VZCZCXRO5714
RR RUEHAST RUEHDH RUEHHM RUEHLN RUEHMA RUEHPB RUEHPOD RUEHSL RUEHTRO
DE RUEHBS #0186/01 0481355
ZNR UUUUU ZZH
R 171355Z FEB 10
FM USEU BRUSSELS
TO RHEHNSC/NSC WASHDC
RUEHC/SECSTATE WASHDC
INFO RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RUCNMEU/EU INTEREST COLLECTIVE
RUEHRC/DEPT OF AGRICULTURE WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC

UNCLAS SECTION 01 OF 02 BRUSSELS 000186 

SENSITIVE 
SIPDIS 

E.O. 12958 N/A 
TAGS SENV, KGHG, PREL, EU 
SUBJECT:   CLIMATE: PERSHING AND HEDEGAARD COMMIT TO CLOSE 
COOPERATION

This cable is sensitive, but unclassified. Please protect accordingly.

¶1. (SBU) Summary: Deputy Special Envoy for Climate Change Jonathan Pershing met with EU Climate Action Commissioner Connie Hedegaard on February 11. Also present was Ambassador William Kennard. Pershing and Hedegaard agreed that the U.S- EU cooperation remains important, particularly in light of the statement issued by the BASICs following their January 25 meeting. They agreed on the need to operationalize the Copenhagen Accord and ensure it is incorporated into the UNFCCC process. Pershing said it would be important to convene the ministers prior to the May meetings in Bonn and suggested a meeting of the MEF, to include relevant non-members. Hedegaard questioned whether guaranteed loans should be included in the $30 billion Fast Start financing package, and Pershing suggested a meeting among the key donor states be held in the near term to discuss, and if possible, agree on a common approach to what financing would be listed in each country’s contribution. End summary.

¶2. (SBU) Pershing told Hedegaard that the prospects for climate and energy legislation this year increased following the State of the Union address. He said the President is very focused on this issue and committed to a legislative package - not just an energy bill. Hedegaard said that she would be traveling to Washington in mid-March as part of an EU delegation and asked if it would be useful for the delegation to meet with Senators. Ambassador Kennard cautioned the Commissioner, noting that any messages to the Hill must be constructive.

¶3. (SBU) Pershing said the focus for the U.S. team in January had been to encourage as many countries as possible to associate with the Copenhagen Accord. He expects the final number to be about 120 countries, which is in the range of the 100-150 that the USG had hoped for, although still less than would be desirable. He said that submissions by some major economies were “opaque”; Hedegaard said China’s submission was open to interpretation. Pershing said Brazil’s and India’s submissions were as well and were probably the result of their January 25 agreement. Citing Special Envoy for Climate Change Todd Stern’s February 9 speech, Pershing stressed two points: (1) the heads of states made commitments at Copenhagen and the United States does not take these commitments lightly and (2) the Accord is the result of a long and arduous process - there is no plan B for negotiation of a different agreement.

¶4. (SBU) Hedegaard asked about China’s perceptions on the Accord. Pershing said the letter from Premier Wen to UN Secretary general Ban Ki Moon and Danish Prime Minister Rasmussen was positive, but he was more concerned about communications from Su Wei, China’s Climate Negotiator. He noted that there had been no formal bilateral climate discussions between the US and China since Copenhagen, but indicated that these would likely resume in February. Pershing said the U.S. and EU must deal with China, specifically on the subject of transparency. Hedegaard then asked “did you agree with China on MRV or not? I was presented with a paper that China, India and the U.S. could agree upon.” Pershing replied: “the question is whether they will honor that language.” Hedegaard said she does not have high expectations for COP 16 in Mexico and that we must avoid the expectations that it will resolve all of the unanswered problems from Copenhagen. She asked whether the Copenhagen Accord could be moved into the LCA (Long-term Cooperative Action) or KP (Kyoto Protocol) working groups for future discussions. Pershing said the two tracks have not yielded much progress but the LCA would be easier, particularly since the United States is not a member of Kyoto. He said in theory, the Accord should guide the work of the COP, but he’s not sure if the BASICs will allow this. He said the BASICs, led by India, are resisting any changes to the UNFCCC guidelines (under which developing countries report on their GHG emissions and actions). He said African and Latin American states are looking to turn Copenhagen into a binding agreement, but the BASICs are opposed to this. Hedegaard suggested the AOSIS (Alliance of Small Island States) countries “could be our best allies” given their need for financing.

¶5. (SBU) Hedegaard said that in light of the BASIC announcement, the U.S. and EU must coordinate more closely. She asked whether the MEF process should be continued and suggested a meeting of Annex I countries. Pershing said the forum for further discussions has not been resolved, but he suggested that non-members could be invited to participate in MEF discussions. He said a meeting of the MEF ministers prior to the May/June meeting in Bonn could help frame expectations for Mexico. Hedegaard said she supports the MEF process but said a constructive signal from the COP at Bonn will be important.
BRUSSELS 00000186 002 OF 002

¶6. (SBU) Hedegaard asked if the U.S. was prepared to move forward on Fast Start funding. She said some countries like Japan and the UK will press the inclusion of loan guarantees as part of the package and asked whether the U.S. will need to do any “creative accounting. “ She added: “$30 billion had been promised - - it cannot be lent.”  She asked for Pershing’s thought on the Soros proposal, which she said was “tempting in the long-term,” but she is not sure it will work for Fast Start funding. [Note: In December 2010 George Soros proposed that developed countries return their IMF special drawing rights (SDRs) to the IMF, which could in turn lend the funds to developing countries for mitigation and adaptation. Soros estimated the amount from SDRs could provide about $150 billion. End note.] Pershing replied that this proposal is just another form of loan guarantee, and we were skeptical of its utility; he also said he would share our analysis on it. On Fast Track financing, Pershing said the administration anticipated the need and budgeted funds in 2010 and 2011. He said some U.S. funding would be directly applied for mitigation and adaptation and other sources would be indirect, citing for example program funds from various agencies and funds for food security. He concurred that it would be valuable to agree on what funds would be included in each country’s reporting, and said donors have to balance the political need to provide real financing with the practical constraints of tight budgets. He suggested that the small group of key donors - those that provide about 90% of the financing - convene quickly to discuss this issue.

¶7. (U) The Deputy Special Envoy for Climate Change has cleared this cable.