COMPREHENSIVE FRAMEWORK FOR EFFECTIVE, SENSIBLE ACTION

October 22, 1997

GREENHOUSE GAS EMISSION REDUCTION TARGET

Under the current international climate change agreement (signed in Rio de Janeiro in 1992), industrialized countries accepted a non-binding emissions reduction goal. Most nations, including the United States, will fall short of meeting it. This fact, coupled with better scientific evidence on the seriousness of the climate change threat, led the U.S. to propose last year that a new agreement set binding limits on emissions. The proposed U.S. emissions target is designed to provide important environmental gains while maintaining strong economic growth. It is:

• Realistic. Seeks to return U.S. emissions to 1990 levels in the period 2008-2012 and reduce them further thereafter. Rejects European proposal for more stringent early reductions, as well as the "do-nothing" approach of some interests.

• Achievable. By providing incentives for early action to reduce emissions, attacking domestic energy inefficiencies, securing flexible international implementation mechanisms, and putting in place a market-based domestic emissions trading system, the U.S. can reach 1990 levels in the proposed time frame with minimal economic costs.

• Meaningful. Achieving 1990 levels in the period 2008-2012 would amount to almost a 30 percent reduction off a business-as-usual path, an important first step on the road toward stabilizing concentrations of greenhouse gases in the atmosphere. Emissions accounting will include all greenhouse gas sources and sinks (including reforestation).

FLEXIBLE, MARKET-BASED IMPLEMENTATION

Just as the effects of climate change will be felt globally, so too are the causes of climate change global in nature. Greenhouse gas emissions do equal harm to the atmosphere whether they come from a coal plant in China or a bus in Boston. For this reason, any regime to reduce greenhouse gases must be global. It must also allow all nations the ability to seek out the most efficient way of reducing emissions so that the greatest gains are achieved at the least cost. For these reasons, the United States strongly supports the inclusion in a new climate change agreement of two innovative, flexible mechanisms for reducing emissions:

• International Emissions Trading --Using Markets to Lower Costs. The principle of emissions trading is to use the efficiency of the market place to achieve environmental objectives at the lowest possible cost. Under an international emissions trading regime, a country (or firm) would be able to meet its emissions reduction target by reducing pollution itself, purchasing reductions from another country (or firm) that was able to achieve excess gains, or some combination of both.

• Joint Implementation --A Global Solution to Low-Cost Reductions. Joint Implementation (JI) is an innovative, market-based approach for addressing global climate change that uses international partnerships to achieve low-cost reductions in greenhouse gas emissions. Under JI, a company in the United States invests in a project which reduces emissions in another country and uses those reductions as a less expensive means of meeting its own target.

PARTICIPATION OF DEVELOPING COUNTRIES

In addition to its non-binding emissions reduction aim for developed countries, the Rio climate change agreement required all countries to take policies and measures to reduce emissions. Many developing countries have made real strides, through, for example, reducing energy subsidies. Nevertheless, given that developing country emissions will eclipse those from the developed world within several decades, these countries need to do more. Accordingly, the U.S. calls on developing countries to strengthen their existing commitments and to agree that their obligations must increase over time to include binding emissions limits. Our principles include:

• Global Participation. All countries must participate. Every nation would be required to take meaningful actions to limit emissions. The U.S. will not assume binding obligations until developing countries agree to participate meaningfully in the challenge of addressing climate change.

• Equity. The obligations of poorer and less developed countries should take into account their state of economic development and their relative contribution to the climate change problem.

• Assistance. While insisting that developing countries take meaningful actions to address climate change, the U.S. recognizes that many of these countries face significant development challenges that hamper their ability to reduce emissions. President Clinton is reemphasizing his commitment to working with these nations to help build more sustainable energy futures. This includes a $1 billion package of assistance from USAID and a renewed commitment to provide financial assistance through the Global Environment Facility, as well as our pathbreaking joint implementation proposals.