Cablegate: Energy and Environment Discussed During

DE RUEHBJ #4222/01 3190654
P 140654Z NOV 08



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1. (SBU) SUMMARY: During a visit to Beijing on October 26-30 (after
stops in Chengdu and Shanghai), Congressional-Executive Committee on
China (CECC) members Jonathan Stivers (Senior China Advisor to House
Speaker Nancy Pelosi) and Gerry Waldron (Staff Director and Chief
Counsel, House Select Committee on Energy Independence and Global
Warming) met with members of China's Ministry of Environmental
Protection (MEP), National Energy Administration (NEA), the Foreign
Affairs Committee of the National People's Congress (NPC), and
several environmental NGOS. The purpose of the CECC visit was to
discuss potential cooperation between the U.S. Congress and Chinese
government officials on energy efficiency and environment
protection, assess China's key environmental challenges, and
determine how the U.S. Congress might engage in the Strategic
Economic Dialogue (SED). NGOs and government officials provided
thorough briefings on China's energy efficiency efforts,
environmental NGO activities in China, environmental challenges
associated with growing energy demand, and China's environmental
protection efforts and goals. All expressed the desire to expand on
existing joint environmental cooperation and to explore new joint
cooperation efforts. While eager to discuss these efforts, NGOs and
Chinese government officials acknowledged they had no prior contact
or experience with the U.S. Congress on energy or environmental
issues, but were willing to explore joint cooperation with Congress,
especially after the U.S. elections. END SUMMARY.

2. (SBU) During a limited country team briefing hosted by the
Ambassador, the visitors solicited viewpoints around the table on
the utility of the SED process (currency, bilateral investment
treaty, sovereign wealth fund), environmental concerns (including
global warming, enforcement issues, and potential U.S. exports of
environmental technology to China), China's energy needs
(reliability of data, price controls), and China's response to the
global economic downturn. Stivers told the LCT that Speaker Pelosi
was considering a trip to China in summer/fall of 2009, and part of
the purpose of his travel here was to advance the trip, in
particular looking at whether cooperation in energy and environment
might be used as "positive" areas around which to focus the trip.

3. (U) At a NGO Roundtable hosted by the Brookings/Qinghua
University Center for Public Policy, the environmental NGO community
was represented by the China Foundation for International Strategic
Studies, Beijing University, the Global Environmental Institute
(GEI), the Natural Resources Defense Council, the Sustainable
Development Consultancy, and the World Resources Institute. In
opening remarks, Stivers conveyed that Speaker Pelosi has a great
interest in the work the NGO community is doing in China,
particularly in the areas of energy and the environment, and
emphasized the U.S Congress's desire to find ways of working
together. The NGO representatives responded with an assessment of
the progress they have made over the last ten years, particularly in
greater information exchange and joint research projects with the
government. On the environmental side, NGO participants also
emphasized that the most effective role for them will be to continue
developing unbiased information and innovative solutions, and
bringing this type of work to the attention of key decision makers
within the Chinese government.

4. (SBU) Some NGOs said they are encouraged that Chinese environment
officials are becoming more receptive to NGO environmental
assessments, particularly the NGOs that are viewed as "impartial,"
and take a non-advocacy tone in dealings with the government. NGOs
also see opportunities in their feeding environmental information
into the political system by forging greater ties to academic and
research institutions, given that, according to some of the NGOs
present, environmental policymakers are talking more and more with
these groups. However, the representative from GEI opined that
environment officials do not generally seek NGO assessments on
environmental issues; instead, the mass media will be the key to
greater public advocacy on environmental issues, and therefore
become the means by which greater progress in dealing with China's
environmental challenges will be made.

5. (SBU) All of the NGOs represented at the Brookings/NGO briefing
agreed on the need to encourage continued cooperation within the NGO
community and for the United States to maintain momentum and
"sustained support" regarding environment and energy issues in
China, as it will be years before China will be able achieve
measurable progress in key areas, including calculating carbon

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dioxide emissions at a national level. Several NGO reps cautioned
Stivers and Waldron that using U.S. models for meeting environmental
standards as measures for progress in China will not likely be
appropriate or effective.


6. (SBU) At a briefing with Embassy ECON, ESTH, and Treasury
officers, the visitors reviewed the current status of the SED
process and discussed how Congress might become more engaged in the
SED. Stivers said that Congress feels it could be more engaged in
the SED process than it is now, possibly as observers, and could
help build on what has already been done, particularly in the areas
of currency issues, sovereign wealth funds, market access, WTO
commitments, consumer safety issues, IPR, and energy and environment
issues. Stivers then raised concerns about whether actual
accomplishments had been achieved by the SED.


7. (SBU) In a meeting at the Ministry of Environmental Protection
(MEP) hosted by Mr. TIAN Weiyong, Deputy Director General,
Environmental Supervisory Bureau, Stivers began by congratulating
MEP on its being raised to Ministry level in March 2008 from the
former State Environmental Protection Administration (SEPA),
emphasizing that United States-China environmental protection
cooperation has made big strides over the last few years. Stivers
added that they had traveled to China to explore further
Congressional-Chinese cooperation on global warming and energy
issues, to discuss challenges China faces regarding environmental
protection, and to explore opportunities for greater United
States-China joint environmental cooperation. According to Tian,
China takes environmental preservation seriously and that
sustainable development is an important part of China's
environmental strategy. Senior MEP officials emphasized that China
has made progress in reducing industrial pollutants and in carrying
out its water pollution abatement effort. But pollutants included in
the 2005-2010 Five-Year Plan are currently limited to sulfur dioxide
and COD (chemical oxygen demand, used to measure water quality) and,
while MEP and the U.S. Environmental Protection Agency (EPA) have
jointly worked on this effort, any decision to expand reduction
targets to include other pollutants in the next five year plan will
have to be decided by the NDRC. MEP reps insisted that with progress
made dealing with water and atmosphere pollution, reducing other
pollutants will eventually emerge as a higher priority in China for
the MEP agenda.

8. (SBU) Tian acknowledged that China's environmental problems had
increased and in some areas worsened over the past few years, but
insisted that the central government and local authorities are
trying to improve environmental quality across the country. The MEP
monitors China's environment regionally via six MEP regional offices
set up to monitor environmental protection at the local level to
intensify environmental regulatory enforcement. When asked about
exploring joint cooperation initiatives with the U.S. Congress, MEP
officials said that they had no prior contact with the U.S. Congress
on environment and energy issues, only experience with the Executive
Branch. Their experience with the U.S. Environmental Protection
Agency (EPA) had proven quite beneficial for China in the past,
especially in the area of environment legislation and law
enforcement. Other areas of MEP-EPA cooperation include water
pollution, atmospheric pollution, toxic disposal, and solid waste
disposal. Tian said that MEP values its relationship with EPA very
highly, and hopes to draw on EPA environmental management strategies
and on U.S. technology to help implement China's enforcement
mechanisms for improving corporate environmental enforcement and
cooperation within China.

--------------------------------------------- ----------
--------------------------------------------- ----------

9. (SBU) After welcoming remarks from Mr. SUN Qin, Deputy Director
General of the National Development and Reform Commission's (NDRC)
National Energy Administration (NEA), Stivers praised United
States-China (and potential U.S. Congress-Chinese government)

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environmental cooperation efforts, emphasizing that his visit comes
in the spirit of understanding and is aimed at learning more about
how decisions are made in China on challenges associated with energy
and environment issues. Stivers praised the dedication of Chinese
officials toward finding ways forward on common energy and
environment issues, particularly on energy efficiency. Specifically,
Stivers was interested in what incentives were in place for local
governments to meet energy efficiency standards. NEA officials
responded that since 2008-2020 is projected to be a growth period
for China's economy, NEA must ensure the country's energy supply.
To do this, there will be added emphasis on energy conservation,
diversity of supply, and environmental protection. Policies have
been put into place encouraging specific energy efficiency targets,
but some provinces have failed to meet them. Sun said the
government is gradually phasing out high-emission projects by
shutting down small coal mines and oil refineries and by launching
some highly- efficient power generating units. Sun also shared
information on the Thousand Enterprises project, whereby 1,000
enterprises are required to upgrade emissions reduction capability
on a regular basis to reduce pollution.

10. (SBU) Sun stated that China is diversifying its energy mix by
bringing more hydro power (145 gigawatts (GW) generated in 2007),
wind power (China generated six GW by the end of 2007 and aims to
develop between 30-50 GW by 2020), and solar power (currently about
1 gigawatt) online, as well as implementing an ambitious nuclear
power program. Sun acknowledged that while renewables are
important, they will only make up a small percentage of China's
energy production over the near term due to the high cost of these
technologies and problems integrating renewables-generated
electricity into the power grid. He further stated that that China
will remain highly dependent on coal, which currently accounts for
70 percent of the country's power generation capacity (China
produces 40 percent of the world's coal - about 2.3 billion tons per
year). Given its abundance of coal resources, Sun said that China
is striving to become a leader in clean coal technology. China is
currently involved in a carbon capture and storage project with
Australia aimed at capturing 3,000 tons of carbon dioxide per year.

11. (U) In a brief discussion on biofuels, the NEA officials said
that nine provinces in China would soon be requiring at least 10%
ethanol in gasoline available for sale in those localities. Staff
Director and Chief Counsel Waldron of the House Select Committee on
Energy Independence and Global Warming also described U.S. efforts,
including that of Congressionally-mandated targets of 26 billion
gallons of ethanol in use by 2020 and encouraging specific
(non-corn) sources of biofuels. Sun concluded the meeting by
affirming that, in his view, the SED has been crucial in ensuring
that the United States and China fulfill common responsibilities and
goals in energy and environment for the benefit of the world. He
also stated that the SED process remains a good forum to enhance
mutual understanding, maintain a constructive dialogue, and reach
consensus on energy and environment issues important to both


12. (SBU) At a meeting with the Foreign Affairs Committee of the
National People's Congress (NPC), chaired by Deputy Director Mr. MA
Wenpu, both sides agreed that tremendous opportunity exists for
Congress to become more involved in cooperative efforts, including
those found within the Strategic Economic Dialogue. Ma emphasized
that China and the United States have seen the benefits of mutual
cooperation on many fronts, including in economics and trade,
military and anti-terrorist issues, and in resolving issues in
international hotspots. The NPC welcomes good relations with the
U.S. Congress and seeks opportunities to increase mutual
understanding, trust, and bilateral cooperation. Ma stated that
while differences exist between the United States and China on Tibet
and arms sales to Taiwan, the NPC welcomes exchanges with the U.S.
Congress as a way for China to learn about U.S. experiences
conducting its legislative process and governmental oversight, as
well as possibly pave the way for cooperation in international
challenges. He cautioned that the recent decision to sell arms to
Taiwan "is not consistent with the trend of the times, is not
conducive to peaceful development, and sends the wrong signals to
Taiwan." Stivers agreed there is bound to be disagreement on some

BEIJING 00004222 004.2 OF 004

issues, but with continued dialogue, Congress hopes to work with
China to find solutions to common problems, including energy
efficiency and independence and global warming. Regarding a possible
visit of Speaker Pelosi, Ma said he would report these plans to the
NPC, and that regardless of the outcome of the U.S. election, the
NPC is committed to ongoing cooperation with the United States.

13. (SBU) COMMENT: Chinese government and NGO interlocutors were
anxious to convey to the CECC visitors the importance of the United
States and China continuing their high-level economic dialogue
established by the SED process, not only because of its success so
far in raising economic issues to the most senior levels of both
governments, but also because of the potential benefit that a
SED-like process could have on future cooperation efforts on energy
efficiency and global warming. After the U.S. election, based on
the tone of the meetings described above, Chinese officials will
likely be looking hard at the status of the SED in the new
Administration, and at which part of the Administration takes the
lead in keeping the SED process going. END COMMENT.

14. (U) The CECC delegation has been sent an information copy of
this message.


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