Remarks at the U.S.-China Strategic and Economic Dialogue

Todd D. Stern
Special Envoy for Climate Change 
Beijing, China
July 9, 2014

MODERATOR: Okay, everybody. So I think we met a few minutes ago. My name is Nolan Barkhouse. I am the U.S. Embassy spokesman here in Beijing, China. It is my pleasure to welcome Special Envoy for Climate Change Todd Stern back to Beijing. He comes here on a regular basis, and is working on (inaudible) related to climate change.

As we've discussed, this will be on the record, and we have about 15 minutes. So, maybe we should get started.

Mr. Stern?

MR. STERN: Okay, thank you very much. Hi to everybody. I will just do a few quick comments at the top, and then we can take whatever questions you have.

We have had quite good meetings here the last couple of days. I think there is a lot of active cooperation going on between the U.S. and China. The joint session that was held today on climate change, I think, was, overall¸ quite positive. There were a number of different elements to it. There were presentations on domestic policy of each side, there was focus on the link between climate change and air pollution, a lot of focus, as you know, undoubtedly, on the Chinese part, regarding pollution, and Vice Premier Wang Yang, I think, referred to needing -- China needing a war on pollution.

Secretary Kerry talked at one point about the importance of taking into account the cost of not acting when you are evaluating the overall costs of (inaudible) mitigation. So those are costs that involve things like health, as well as perhaps extreme weather events and droughts, and so forth. In the analysis of our own (inaudible) rules, I believe the estimate is that we will -- that the rules will have a net benefit of something on the order of $90 billion a year. Very significantly countered the avoided health -- damages to health from pollution.

Both Vice Chairman Xie Zhenhua and I talked about bilateral cooperation between the U.S. and China that was -- Secretary Kerry visited China in April of 2013, last year, and on that visit, along with State Councilor Yang, announced the formation of a new Climate Change Working Group, which has become an important body. At the S&ED -- so a few months after April, the S&ED last year, five initiatives were launched on things like smart grids and carbon capture and utilization of storage and energy efficiency in heavy-duty vehicles, and the like. And over a not very long period of time, work plans were developed, and a whole host of activities -- workshops and study tours and particular specific deliverables -- were developed. There were actually eight different projects announced yesterday on -- particularly focused on smart grid demonstration projects and the like, and also the CCUS, there was an event on that yesterday.

Secretary Moniz talked about a variety of areas of either actual or potential cooperation with respect to energy. John Holdren -- Secretary Kerry asked John Holdren to speak for a few minutes on the science flowing out of the recent IPCC Fifth Assessment Reports, as well as the National Climate Assessment in the United States.

And I guess the other thing I would just mention, not from the joint session, but from the day that we spent yesterday -- the "we" being me and John Podesta from the White House on the U.S. side, and our team, along with Xie Zhenhua and his team -- engaged in quite detailed conversations about the domestic policies of each side, and various ways of (inaudible) planning for the post-2020 period and the actions that we have been taking to limit greenhouse gases, and essentially to develop a target for post-2020.

All of that, by the way, flowed out of an agreement that was reached on a trip that Secretary Kerry did, and I joined him on that trip this past February, where (inaudible) short statement that was released was (inaudible) on, essentially, developing (inaudible) sharing information (inaudible) post-2020 plans to reduce greenhouse gases.

So, in any event, overall I think they were a quite constructive set of conversations the last couple of days, and with a number of deliverables attached. Mostly this is -- from my point of view, this is part of an ongoing process, which is a very intensive one with China. And so there we go. I am happy to answer questions.

QUESTION: I know this is a small project, but it sounds quite interesting. Apparently, the Chinese agreed to (inaudible) to do a pilot project in two cities in which industrial boilers would be switched from coal to natural gas.


QUESTION: Can you talk about that a little bit, and what it illustrates?

MR. STERN: Yes. So, the way the working group is set up, it's essentially the umbrella for various kinds of policy discussions or initiatives in different areas to get going, and then for a -- for personnel on our side and their side to get together to do work.

This is a project that was -- that is focused on the fact that a surprisingly large amount of China's coal use is actually used not for -- not in the power sector -- it is used there, too -- but also in industry and industrial boilers. And the hope -- and this is actually something that is -- it was developed out of the energy bureau in the State Department, so if you really want chapter and verse you can get it from Carlos Pascual. I can give you the sort of general idea. But I think the idea is to do a study, focus on two cities to see what ways in which gas can be used to swap out coal, and what the challenges on regulatory and market barriers might be to that, and whether those barriers can be overcome. But if you want more, I would direct you there.

QUESTION: And did you say that Wang Yang said there was a need for a war on coal?

MR. STERN: Yes. I think that was basically -- John, right? I mean I think that was basically what -- I mean he used the words "war on pollution," and that -- I don't know --

PARTICIPANT: (Inaudible.)

MR. STERN: Okay. I don't know if the word is "need."

PARTICIPANT: He said we need a war on pollution, like --

QUESTION: Like a war --

PARTICIPANT: Like when we had a war on poverty.

MR. STERN: Okay, right.

MODERATOR: Any other questions? Please.

QUESTION: Thank you so much. My name is Diska Igoashi from Japanese News (inaudible). And you said you had a detailed discussion on emission target after 2020. So can you elaborate a little bit about what kind of discussions you had? And then what did the U.S. side ask the Chinese side about this --

MR. STERN: Yes. Well, I mean, we are certainly not at a point where anybody is talking about concrete numbers. It is more what is your process for developing a target, what sort of form you think your target is going to take. What are the policies that underpin the target you are going to develop?

I mean on our side we talked about the -- there is a whole host of policies that President Obama has put in place now, from the fuel efficiency standards early on in the first term, a whole large slew of efficiency standards for buildings and homes and industry. Obviously, the biggest single policy is what has just recently been rolled out, which is the standard for existing power plants, but also a standard for new power plants. But there is lots of policy. There is a methane strategy that could be extremely potent, in terms of greenhouse gas savings, focusing on methane and the oil and gas sector, agriculture, and landfills. There is work being done on HFC.

So, we talked about all of the kinds of policies that are either -- that have either been put in place, are in train, or are, in one form or another, in development. Those will be the kind of foundation -- I mean that is what is reducing emissions for us right now, sort of for the period up to 2020, and for the purpose of reaching our 17 percent target. But they will also be the foundation stone for whatever targets we do post-2020. They won't be the only thing; there will be more in the post-2020 period, because there will, obviously, continue to be actions taken on climate change. But we talked about what we know.

The Chinese also talked about policies that they have in the works. There was a meeting among -- that I wasn't part of, but that was among technical people and people who do modeling in the morning to kind of look at different scenarios. This was more -- the modelers were more on the Chinese side.

So it was meant to be a real exchange of information, so that we each have a lot more of a window into what the other side is thinking about, and looking at, and planning, than we have ever done before. And we mean to continue that information exchange, because it is useful for both of us.

MODERATOR: I think we have about -- time for one more question. Please.

QUESTION: Following up on the same question, Brad Klapper from Associated Press. We heard from the Chinese officials that they are wedded still to this notion of the common but differentiated goals. And while I am sure you respect that in some regard, how important is it to get China post-2020 to play a role in fighting -- in cutting emissions and fighting climate change that is commensurate to their role as the world's -- a world economic power, and the world's single biggest emitter? And do you feel China is ready or is getting closer to being ready to take on that role?

MR. STERN: So, let me make two points. It is -- on the one hand, it is -- well, not on the one hand -- it is crucial for China to play a very important role in reducing emissions. China has been doing a lot of things to reduce its emissions, as compared to what they would otherwise be. Remember, they took a target in the immediate post-Copenhagen phase. That target is to reduce the energy intensity of their economy 40 to 45 percent below 2005 levels by 2020, and I think their belief is that they are on track to do that.

They also had, at the same time, a target for non-fossil energy in their energy mix to rise to 15 percent. I think it is not there yet, but it is certainly rising. They have been doing a tremendous amount in the development of solar and wind, and they have got a big program planned on nuclear. So they are doing a lot on that front.

The other sort of third part of their target back in 2010 was what is called afforestation, growing -- planting more forest.

So, yes, it is crucial. China is about a quarter or more of the world's -- accounts for about a quarter or more of the world's greenhouse gases. These numbers always shift around, depending on whether you are looking at just energy, or energy plus land use. One of the big services that provides data in The Netherlands, for whatever reason, counts energy plus cement. I think if you count energy plus cement, China is something like 29 percent of the worldwide total. By 2020 they will probably be about twice the size of the U.S., in terms of emissions, because they are still growing rapidly, and we are going down. So, yes, absolutely, they have to be part of it.

Now, on the question of the kind of differentiated responsibilities, I will try to make this short. You waded into a complicated question in the negotiations.

So, CBDR, as the phrase is known in the negotiating world, is, from the point of view of the United States, a completely legitimate concept. The whole phrase is "common, but differentiated responsibilities and respective capabilities." The issue is how you interpret it. I have had long and detailed conversations on this subject with Minister -- Vice Chairman Xie and the others. We don't quarrel with the basic concept. What we don't agree with, and what we do quarrel with, is the notion that the way you interpret CBDR is to say that you look at the two categories of countries that were drawn up in the original granddaddy climate change treaty in 1992, and you look at those two categories, which, again, in the climate world are known as Annex I as the developed countries, and Non-Annex I as the developing. And you say those two categories in 1992, A, are immutable, they never change; and, B, they determine the form and content of all agreements, going forward.

Okay. At that point we get off the bus. We can't do that. So what we have proposed -- and I think there is actually a lot of support for this in the negotiations now -- and I say we have proposed it; many countries have proposed something quite similar to this, is essentially a system of what are called nationally determined commitments, or contributions -- and, again, in the lingo of the climate talks -- which essentially just means you self-determine. So every -- you recognize CBDR, in the sense that every country can decide what they have got the capability of doing, what their circumstances allow them to do, with the very strong encouragement to do the maximum that they can, but it is still up to them what they are going to do. And it is up to them whether you are -- whatever country you are, so that there is a sort of continuum across 190 countries of differentiation, rather than a sort of on-off switch between developed and developing that never changes.

That is the nature of the discussion about CBDR. So we accept -- we absolutely accept the notion that there -- that differentiation is appropriate, but not in that bifurcated, two categories set in 1992 --

QUESTION: Do you feel the Chinese are receptive --

MR. STERN: I don't know. I mean I think that I have a kind of -- it is one of those conversations that just goes on and on and doesn't stop. I see Minister Xie, or Vice Chairman Xie, many times every year. I see him here, I see him in Washington, I see him in various places we have major economies fora meetings. I am going from here tomorrow directly to Paris for a major economies fora meeting. There is a meeting right after that in Berlin with another bunch of countries. So I see him all the time, and we have this conversation. And I think that we understand each other and understand each other's positions quite well, and always look to find ways to accommodate both sides.

And again, I -- hopefully, what I am talking about, the sort of structure that I am talking about, is going to work for China and work for everybody else, because I think that is the resolution to this issue, in our view.

MODERATOR: I think you are about out of time. But thank you, everybody, for coming. And we look forward to seeing you at the next event, whichever one that is.