too late. (Laughter.)
Ma'am, in the back.
QUESTIONER: Thank you. I'm Margaret Ryan with Clean Skies News. Last week in Barcelona, the G-77 developing nations and the Africa Group took a stand saying if the -- saying they were insisting the developing -- the developed world had to commit to carbon cuts of 40 percent from 1990 levels by 2020 and agree to vote -- to devote 1-1/2 percent of GDP from now till 2050 to the developing world in order to combat climate change, that these were non-negotiable demands for signing a new climate treaty.
Those demands were obviously, the EU said, the U.S. said -- you know, there was general agreement they were way beyond what could be committed to. And I wondered if any of you have any feel for whether that wide a difference can be overcome -- especially, Mr. Goldemberg, in light of your statements about equity arguments. Or is everything just about to fall apart in Copenhagen?
GREENE: Why don't we -- now might be a good point for all of us to -- all three of you to make one last stab at what we expect.
GOLDEMBERG: I missed the -- part of --
GREENE: The G-77 has proposed an -- a very ambitious -- has put forward a very ambitious ask of --
GOLDEMBERG: Oh, that I got. Yes.
GREENE: Got that. So can that gap be bridged?
GOLDEMBERG: Oh, okay.
GREENE: The EU has said no way, the United States has said far too much.
ARYA: After you. (Laughter.)
Look -- (laughs) -- look, let me go with the basics. You know, we are changing the composition of the atmosphere. You know, it's the first time in human history that we succeeded in doing it, you know? And the -- and the -- and the -- we have to minimize that. Any numbers that you set depend on models, on calculations, on things likes that, so-- why do you choose 2005? Actually, the explanation you gave was very interesting, because I didn't know that 2005 was the peak year for U.S. emissions. Why do we use 2000 as a reference? Why 1990 and so on and so forth?
It's rather arbitrary. You know, the point is that we have to reduce the emissions. And there are models that tell you that you have to reduce 60 percent up to the year 2050; otherwise, the temperature will go to a very high value, and so on and so forth.
Those numbers are -- you know, they have error bars. It's impossible to give a single answer. So to make a political issue out of 40 percent or 20 percent, I think, is the wrong way to go. What we have to do is to embark in a direction in which we are going to reduce the rate of growth of the emissions. And I think the 40 percent became a political issue. You know, some NGOs love it, you know, and others, I think 20 percent is pretty good start, you know. And there is no scientific basis for -- no firm -- there is scientific basis (chuckles), but no firm scientific basis for 20 percent or 40 percent.
ARYA: I would answer this from a technology perspective. And I would say as a technologist I'm very optimistic, because in many technologies we are at the very bottom of the S curve, the learning curve. And the projections we are making for future costs make some assumptions about how we will -- you know, how we'll go up that learning curve, but they're all assumptions. So there are big error bars even in terms of what it will cost.
And if history is an indicator, the energy industry has done remarkable things to deliver technology in the carbon world, and there is no reason why it couldn't do that in a low-carbon world. So I would conclude by saying financing is an issue; we need to reduce regulation. You know, the free market in energy has been very successful and it can again be successful and deliver solutions. We need a stable regulatory framework, which is what is missing today.
GREENE: Thanks. And Sun Guoshun, you have the last word.
SUN: Thank you for this question. You know, the fourth assessment report of IPCC, you know, I think the third working group report, has said that if we're going to achieve the two-degree Centigrade temperature increase, at least we should achieve the 450 ppm emission scenario.
And that requires at least 25- to 40-percent reduction for developed countries by 2020. So there's scientific base of the claim of developing countries to ask developed countries to reduce by 40 percent by 2020. So there is scientific base for that claim.
And on the other hand, for the finance, 1 percent GDP, you know we have many reports on addressing climate change: the Stern review, the World Bank report and also the IPCC report. And these say that to adapt to the adverse impact of climate change, you know, large amount of financial resources are needed to do that. And, you know, according to my -- you know, my memory -- but I'm not exact on that -- actually, you know, even 1 percent of GDP for developed countries does not meet that requirement.
Of course, you know, this -- personally, I think that this doesn't necessarily mean that all the money should come from the, you know, budget of developed countries. And also, maybe some of the money can come through, you know, the carbon market. But there should be a substantial amount of the money from public money -- public money of developed countries. And I am not sure whether the developed -- developing countries will soften their stance on this in Copenhagen. I don't have any idea. And I have not followed the negotiations on this specific agenda item in the UNFCCC.
GREENE: Well, with that, I will -- I will call this meeting to a close. Thank you very much for an excellent discussion. I personally learned a lot and have been stimulated by it, and I hope you have as well. (Applause.)
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