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UNCLAS SECTION 01 OF 05 BRASILIA 002020 
 
SIPDIS 
 
SENSITIVE 
 
SIPDIS 
 
NSC FOR D.PRICE, J.COBAU, G.TOMASULO 
DEPT FOR G - D.ROCHBERG, WHA/EPSC - L.KUBISKE 
DEPT FOR OES/EGC-E.FENDLEY AND D.NELSON AND OES/ETC - S.CASWELL 
DEPT PASS TO CEQ FOR E.LADT AND A.SCHMITZ 
ENERGY DEPARTMENT FOR S.EULE - CLIMATE CHANGE PROGRAM 
 
E.O. 12958: N/A 
TAGS: SENV KGHG ENRG KSCA BR
SUBJECT: BRAZIL:  FRANK DISCUSSION ON CLIMATE CHANGE 
 
REF: A) STATE 140075, B) BRASILIA 1952, C) BRASILIA 1351 
 
¶1.  (U) THIS CABLE IS SENSITIVE BUT UNCLASSIFIED AND NOT FOR 
INTERNET DISTRIBUTION. 
 
¶2.  (SBU) SUMMARY.  In a frank and wide ranging conversation, 
Director of the National Economic Council Al Hubbard, Deputy 
National Security Advisor Dan Price, and Ambassador Clifford Sobel 
met in Brasilia on October 11 with Brazilian Ministry of Exterior 
Relations (MRE) Under Secretary for Policy Everton Vargas and 
Brazilian Ambassador to the United States Antonio Patriota to 
discuss climate change.  Hubbard expressed unhappiness on Vargas' 
public statements on the Major Economies Meeting (MEM).  He noted 
that the United States was prepared to work cooperatively on a 
post-2012 international framework based on five elements laid out at 
the MEM.  Vargas said that the new framework must be a continuation 
of the Kyoto Protocol. 
 
¶3.  (SBU) In response to a question from Price, Vargas said that 
even if the United States were willing to accept internationally 
legally binding caps on emissions, Brazil would not be, even if the 
obligations or quantities were different.  Vargas said that under 
the terms of the UN Framework Convention on Climate Change (UNFCCC), 
Brazil would only be willing to accept a commitment on greenhouse 
gas emissions that would be binding domestically.  Vargas said that 
this inconsistency was necessary because of the UNFCCC framework, 
and any change would require revising this framework.  Price noted 
that the UNFCC did not pose an obstacle to developing countries 
taking legally binding commitments if the political will was there, 
and that this was just a drafting issue.  END SUMMARY. 
 
¶4.  (SBU) On October 11, the Director of the National Economic 
Council, Al Hubbard, Deputy National Security Advisor Dan Price, and 
Ambassador Clifford Sobel met in Brasilia with Brazilian Ministry of 
Exterior Relations (MRE) Under Secretary for Policy Everton Vargas 
and Brazilian Ambassador to the United States Antonio Patriota to 
discuss climate change.  Hubbard and Price were in Brazil in 
connection with the CEO Forum (SEPTEL).  COMMENT.  Vargas plays a 
key role as the Government of Brazil's (GOB) lead negotiator on 
climate change, personal representative of President Lula to the 
"Major Economies" process, and the sherpa for Brazil in the G-8 
setting.  END COMMENT. 
 
U.S. VIEW ON ADDRESSING CLIMATE CHANGE 
 
¶5.  (SBU) Hubbard provided the U.S. perspective on the Major 
Economies Meeting (MEM) on energy security and climate change, which 
took place in Washington September 27-28.  (REFTEL A)  Hubbard said 
the MEM fulfilled President's Bush's plan for a next step in 
addressing climate change, which was announced in June at the G-8 
meeting in Heiligendamm, Germany.  The United States recognizes that 
CO2 is a problem that needs to be addressed, and that needs to be 
addressed globally.  Hubbard underscored that if the United States 
alone halted its CO2 emissions completely it would have virtually no 
impact on global CO2 levels.  This is why we need a global solution 
with the participation of all the "major emitters" and why we 
organized the MEM.  It will take time and conversation to put a 
global solution together. 
 
¶6.  (SBU) Hubbard said transformational technology is needed to 
solve this problem.  This is why the U.S. Government (USG) is 
 
BRASILIA 00002020  002 OF 005 
 
 
committing billions of dollars to research and development of clean 
technologies, which we will share with the world.  Moreover, we 
believe that there are many existing clean technologies that can 
make a contribution and these should be traded freely. 
 
¶7.  (SBU) Hubbard said that a mandatory cap on CO2 emissions is a 
non-starter.  A cap that excludes major countries would not be 
politically acceptable in the United States, and further it would 
not have a significant effect.  He pointed out that the Europeans 
have had less success than the United States in controlling CO2 
emissions.  The USG is careful about the commitments it takes on 
because when the United States makes a commitment, we fully intend 
to fulfill it.  Hubbard added that imposing mandatory CO2 emissions 
would constrain the U.S. economy, and what the world needed was 
strong economic growth to support efforts to deal with climate 
change. 
 
¶8.  (SBU) Price elaborated saying the USG at the MEM laid out the 
five core elements for a post-2012 world:  (A) agreement on a 
long-term global goal; (B) agreement on medium-term goals to be 
implemented by national plans which may have binding elements and 
may use market mechanisms; (C) common measurement tools; (D) a 
financing mechanism to accelerate use of existing technologies; and 
(E) research focused on adaptation and mitigation, including 
reducing deforestation and reforestation.  We want to build 
consensus on a few principles, such as no "free riders" which isn't 
different from the "common, but differentiated responsibilities" 
principle found in the UN Framework Convention on Climate Change 
(UNFCC).  Price made clear that the USG thought that a multilateral 
regime was worth pursuing and we were doing so. 
 
WORKING WITH BRAZIL 
 
¶9.  (SBU) When President Bush met with Brazilian President Lula in 
New York in September, there was a good feeling on collaboration on 
climate change and on the Doha Round of the World Trade Organization 
(WTO), Price related.  That spirit at the top should be reflected on 
both sides elsewhere in the two governments, he said. 
 
¶10.  (SBU) Hubbard told Vargas that his public comments weren't 
helpful.  Saying that the United States is not doing anything does 
not help reach a solution.  (REFTEL B)  He added that if we truly 
want to address CO2, rather than play to headlines, technology is 
the only solution.  So the focus needs to be on accelerating 
technology development.  He said, at some time, each country will 
have its own goals, though meeting those goals will depend on using 
effective technologies.  Hubbard noted that it will be healthier and 
more productive if we could work collaboratively and don't use the 
press to make unnecessary attacks on the United States or others. 
Price added that there may be differences between our two countries, 
but it is not helpful to attack the United States for not taking on 
the commitments in the Kyoto Protocol. 
 
VARGAS EXPLAINS THE GOB POSITION 
 
¶11.  (SBU) I'll be frank, Vargas began.  He said that he hadn't 
attacked the United States but rather gave Brazil's impression of 
the MEM.  He later added, "We can do things together, but on some 
issue we can't be silent."  Brazil - and others - thought that at 
the MEM we would see the USG move to show willingness to work toward 
a multilateral regime on climate change.  This didn't happen, he 
 
BRASILIA 00002020  003 OF 005 
 
 
said.  Vargas bristled at the use of the term "major emitters" with 
regard to Brazil, stressing that the meeting was of the "Major 
Economies."  He later returned to the topic, saying that he is not 
negotiating through the press and that Brazil is ready to work with 
us. 
 
¶12.  (SBU) Vargas outlined his view of the post-2012 regime.  He 
said it is essential that the United States is part of the post-2012 
multilateral regime under the UNFCC, if that new regime is to 
succeed.  Of course technology is important, he said, which is why 
the GOB is joining with the USG in promoting the use of ethanol. 
Technology is not the only way, he said, we need to put the 
principle of "common, but differentiated responsibilities" to work. 
This means using mandatory, not voluntary goals, and we need a 
review of our achievements on efforts to reduce greenhouse gas 
emissions.  President Lula said in Heiligendamm that Brazil expects 
to see a second commitment period for Kyoto Protocol commitments. 
The United States must take a leadership role and take the bold step 
of participating as part of this second round of Kyoto Protocol 
commitments.  For Brazil's part, he said, we are prepared to make 
deeper - voluntary - cuts in emissions from deforestation and 
promote better energy efficiency. 
 
¶13.  (SBU) Brazil under the UNFCC does not have to - and will not - 
take on commitments that will hurt its economy.  Vargas said he had 
stressed to Under Secretary Paula Dobriansky during her visit to 
Brazil in May (REFTEL C) that President Lula stated we won't 
sacrifice economic growth, and what we need is to use different 
production and consumption patterns.  If Brazil takes on 
commitments, this could adversely affect its competitiveness in the 
global economy.  He stated, "We can't lose competitiveness." 
 
¶14.  (SBU) With regard to the MEM process, Vargas said that it would 
be difficult to go along with the U.S. idea of developing a backbone 
for the UNFCCC negotiations through MEM.  Brazil couldn't be part of 
an effort to impose a solution on other countries in the UNFCCC. 
 
¶15.  (SBU) Vargas responded to the key points raised by Hubbard and 
Price.  He said: 
 
-- The good spirit between the two presidents wasn't reaching other 
areas.  Specifically, the GOB sees very little progress on lifting 
the U.S. tax on ethanol.  (Subsequently, Hubbard explained that the 
ethanol tariff is meant to counterbalance the 51 cents per gallon 
subsidy to ethanol producers.  The United States is not going to 
give a subsidy to non-U.S. ethanol.) 
 
-- A funding mechanism is not as important as how it is going to be 
funded.  The GOB has suggested various ideas on funding, but we find 
resistance from the industrialized countries. 
 
-- Trade barriers to clean technologies cannot be solved in 
isolation, they need to be part of the WTO Doha Round negotiations. 
 
-- One of the biggest barriers to technology transfer is 
intellectual property rights (IPR).  "Can we be more flexible on IPR 
rules to deal with climate change?" he asked. (Hubbard replied that 
weakening IPR would be the best way to assure that no new 
technologies are developed.  It would kill the goose that lays the 
golden egg, by removing incentives to innovate.) 
 
 
BRASILIA 00002020  004 OF 005 
 
 
¶16.  (SBU) Vargas identified several areas where the USG and GOB 
should cooperate: 
 
-- Deforestation.  Brazil has made a proposal to create 
international financial incentives to reduce the rate of 
deforestation.  Vargas said the GOB was waiting for a response from 
the USG to their proposal. 
 
-- Clean Development Mechanisms (CDMs).  Vargas noted that the USG 
and GOB has played a critical role in developing this concept and 
now should work together in implementing it.  Brazil has proposed a 
fund to support CDMs. 
 
- Roadmap from Bali.  He urged the USG to work with the GOB on 
developing a "roadmap" to come out of the UNFCCC Conference of the 
Parties in Bali in December.  Such a roadmap could be helpful with 
the MEM process.  (Hubbard and Price replied that we have a 
"roadmap" on climate change; it is what President Bush proposed back 
in June for developing a long-term global goal.) 
 
BRAZIL'S FUNDAMENTAL POSITIONS 
 
¶17.  (SBU) The frank discussion clarified the GOB's fundamental 
positions in the climate change debate: 
 
--  UNFCCC MEANS THAT BRAZIL CANNOT ACCEPT MANDATORY EMISSIONS 
OBLIGATIONS, BUT THE UNITED STATES MUST DO SO.  Vargas stated that 
the UNFCCC principle of "common, but differential responsibilities" 
means that Brazil and other developing countries can take on binding 
national measures, but not international commitments.  Even if 
hypothetically the USG assumed mandatory obligations, Vargas stated 
that Brazil would not do so, even if the obligations or quantities 
were different.  He said setting a long-term global goal, as 
envisioned in the MEM process, would not satisfy the obligation in 
the UNFCCC on industrialized countries.  On the other hand, the only 
commitments that Brazil and other developing countries had under the 
UNFCCC were to submit reports and a vague obligation to protect 
carbon "sinks".  That said, he noted Brazil was prepared to take 
additional voluntary steps, such as improving domestic energy 
efficiency and promoting the use of biofuels. 
 
--  BRAZIL WOULD NOT AGREE TO BE ADDED TO UNFCCC'S ANNEX I.  To take 
on international commitments, which industrialized countries must 
accept, Brazil would have to be added to the list in Annex I (or 
industrialized countries), Vargas explained.  That would be a "MAJOR 
PROBLEM" for Brazil if it did so, he declared.  (COMMENT.  Price 
replied that if Brazil took such a step it would be a "MAJOR STEP 
FORWARD".  END COMMMENT.)  The UNFCCC formula cannot be annulled, 
Vargas stressed.  Price responded that the UNFCC did not pose an 
obstacle to developing countries taking legally binding commitments 
if the political will was there, and that this was just a drafting 
issue. 
 
--  MUST ACKNOWLEDGE HISTORIC EMISSIONS.  While not disagreeing that 
China will become the leading CO2 emitter, Vargas declared that for 
reasons of equity and fairness any limits should take into account 
"historic" or cumulative levels and not just current ones.  He would 
not agree that China or India needed to accept international 
mandatory obligations, but did agree that we needed to "deal with 
China." 
 
 
BRASILIA 00002020  005 OF 005 
 
 
--  THE UNITED STATES COULD ACCEPT MANDATORY LIMITS WITHOUT 
IMPAIRING ITS ECONOMIC GROWTH.  Vargas said he recognized that no 
U.S. leader would accept obligations that impeded U.S. economic 
growth, but persisted in calling on the United States to participate 
in a second round of commitments under the Kyoto Protocol.  He 
squared the circle by baldy declaring that he could not believe that 
accepting mandatory obligations would hurt the U.S. economy. 
 
--  NO ILLUSIONS ABOUT NEGLIGIBLE IMPACT ON CO2 LEVELS BY A SECOND 
ROUND OF COMMITMENTS UNDER KYOTO PROTOCOL.  In response to Hubbard, 
Vargas admitted that he had "no illusions" about the ability of a 
second round of commitments to make a significant impact on CO2 
levels other than a draconic regime that shut down the world 
economy.  He explained that the real value of the Kyoto Protocol lay 
in giving cover to countries to take some steps to reduce their CO2 
emissions. 
 
SEARCH FOR COMMON GROUND 
 
¶18.  (SBU) Amb. Sobel underscored the USG interest in working 
together with the GOB.  He said we need to find common goals, 
addressing the climate change problem while protecting economic 
growth.  Vargas said that Brazil was ready to continue dialogue 
always keeping in mind the principle of common, but differentiated 
responsibilities found in the UNFCCC.  Price and Vargas concluded 
the meeting saying, "We understand each other." 
 
OTHER ATTENDEES 
 
¶19.  (U) The other attendees on the USG side were NSC John Cobau, 
NSC Gary Tomasulo, State WHA/EPSC Director Lisa Kubiske, ESTH 
Counselor Rick Driscoll, and Deputy ECON Counselor Tim Hall.  For 
the GOB side, the other MRE attendees included the Director of the 
Department of Environmental and Special Issues, Luiz Alberto 
Figueiredo Machado, the Chief of the Environmental Policy and 
Sustainable Development, Rafael Azeredo (and his assistant Paulo 
Chiarelli), the Chief of the Renewable Energy Division, Claudia 
Santos, the Special Ambassador for Climate Change, Sergio Serra, and 
the Chief of the U.S. and Canada Division Joao Tabajara. 
 
SOBEL