VZCZCXRO4200
PP RUEHCN RUEHGH RUEHVC
DE RUEHGZ #0121/01 2580955
ZNR UUUUU ZZH
P 150955Z SEP 06
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC PRIORITY 3354
INFO RUEHBY/AMEMBASSY CANBERRA 0370
RUEHNE/AMEMBASSY NEW DELHI 0096
RUEHUL/AMEMBASSY SEOUL 1424
RUEHKO/AMEMBASSY TOKYO 1209
RUEHOO/CHINA POSTS COLLECTIVE
RUEAEPA/HQ EPA WASHDC
RHMCSUU/DEPT OF ENERGY WASHINGTON DC
RUCPDOC/USDOC WASHDC

UNCLAS SECTION 01 OF 03 GUANGZHOU 030121 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR OES/WATSON, OES/EGC-DEROSA-JOYNT AND OES/PCI 
STATE FOR EAP/CM - WARD 
STATE PASS TO CEQ CONNAUGHTON AND BANKS AND NSC FOR HUNTER 
DOE FOR INTERNATIONAL/PUMPHREY AND GEBERT 
EPA FOR INTERNATIONAL/MCASKILL 
 
E.O. 12958: N/A 
TAGS: SENV ENRG TSPL BEXP CH
SUBJECT: ASIA PACIFIC PARTNERSHIP ON CLEAN DEVELOPMENT AND 
CLIMATE: CEQ CONNAUGHTON MEETS WITH AMCHAM SOUTH CHINA 
 
¶1.  (U) Summary:  In his roundtable discussion with 
American Chamber of Commerce South China representatives 
September 1, White House Council on Environmental Quality 
(CEQ) Chairman James Connaughton said that his mission in 
China was to advance the Asia Pacific Partnership on Clean 
Development and Climate (APP).  The latter, he noted, is 
designed to foster private-public cooperation and to 
address pollution control, greenhouse gas reduction, and 
energy security issues.  AmCham representatives outlined 
environmental protection efforts in their companies, and 
discussed challenges they face in the region.  End Summary. 
 
¶2. (U) On September 1, CEQ Chairman Conaughton met with the 
AmCham South China Board of Governors and selected company 
representatives in Guangzhou.  Connaughton said that his 
mission in China was to advance the APP on pollution 
control, greenhouse gas reduction, and energy security 
issues.  He said that the APP countries (the United States, 
Australia, China, India, Japan, and South Korea) 
represented 50% of current and future growth and energy use. 
The challenge would be to find ways to break down the 
shared commitments under the APP into practical 
partnerships in the APP task forces.  Mr. Connaughton 
commented that he was working with China to bring its 
industrial sector more fully into the partnership.  One 
desired policy outcome would be to eliminate tariffs on 
environmental equipment and services, pulling the zero- 
tariff issue out of the stalled Doha Round WTO negotiations. 
He then opened the discussion to the AmCham members present 
to hear about the opportunities and challenges they faced 
in South China. 
 
AmCham President 
---------------- 
 
¶3. (U) AmCham President Harley Seyedin highlighted the 
environmental protection efforts of South China companies, 
taking note, in particular, of MBA New Plastics Technology 
Co. and the Nine Dragons Paper Co.  MBA, he said, uses 100% 
recycled materials in its manufacturing, and Nine Dragons 
is a waste paper export and recycling company.  Seyedin 
also mentioned that he was trying to organize an 
international conference on energy and the environment to 
Guangzhou in 2007, and he invited the Chairman ? and those 
involved in the APP - to attend, if possible. 
 
¶4. (U) Seyedin said that Guangdong had no significant coal, 
oil, or liquefied natural gas (LNG) resources and must 
either import these or electricity from hydroelectric 
plants in Yunnan Province.  (Note: According to Chinese 
Government statistics, in 2005, Yunnan transmitted 6.296 
billion kilowatt hours to Guangdong, while Guangdong 
generated 216.3 billion kilowatt hours.  End Note). 
Seyedin noted, however, that in the last five-to-six years, 
Guangdong had done more than any other province to improve 
the local energy situation.  An LNG plant and pipeline, 
which had begun operations in the province, could 
potentially supply the region with up to 10 million gallons 
of imported LNG from Australia. 
 
¶5. (U) On the environment, Seyedin said that 186 water 
treatment plants were in the planning or construction phase. 
He noted that one third of power generation in the region 
came from "backyard" generation (small, unlicensed, highly- 
polluting diesel generators used during periodic power 
outages in the area).  Once newer, larger power plants come 
online, Seyedin said, backyard generators would disappear. 
Nonetheless, the province would still likely experience 
major shortages for the next five years. 
 
¶6. (U) These newer power plants would be mostly be LNG- 
fueled, as it was difficult to get a coal-fired plant 
project approved by the Government.  Hydroelectric power 
transmitted from Yunnan Province supplemented local 
production and was a source of electricity to energy- 
intensive factories and residential areas in Guangdong. 
When there was a drought in western China, electricity 
imports declined, causing industries to rely more heavily 
 
GUANGZHOU 00030121  002 OF 003 
 
 
on local coal-fired power plants and their own backyard 
plants. 
 
¶7. (U) Seyedin said that the regional power grid could not 
handle the load, and that there was significant energy loss 
in transmission.  He estimated that it would require USD 25 
billion in upgrades for the grid to handle the load. 
 
Nine Dragons Paper 
------------------ 
 
¶8. (U) Ming Chung Liu, Nine Dragons' CEO, said that in 
addition to waste paper and recycling business, Nine 
Dragons operated its own waste water treatment plant and a 
coal-fired power plant that used pollution reduction 
equipment.  Liu stated that "for better living tomorrow, we 
need to protect the environment today."  He pointed out 
that Chinese-made desulfurization equipment using the semi- 
dry or dry method did not work and the wet method was 
better.  As for marketing U.S.-manufactured environmental 
equipment to Chinese consumers, Liu suggested that the 
Chinese did not want to read studies or reports; "they need 
to see a sample, they need to see how it works." 
 
Northwest Airlines 
------------------ 
 
¶9. (U) Northwest Airlines General Manager for China Sandeep 
Bahl said improvements in airspace management near airports 
were needed to minimize "circling" and reduce fuel 
consumption.  Northwest no longer used airplane power units 
(APUs) when planes were at an airport in an effort to 
conserve fuel; Chinese carriers, however, still used them. 
He added that he would like to see a sector-wide move 
towards motor-driven taxiing instead of engine taxiing. 
Bahl stated that while it was good that the APP promoted 
discussions with businesses, "decisions are made on the 
government level, and business complies." 
 
FedEx 
----- 
 
¶10. (U) Alex Yim, FedEx's Managing Director of Operations 
for Southern China, echoed Bahl's comments on fuel 
conservation, adding that non-Chinese carriers were still 
not permitted to fly more direct routes, such as the "L888" 
route across China; this would allow companies to save time 
and fuel.  Yim said that China is now focusing more on 
environmental issues; recent well publicized environmental 
disasters had, in fact, pushed the Government to improve 
its efforts. 
 
Closing Remarks 
--------------- 
 
¶11. (U) Connaughton discussed his meetings with Chinese 
officials in Beijing, saying that the Vice Premier with 
whom he met was "bold" when discussing opportunities for 
cooperation.  However, Connaughton said that the problem 
now is getting the bureaucracy to implement things.  The 
United States and China are coal consuming nations, 
Connaughton said, and we had a special responsibility to 
improve our environmental protection efforts.  He stated 
that the "payback" was real in human health terms.  He 
noted that many of the environmental systems were cheaper 
to install in China than in the United States.  Connaughton 
said that while cost/benefit analysis and pricing 
structures were poor in China, that there was no reason why 
China could not be right behind the United States in 
getting coal-fired plants to reduce pollution by 90%. 
Connaughton also told the AmCham representatives that China 
needed a national fuel standard and should develop clean 
dieselization. 
 
¶12. (U) The Chairman expressed his desire to see CEOs of 
Chinese public and private companies talking to CEOs of 
other countries' companies and sharing knowledge and best 
practices to reduce pollution.  He suggested that AmCham 
 
GUANGZHOU 00030121  003 OF 003 
 
 
get in touch with its companies? CEOs and start a 
grassroots network to initiate this type of international 
dialogue. 
 
¶13. (U) AmCham Participants 
 
Harley Seyedin, AmCham President 
Tim Wen, Allway Co. President 
Simon Foo, AIU Guangzhou General Manager 
Christian Doeringer, Hewitt General Manager 
Charles Hubbs, Guangzhou Fortunique CEO 
Tony Zou, Proctor and Gamble Director of Government 
Relations 
Alex Yim, FedEx Managing Director of Operations 
Thomas Podgurski, Royal Service Air Conditioning System 
Operation Director 
Brad Mingus, Lexmark Director of Hardware Operations 
Ming Chung Liu, Nine Dragons Paper CEO 
Eric Wang, GISE-MBA New Plastics Technology General Manager 
Frederick Hong, Frederick Hong Law Office 
C.K. Lim, ENSR General Manager 
Andy Qian, Elevation Technology General Manager 
Sandeep Bahl, Northwest Airlines General Manager for China 
 
¶14. (U) Chairman Connaughton has cleared this message. 
 
GOLDBERG