VZCZCXYZ0000 PP RUEHWEB DE RUEHRH #0184/01 0431416 ZNY SSSSS ZZH P 121416Z FEB 10 FM AMEMBASSY RIYADH TO RUEHC/SECSTATE WASHDC PRIORITY 2481 INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE PRIORITY RHEBAAA/DEPT OF ENERGY WASHINGTON DC PRIORITY RHEHNSC/NSC WASHDC PRIORITYS E C R E T RIYADH 000184 SIPDIS DEPARTMENT FOR NEA/ARP, EEB/ESC/IEC (MONOSSON), S/CIEA (GOLDWYN, SULLIVAN), S/SECC (STERN, PERSHING, ROCHBERG) DEPT PASS TO DOE FOR JONATHAN ELKIND, JAMES HART E.O. 12958 DECL: 02/09/2020 TAGS KGHG, SENV, EPET, ENRG, PREL, SA SUBJECT: TWO FACES OF SAUDI ARABIA’S CLIMATE NEGOTIATING POSITION REF: A. 09DHAHRAN 201 B. 09RIYADH 1302 C. 09RIYADH 1397 D. 09RIYADH 1492 E. 09RIYADH 1557 F. 09RIYADH 1642 G. RIYADH 103 H. SECSTATE 3080 I. SECSTATE 11182 Classified By: Ambassador James B. Smith for reasons 1.4 (b) and (d). Summary ------- ¶1. (S) Saudi Arabia is officially still studying the issue of whether to associate with the Copenhagen Accord on Climate Change. Behind the scenes, we understand serious discussions are taking place about which road will best serve the Kingdom’s long term interests. On one hand, Saudi Arabia’s lead climate change negotiator has criticized the Copenhagen process in private and in public, arguing that the UNFCCC process is the only acceptable legal framework. On the other hand, Saudi officials are very eager to obtain investment credits for Carbon Capture and Storage (CCS) and other technology transfer projects that will only become available once an agreement has been reached. Saudi officials express concern about the impact a transition to a low-carbon energy mix will have on the country’s revenue stream at a time when it faces enormous financing needs to transform its economy to create jobs for its young, growing population. It also fears imposed economic costs associated with “demonizing” oil. Part of the explanation for this schizophrenic position is that the Saudi Government has not yet thought through all the implications of a climate change agreement, in part because it may not fully understand the various demand scenarios. There appears to be a growing sense within the SAG that it may be in danger of becoming isolated on climate change, which may prompt a re-examination of its position. Saudi officials have suggested that they need to find a way to climb down gracefully from the country’s tough negotiating position. More sustained engagement in coordination with other governments, particularly if pitched as an effort to develop partnership, may help them do so. End Summary. Saudi Arabia not yet Decided on Copenhagen Accord --------------------------------------------- ----- ¶2. (C) Saudi Arabia’s lead climate change negotiator Dr. Mohammad Al-Sabban told Econoffs February 3 the United States should adopt a more inclusive, transparent approach to United Nations Forum for Climate Change Cooperation (UNFCCC) negotiations. Although he was encouraged by President Obama’s attitude towards developing country partners in the negotiations, Al-Sabban said the parties needed to “learn from the mistakes” of Copenhagen in thinking about preparing for the next Conference of Parties (CoP) in Mexico. Al-Sabban said developing countries felt their Danish hosts forced them to decide on the Copenhagen Accord with practically no notice. Heads of state were also called into the negotiations too early and they applied too much pressure “when the deal was not there,” he said. In specific response to the U.S. request for support for the Copenhagen Accord (ref H), Al-Sabban said Saudi Arabia was still studying the accord to determine its position. The SAG cares about the environment, but it also must care for its citizens, he said. Addressing Saudi Economic Concerns Key to Progress --------------------------------------------- ----- ¶3. (C) Asked how to move forward on a global climate change commitment, Al-Sabban agreed negotiations need a “speedy outcome,” and said countries need to rebuild trust and confidence through more transparent negotiations. He reminisced fondly about the inclusive nature of the initial Kyoto Protocol negotiations, which he said should be replicated in Cancun. Al-Sabban said climate change negotiations should remain under the UNFCCC and not be pursued under alternative frameworks. ¶4. (C) Asked about tangible actions to reach national climate change goals, Al-Sabban said Saudi Arabia’s nationally appropriate actions would include carbon capture and storage (CCS) credits. He emphasized Saudi Arabia’s need for technology transfer and foreign direct investment to mitigate the adverse impact that emissions-reducing policies may have on the Kingdom. Al-Sabban said the SAG had closely studied climate change policies’ potential negative impacts. The Kingdom will need time to diversify its economy away from petroleum, he said, noting that a U.S. commitment to help Saudi Arabia with its economic diversification efforts would “take the pressure off climate change negotiations.” ¶5. (C) Al-Sabban said the development of renewable energy and energy efficiency technologies was key to addressing Saudi Arabia’s domestic energy demand, and he acknowledged the need for increased energy efficiency awareness. The deployment of CCS technology, he said, was “crucial” for Saudi Arabia. He said the U.S. Administration’s rhetoric to end dependence on foreign oil, reiterated by President Obama in Copenhagen, is antagonistic and causes genuine fear in Saudi Arabia. The SAG is concerned about the outlook for oil demand and global production, and fears it will not be able to diversify in time to reach its development goals. Shadow Negotiator Suggests Partnership -------------------------------------- ¶6. (C) Senior Advisor to the President of Meteorology and Environment (PME) Fawaz Al-Alamy told Econoffs January 27 the U.S. and Saudi Arabia share the same values on climate change, but have different negotiation tactics. Al-Alamy, who joined PME in late 2009 and led Saudi Arabia’s World Trade Organization (WTO) negotiations, said Saudi Petroleum Minister Ali Al-Naimi wants to move forward in UNFCCC negotiations. (Note: PME sends three representatives with Al-Sabban to climate change negotiations. End note.) Al-Sabban’s negative approach to negotiations “disheartens” him, as does the ongoing “blame game” on climate change. Saudi Arabia, like China and India, needs to behave like an emerging economy rather than a developing country, he said. Al-Alamy noted he had met the previous day with both the Chinese and the Indian Ambassadors to the Kingdom to discuss climate change. ¶7. (C) Al-Alamy recommended several steps for U.S. engagement with Saudi Arabia on climate change, including active outreach to all the key players including Al-Sabban, Petroleum Minister Al-Naimi, and PME President Prince Turki bin Nasser. Al-Alamy recommended the U.S. reach out to the Gulf Cooperation Council (GCC) Secretary General, who has the power to tone down the alarm in the rest of the Arab world, such as in Egypt. Al-Alamy recommended the U.S. continue to coordinate its approach with other Embassies, which he said has been very effective. Asked how to get beyond the Kyoto Protocol lens through which Al-Sabban views climate negotiations, Al-Alamy quickly replied “he only has two more years to talk about Kyoto” before it expires. ¶8. (C) Al-Alamy said that Minister of Petroleum Al-Naimi strongly supports solar energy as he believes it will displace oil currently used in the power sector and ultimately increase oil exports. Saudi Arabia currently uses 1.5 million barrels per day to produce electricity and water, he said. The Kingdom is considering beginning a civilian nuclear program, and top leadership including Minister of Foreign Affairs Saud Al-Faisal supports the increased use of renewable energy sources. Some, however, view Copenhagen as a serious threat to Saudi Arabia’s economic stability. “Ask any Saudi,” Al-Alamy said, “they all think Saudi Arabia will be asked to foot the bill for climate change.” Al-Alamy outlined Saudi Arabia’s top concerns, including its strong aversion to mixing trade and environmental priorities. If duties are placed on oil and gas, Saudi Arabia will not be able to move ahead with its economic diversification plans, and this creates a “phobia” of climate change talks, he said. The Saudis also resent the U.S. when it makes decisions “without consulting its friends.” Al-Alamy said Saudi Arabia, and Al-Sabban in particular, needs to feel like a partner of U.S. decision making. Is Al-Naimi the Problem? ------------------------ ¶9. (S) Minister Al-Naimi has consistently been rational and practical in talking with western delegations about climate change, noting that Saudi Arabia had to address its development concerns, but conceding that the world needs to work together to address climate change. These reassuring statements stand in sharp contrast to Al-Sabban’s public comments, such as questioning the science behind climate change just before Copenhagen, and his often obstructionist behavior, as reported by a number of Embassies in Riyadh, during working-level negotiations. Senior Ministry of Petroleum officials have reassured us after each of Al-Sabban’s public outbursts over the last six months that he has been “tamed” and brought back onto the reservation. The frequency and number of times that Al-Sabban steps out of line, and the apparent lack of any sanction, raises questions about the real Saudi position on climate change. ¶10. (S) A recent conversation with UK Embassy officers suggests that indeed Al-Naimi may have some questions about climate change. They report that Al-Naimi was sharply critical of the Copenhagen meetings and the climate change effort in general, in marked contrast to earlier meetings. He complained that heads of state were brought in to negotiate the final stages, which prevented Saudi Arabia from voicing its true opposition to several elements. He also questioned the legality of the Copenhagen process and its future direction. ¶11. (S) A senior Ministry of Petroleum official explained that, leaving Copenhagen, the Saudi delegation was convinced that the Copenhagen accord would not attract significant support, apparently largely based on Al-Sabban’s analysis. The Minister’s office was unpleasantly surprised by mid-January, when it was clear that a number of countries had already associated themselves with the accord. Assistant Petroleum Minister Prince Abdulaziz bin Salman told EconCouns that he had spent two days walking Minister Al-Naimi through each of the 90 plus submissions on the UNFCCC web site. Prince Abdulaziz told the Minister that Saudi Arabia had missed a real opportunity to submit “something clever,” like India or China, that was not legally binding but indicated some goodwill towards the process without compromising key economic interests. The Prince intimated to EconCouns that Al-Sabban would not long retain his position, and said the challenge for Saudi Arabia was to find a way to “climb down” from its negotiating position. Comment ------- ¶12. (C) All indications are that Saudi officials are intensely discussing what position the country should take. We believe that the message is getting through, that there is a broad consensus among countries that tangible action needs to be taken now to address climate change. We also think that Saudi leaders are beginning to understand that they are in increasing danger of being left behind. They do have significant, legitimate concerns about how this process will affect their long-term livelihood. Our conversations, however, with officials in Finance, Petroleum and the other economic ministries suggests that they have not done sufficient economic analysis of the various scenarios to understand what the real impact of a climate change agreement might be. Such a discussion might help provide the kind of dispassionate basis to address legitimate Saudi concerns, while also making a better case for the need to take action to mitigate increasing emissions. We take as an encouraging sign the fact that several Saudi officials have noted to us that the Kyoto agreement only runs for two more years, suggesting that some at least understand the need to chart a more assured future course. We take the suggestion seriously that we help the Saudis find a way to climb down from their current position, ideally by offering the hand of partnership, which may help persuade the rest of OPEC to follow suit. For now, we believe that success will require a sustained, broad engagement with Saudi leadership, as we think the problem is more than just a rogue negotiator, but some broadly shared fears about the future, and uncertainty about the way forward. SMITH
The oil princes of Saudi Arabia became literal beggars at the United Nations climate talks that began at Bangkok on September 28. The oil kingdom demanded that they, along with other OPEC member nations, receive subsidies for revenues to be lost due to potential global warming.
Speaking on October 8, Mohammad S. Al Sabban, who led the Saudi delegation at the talks, claimed that a report by the International Energy Agency on OPEC revenues was seriously skewed. According to the IEA, OPEC revenues would still increase by more than $23 trillion between 2008 and 2030. This is four times the amount revenues increased between 1985 and 2007. Al Sabban said of Saudi Arabia “We are among the economically vulnerable countries,…This is very serious for us. He went on to say “We are in the process of diversifying our economy but this will take a long time. We don’t have too many resources.”
Al Sabban sees dark motivations on the part of the West and a supposed silent war being waged against oil producing states. Said the delegate, “Many politicians in the Western world think these climate change negotiations and the new agreement will provide them with a golden opportunity to reduce their dependence on imported oil…That means you will transfer the burdens to developing countries, especially those dependent on the exploitation of oil.” Moreover, said Al Sabban, the IEA figures are "biased" and asserted that OPEC's calculations showed that Saudi Arabia would lose $19 billion a year starting in 2012 under a new climate pact.
Some observers noted that oil consuming nations received no such subsidies in 2008 when oil prices reached $150 per barrel. The Arab environmental group IndyACT and Germanwatch stated that Saudi Arabia is holding up negotiations by insisting that a provision be included for oil producing countries. “Despite the variability in the region, the current Arab position is mainly focused around protecting the oil trade rather than saving the planet form the adverse impacts of climate change,” said Wael Hmaidan, the executive director of IndyACT.
There is broad consensus among the countries involved in the talks that any new pact should include provisions to avoid global temperature increases of more than 3.6 degrees Fahrenheit (2 degrees Celsius) above pre-industrial levels — the threshold at which serious climate change will ensue. That would require emissions cuts from industrial countries of 25 to 40 percent below 1990 levels by 2020, far above the 15 to 23 percent cuts rich countries have offered so far. It would also require developing countries to scale back their emissions.
Meanwhile, the dollar is under attack as the designated currency for international oil and gas transactions. Russian Prime Minister Vladimir Putin has stated that Russia is contemplating replacing the US dollar with Russian and Chinese currencies in bilateral oil and gas transactions. The British broadsheet The Independent reported that Russian officials had held "secret meetings" with Arab states, China and France regarding eliminating the U.S. dollar in global oil transactions. According to the Russian newspaper RIA Novosti, the U.S. dollar would be replaced with a “new unified currency… including the euro, Japanese yen, Chinese yuan…” and gold.
Iran's Trade Promotion Organization has also said that it plans to “completely exclude the US dollar from the country's foreign revenues and reserves.” The Islamic Republic is encouraging Japan to substitute the US dollar with the yen in all oil transactions with Iran, according to Iranian media outlets. Iran is also considering using the euro and United Arab Emirates' dirham as alternates to the US dollar for oil revenues.White House report on energy recommends government-wide policy changes
Cancun climate conference should focus on oil
Author Edwin Black predicted last year in his book The Plan, that in any showdown over Iran ’s nuclear ambitions, Tehran could frustrate America ’s oil supply by launching a “dollar war.” If America cannot use its own currency to purchase oil, oil will become more expensive and could become dramatically less accessible, wrote Black.
