VZCZCXRO2113
PP RUEHAST RUEHCN RUEHDH RUEHGH RUEHHM RUEHLN RUEHMA RUEHPB RUEHPOD
RUEHSL RUEHTM RUEHTRO RUEHVC
DE RUEHBJ #2072/01 2020607
ZNR UUUUU ZZH
P 210607Z JUL 09
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC PRIORITY 5305
RHMFIUU/DEPT OF ENERGY WASHINGTON DC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
INFO RUEHOO/CHINA POSTS COLLECTIVE PRIORITY
RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE PRIORITY
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUEAEPA/HQ EPA WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY

UNCLAS SECTION 01 OF 03 BEIJING 002072 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SECC/STERN, EAP/CAMPBELL AND NORRIS, OES/MIOTKE, OES/EGC, 
EAP/CM, EEB/ESC 
 
STATE PASS USTR FOR LINSCOTT AND STRATFORD 
COMMERCE FOR KASOFF AND MELCHER 
ENERGY FOR SANDALOW AND YASHIDA 
 
E.O. 12958:  N/A 
TAGS: ENRG KGHG ECON SENV PGOV CH
SUBJECT:  SECRETARY CHU MEETS WITH VICE PREMIER LI KEQIANG 
 
1.(U) This cable is Sensitive but Unclassified (SBU) and for 
official use only.  Not for transmission outside USG channels. 
 
¶2. (SBU) Summary: Chinese Vice Premier Li Keqiang, after taking 
a moment to officially state China's position on the recent violence 
in Urumqi, reaffirmed to Energy Secretary Chu China's commitment to 
energy conservation and protecting the environment.  He added, 
however, that as a developing nation, China had to prioritize 
economic development.  Li stated that developed countries should 
take the lead in cutting emissions and transferring technology and 
reiterated the need to proceed under the principle of common but 
differentiated responsibilities.  Chu acknowledged China's 
circumstances, applauded its progress to date, and asked Li to 
further publicize Chinese efforts to help combat U.S. skepticism 
about China's commitment to energy conservation.  Li did not 
directly respond to Chu's suggestion that China send climate 
negotiators to the upcoming Strategic and Economic Dialogue, and 
instead countered with his hopes for progress at the Copenhagen 
Climate Conference.  Li said that China welcomed more technology 
transfer and Chu said that the U.S. was working to bring down the 
cost of CSS and other technologies.  End summary. 
 
¶3. (SBU) On July 16, U.S. Secretary of Energy Steven Chu met with 
China's Vice Premier Li Keqiang.  Li opened the meeting by observing 
that, since the beginning of the Obama administration, there was new 
momentum in the bilateral relationship and a great opportunity to 
work together on climate change as developed and developing 
countries.  He said that he was happy with the progress in the 
preparations for the Strategic and Economic Dialogue and pleased to 
know that Chu himself would be attending. 
 
¶4. (SBU) Li then presented China's position on the situation in 
Urumqi where "serious acts of premeditated violence have been 
committed by overseas separatists."  He said that China, like any 
nation, must uphold the rule of law.  He insisted that this was an 
internal Chinese affair and asked for U.S. support and understanding 
as China safeguarded its social stability and territorial integrity. 
 He also said that U.S. support on this issue was important for 
future collaboration on counterterrorism.  He ended by saying that 
U.S.-China cooperation should be "all-dimensional." 
 
¶5. (SBU) Chu stated that the purpose of his visit was to find ways 
to cooperate to develop new technologies to reduce carbon emissions. 
 He said he was very encouraged by how much China had moved forward 
in promoting energy efficiency and cleaner forms of energy. Chu said 
that he hoped to work together specifically on increasing building 
efficiency, on using coal reserves in a cleaner way and on creating 
more efficient cars.  The U.S. and China paralleled each other in 
that both are big oil importers and both have similar goals to 
decrease oil consumption.  Chu reiterated that the Obama 
administration has aggressive goals in improving energy efficiency 
and Americans are trying to achieve this by driving less, driving 
more efficient cars, developing electrified cars and developing 
fourth-generation biofuels. 
 
¶6. (SBU) Li insisted that cooperation was very important and that 
Chu's trip to China would greatly contribute to the effort.  He 
acknowledged Chu's comment that the United States and China parallel 
each other as great consumers of energy but specified that there 
were differences between the two countries as well.  China, as a 
populous country with a weaker economic foundation, must focus on 
its economic development.  Nonetheless, he asserted that China is 
committed to attaining this development in an energy efficient and 
environmentally friendly manner.   He insisted that conservation was 
a priority in China's development strategy because Beijing did not 
believe a development model predicated on massive energy consumption 
was sustainable. 
 
¶7. (SBU) Li detailed the following steps the Chinese government has 
taken to raise energy efficiency: 
* Closing coal fired plants which consume 400g coal per kWh and 
designating supercritical coal plants that reduce coal consumption 
to about 280g per kWh.  China is disseminating this technology as 
widely as possible and closing inefficient plants as they bring on 
the more efficient ones. 
* Promoting IGCC technology despite its high cost. 
* In 2005, the Chinese government formulated a program to reduce 
energy consumption by 20% in 5 years and the goal is already within 
 
BEIJING 00002072  002 OF 003 
 
 
reach.  Scientists have calculated a reduction of 600-700 million 
tons of coal annually from this program. 
* Promoting clean energy technologies.  Although the current ratio 
is modest, the goal is to raise the clean energy ratio to 15% or 
more of the energy mix by 2020. 
* Requiring the removal of particulates, sulfur and nitrogen from 
coal plant emissions (which account for 70% of China's energy mix) 
and supporting technologies related to carbon capture and storage. 
 
* Supporting the development of electric vehicles and related 
enterprises. 
* Increasing the cost of fuel to discourage its consumption. 
China's fuel tax makes auto fuel more costly than in the United 
States. 
* Driving a new balance of electrical energy generation via China's 
five year plan.  Currently nuclear power generates 25 million 
kilowatts per year and hydropower generates 170 million kilowatts 
per year.  Both of these clean energy forms are being rapidly 
expanded. 
 
¶8. (SBU) Li concluded that these efforts proved China's seriousness 
about a scientific approach to development and commitment to clean 
energy.  However, he added that the two nations must continue to 
follow the principle of common but differentiated responsibilities. 
As China is still developing, most emissions are of the category of 
subsistence emissions and transfer emissions.  He gave the example 
of China's production of 2 million kilowatts of solar photocells 
which create energy-conserving benefits for many nations but which 
are the result of an energy intensive production process carried out 
in China.  He stated that in cutting emissions, developed countries 
should take the lead for historical reasons and due to their higher 
per capita consumption. 
 
¶9. (SBU) Chu recognized that China had the right to become a 
prosperous country and supported the principle of common but 
differentiated responsibilities.  He also acknowledged that as a 
services-centered economy, the United States had outsourced many of 
its energy intensive industries.  Chu gave an overview of some of 
the positive steps the Obama administration had taken to revamp U.S. 
energy policy.  In particular, he discussed the economic stimulus 
plan's focus on energy efficiency and clean energy.  He also 
informed Li of the $38.9 billion in additional funding DOE had 
received to promote energy efficiency and clean energy.  Chu 
explained that DOE is highly focused on research and development and 
supporting scientists.  Chu admitted that the United States had not 
taken a strong leadership role on environmental issues in the past 
but reiterated that the current administration is deeply committed 
to decreasing its energy consumption and carbon footprint. 
 
¶10. (SBU) Chu said that conveying to the U.S. public how serious 
China is about climate change was important to bilateral 
cooperation.  The American people and Congress needed to be 
convinced.  He explained that some Americans do not realize the risk 
of climate change and use the false perception that the Chinese are 
not making efforts to conserve energy as an excuse for U.S. 
inaction.  He urged China to publicize all the impressive efforts he 
had learned about during his visit. 
 
¶11. (SBU) Chu said that he hoped China would bring climate 
negotiators to the upcoming Strategic and Economic Dialogue.  Li was 
non-committal, saying that the relevant departments were taking the 
necessary steps and stressing instead that he hoped for a positive 
outcome from the Copenhagen Climate Conference. 
 
¶12. (SBU) Li said that the energy administrations of the two 
countries varied greatly.  He said that China did not have as many 
resources, joking that National Energy Administration (NEA) Director 
ZHANG Guobao, who was also present at the meeting, would now be 
lamenting his modest budget.  Secondly, he clarified that many 
different ministries were making their own efforts.  For example, 
the Ministry of Housing and Urban-Rural Development was taking the 
lead on raising building efficiency.  He also stated that large 
portions of China's economic stimulus package were being targeted at 
energy efficient companies.  Though he provided no quantitative 
statistics, he stated that the plan greatly prioritized new energy 
and related technologies. 
 
¶13. (SBU) In a final exchange, Chu asked Li to consider Carbon 
 
BEIJING 00002072  003 OF 003 
 
 
Capture and Storage (CSS) and said that the U.S. was committed to 
bringing down the price.  Li said that China hoped for more 
technology transfer and wanted to work together on making CSS and 
other technologies more affordable. 
 
GOLDBERG