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SUBJECT: ENGAGING GERMANY ON ENERGY AND CLIMATE: CEQ 
CHAIRMAN'S MEETINGS WITH GERMAN OFFICIALS AND GERMAN 
PRIORITIES FOR ITS G-8 AND EU PRESIDENCIES 
 
¶1.  SUMMARY:  White House Council on Environmental Quality 
Chairman James L. Connaughton met with senior German 
officials from the Environment, Economic, and Foreign Affairs 
Ministries as well as the Bundestag (parliament) and 
Chancellery to discuss environment and energy policy as 
Germany prepares to take over the EU and the G-8 presidencies 
in 2007.  The meetings took place following the High Level 
Dialogue on Climate, Clean Energy, and Sustainable 
Development October 24-25 in Helsinki.  Comments from 
interlocutors at all agencies indicate Germany approaches 
climate change as an integrated policy approach with a 
recognition of the economic potential of exporting clean 
technologies to India and China.  Germany's goals for the EU 
and G-8 presidencies will include a focus on energy 
efficiency and promoting clean energy technologies, 
biodiesel, and clean coal.  Interlocutors agreed with 
Conanaughton these are areas where the U.S. and Germany can 
and should cooperate.  German officials were eager for 
follow-on discussions that would lead to further cooperation. 
 Officials for the Bundestag, Ministry of Foreign Affairs, 
and Chancellery explained that Berlin remains committed to 
the Kyoto Protocol, and to the post-2012 framework 
discussion. 
 
¶2.  Connaughton used his meetings to make key points on clean 
coal, biodiesel, energy efficiency, and international climate 
change negotiations.  Connaughton also made a presentation on 
U.S. climate policy at the Friedrich Ebert Foundation, 
highlighting U.S. domestic and international policies that 
advance the development and deployment of cleaner and more 
efficient technologies that reduce greenhouse gas emissions, 
improve air quality, and lead to greater energy security. 
German public opinion of U.S. environmental policy is 
generally very critical and Connaughton did some much-needed 
public outreach in an exclusive interview with Die Zeit, a 
leading national newspaper. END SUMMARY 
 
CLEAN COAL 
 
¶3.  On the topic of clean coal, Connaughton shared with his 
interlocutors U.S. plans to commercially deploy advanced coal 
power technology, including FutureGen, the world's first 
integrated sequestration and hydrogen production research 
power plant.  He said the federal government will shortly 
announce approximately USD 1 billion in tax credits to 
encourage commercial construction of advanced clean coal 
plants.  Connaughton encouraged Germany to pursue a  parallel 
strategy on a similar scale to that of the U.S. so that both 
countries would test different clean coal technology 
platforms and learn the true economics of the technology. He 
noted China has been reluctant to invest so heavily in clean 
coal, but transatlantic cooperation on this issue could 
change things.  If we are successful in lowering clean coal's 
capital costs and accelerating commercial deployment, he 
suggested, we will be in a stronger position to urge China 
and other developing countries to adopt the technology. 
 
¶4.  Officials from all agencies acknowledged the U.S. and 
Germany, as two of the largest coal users and the leading 
innovators of clean coal technology, have a common interest 
in promoting clean coal at home and abroad and the G-8 could 
provide the forum to do so.  Foreign Ministry Director 
General for Economics and Sustainable Development and G-8 
Sous Sherpa Peter Ammon said clean coal will be a 
"centerpiece" of the German presidency and recommended 
forming a contact group.  Johannes Kindler, Deputy Director 
General for Industry, Energy, and Telecommunications at the 
Chancellery asked Connaughton to convey Germany's interest in 
bilateral cooperation on clean coal to the President. 
Kindler said the time is ripe for U.S.- German cooperation on 
clean coal at the government and industrial levels and noted 
GE has expressed interest in cooperating with Munich-based 
Siemens.  For its part, he said, German industry is eager to 
cooperate with U.S. counterparts. 
 
¶5.  Clean coal cooperation was also advanced by Ministry of 
Environment State Secretary Matthias Machnig, who said the 
U.S. and Germany should use the G-8 sherpa process to explore 
promoting clean coal in third countries.  He cautioned that 
there is still serious public concern about the safety of 
underground carbon storage which poses a challenge to 
investment in clean coal technology in Germany.  Machnig 
noted a public endorsement of the importance of clean coal by 
Chancellor Merkel, an East German and former Environment 
Minister, would send a powerful political signal in support 
of this technology to the international community.  He 
suggested that if the German public knew that by 2020 all new 
power plants would have to be equipped for carbon capture and 
sequestration (CCS), innovation would take off.  While 
acknowledging the G-8 cannot articulate such a specific goal, 
he said it would be very useful if G-8 leaders emphasized the 
importance of speeding up the commercial deployment of clean 
coal technology. 
 
¶6.  In Connaughton's meeting with Parliamentary State 
Secretary Peter Hintze at the Economic Ministry, Andreas 
 
SIPDIS 
Obersteller, Deputy Director General for Sustainable Energy, 
Efficiency, Coal, and Mining, explained clean coal is part of 
Germany's graduated process of increasing energy efficiency. 
The first step is making existing traditional power plants 
and new plants more efficient.  He said there are already new 
German power plants (i.e., 2000 MW plants currently being 
built by RWE in North Rhine Westphalia) that are utilizing 
the best available technology and are more efficient than 
their predecessors.  Building clean coal facilities  is the 
next step after achieving greater efficiency in traditional 
power plants. Connaughton pointed out, and Economic Ministry 
interlocutors agreed, that Germany's G-8 presidency would be 
an opportunity to articulate to the public the role of clean 
coal in this process. 
 
¶7.  Speaking on behalf of the Bundestag Environment 
Committee, Deputy Chair and Left Party member Eva 
Bulling-Schroeter told Connaughton that the Bundestag also 
sees clean coal as an increasingly important part of 
Germany's approach to climate change. 
 
ENERGY EFFICIENCY 
 
¶8.  Connaughton suggested Germany use its role as G-8 
president to shift attention to a greater focus on energy 
efficiency.  He noted energy efficiency is a good way to 
engage China on greenhouse gas emission reductions, given 
Beijing's goal of increasing efficiency by 20 percent by 
¶2010.  Connaughton explained that Asia Pacific Partnership 
(APP) task forces are currently identifying targets and 
projects for investment in energy efficiency in each 
industrial sector under the APP. 
 
¶9.  Interlocutors at the Chancellery and MFA emphasized 
energy efficiency will be on Germany's EU and G-8 presidency 
agendas. The Environment Ministry's Machnig also stated it 
would be helpful if the U.S. made clear, in the G-8 context, 
its strong interest in energy efficiency and suggested 
identifying specific areas for cooperation. 
 
¶10.  At the Economic Ministry, Obersteller commented that 
Germany's approach to energy efficiency, in contrast to that 
of the European Commission, is market-oriented.  As an 
example he explained Brussels is considering mandating 
(currently voluntary) carbon emissions reductions in the 
automobile sector but Germany advocates consumer labeling of 
vehicles so people know how much fuel a car consumes before 
they buy it. 
 
BIOFUELS 
 
¶11.  Connaughton noted the U.S. is focusing on the 
development and deployment of second generation biofuels, 
including ethanol and biodiesel.  He mentioned to 
interlocutors the U.S. has mandatory target of producing 7.5 
billion gallons of biofuel by 2012.  The U.S. may produce as 
much as 12 billion gallons, he explained, depending on market 
demand.  On biodiesel, he noted German biodiesel standards 
favor rapeseed while U.S. standards favor soybeans and 
emphasized that harmonizing standards is essential for the 
development and global interoperability of biofuels and other 
key new energy saving/emissions cutting technologies. 
 
¶12.  The Chancellery agreed that biofuels is an area ripe for 
U.S.- German cooperation in the context of their upcoming EU 
and G-8 presidencies.  Kindler suggested the U.S. and EU 
bolster their clean technology sectors by working to jointly 
set standards and efficiency criteria.  In comments made 
before MFA State Secretary Georg Boomgaarden joined their 
meeting, Ammon told Connaughton he wants to see more 
U.S.-German cooperation on biofuels. He noted German 
companies, such as Daimler Chrysler, are pushing forward on 
second generation biofuels and biomass-to-liquid (BTL) 
development and emphasized the need for the U.S. and German 
governments to engage industries in their bilateral 
discussion.  He also pointed out that biofuels makes sense as 
a fuel source for the U.S. and Germany, who both want to put 
surplus agricultural productions capacity to good use. 
 
INTERNATIONAL PROCESS STILL KEY 
 
¶13.  While showing strong interest in cooperating with the 
U.S. on clean coal technology, energy efficiency, and 
biofuels, interlocutors from the MFA, Ministry of 
Environment, Chancellery, and Bundestag nonetheless expressed 
Germany's unwavering commitment to international discussions 
on climate change, both through the Kyoto Protocol and the 
discussions on a follow-on agreement. 
 
¶14.  Connaughton stressed the importance of engaging China 
and India on climate protection as part of a broader agenda, 
including energy security and environmental quality.  He 
noted that China and India rank climate change lower than 
energy security and air pollution and are not organized 
around the goal of reducing greenhouse gas emissions. 
Connaughton explained that the Asia Pacific Partnership was 
created in part to help promote such a dialogue.  He said the 
EU made a mistake at Montreal by assuring China and India 
that they would not be obligated to make emissions reductions 
in a post-2012 regime and stressed that the U.S. will not 
join an international framework in which developing countries 
have no commitments.  Connaughton explained the U.S. supports 
a dialogue among all UN members within the UNFCCC but a more 
focused discussion among environment, economic, energy, and 
industry interests of the 15-20 leading emitters of carbon 
dioxide would be more effective in coming up with real 
solutions. He noted British Prime Minister Tony Blair started 
this kind of "leadership dialogue" on climate change at 
Gleneagles. 
 
¶15.  MFA State Secretary Boomgaarden's first comment in his 
meeting with Connaughton was that it is important to have the 
U.S. "in the boat" in post-2012 discussions, along with India 
and China.  Boomgaarden said he is optimistic clean coal and 
other technologies can become economically viable.  He 
stressed the importance of the Kyoto process and the inherent 
value of approaching climate at the international level and 
of having specific goals for carbon emissions reductions. 
Boomgaarden acknowledged U.S. reticence to commit to a target 
for absolute carbon emissions reductions, but pointed out 
that the U.S. has targets in other areas.  He said on aid to 
Africa, for example, Americans are comfortable with setting a 
number goal. 
 
¶16.  Boomgaarden, however, acknowledged the value of a 
smaller-scale discussion on climate among key industrialized 
countries.  He said it was useful that UK Prime Minister Tony 
Blair stared the G-8 dialogue on climate at Gleneagles and 
noted the G-8 process is an easier way to engage ministries 
of Economics/Energy than within the UNFCCC.  He concluded by 
reiterating the need for a minimum binding goal such as 
preventing a global temperature rise of more than 2 degrees 
Celsius above pre-industrial levels.  There are different 
ways to achieve such a goal, he said, but stressed "the 
discussion doesn't make sense without the context of binding 
goals."  Ammon qualified Boomgaarden's remarks by commenting 
"it doesn't make sense for the U.S. and Germany to have a 
religious war" about how to approach climate when there is 
there is so much the two countries have common, such as 
interest in engaging in China, which will soon be the biggest 
emitter of carbon dioxide. 
 
¶17.  Members of the Bundestag from all parties similarly 
advocated strong support of the Kyoto process.  Dr. Axel 
Berg, Social Democrat member of the Economic Committee, said 
that while he is "no great fan" of Kyoto, he does not see 
Kyoto commitments and support for technological innovation as 
mutually exclusive.  Both the U.S. and Germany want to sell 
clean coal technology to China, he continued, and Germany 
wants to use the Clean Development Mechanism under the Kyoto 
Protocol as a mechanism to do so.   Michael Kauch, Left Party 
member of the Environment Committee, supported Berg's 
comments but noted that the German public's impression of 
U.S. environmental policy is tainted by the U. S. refusal to 
discuss Kyoto. 
 
¶18.  Machnig touched on the topic of international 
cooperation on climate by raising the issue of adaptation. 
He said there needs to be a signal at the G-8 level that we 
take the concerns of developing countries seriously and will 
support their adaptation to climate change.  Connaughton 
agreed but explained the U.S. sees adaptation as part of a 
broader, sustainable development agenda.  Machnig insisted on 
the importance of signaling to the developing world that we 
support adaptation by putting money into the World Bank 
Energy Investment Framework for this cause. 
 
¶19.  This message has been cleared by CEQ. 
TIMKEN JR