Prime Minister Matti Vanhanen at the National Press Club, Washington DC

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Mr President, Distinguished Journalists, Ladies and Gentlemen,

It is a great privilege for me to address this audience. It is even more so when I realised that I have been given the honour to be one of the first guest speakers here during the National Press Club?s 100th anniversary year.

I also know that you are at this moment of time living a very exciting period here in Washington and the United States in general. Therefore, it gives me all the more pleasure that so many people have found the time to come and listen to me. But in fact, what I am going to tell you, my message from Finland, we Finns find a very important one.

Ladies and Gentlemen,

Last year, climate change rose very high on the political agenda. This has never before happened for an environmental issue. It is obvious that there is an increasing awareness of the consequences of climate change.

The Intergovernmental Panel on Climate Change (IPCC) has played a key role. Our current understanding of the problem and the high risks involved leaves no option for any responsible policymaker but to act.

It was no accident that the IPCC and former vice president Al Gore were accorded the Nobel peace prize – the threats presented by climate change to the stable development of societies have become more and more visible.

There is an imminent threat to the environment. We run the risk of undermining the future for coming generations.

Secondly, competition for vital natural resources, in particular water, may further intensify in many parts of the world as a result of changing weather patterns. This is likely to lead to increasing local and regional strife.

Climate change is also an economic problem. A growing number of leading economists say that climate change itself, not the various actions to mitigate it, threatens the sustainable economic growth of nations.

The United Nations climate conference in Bali in December was a very important milestone in the efforts to tackle climate change. Expectations were already very high before the conference. The international community stressed the need to act. Political leaders were also very explicit in this respect at the High-Level Event on Climate Change organised by the UN Secretary-General in New York in September.

However, countries had of course differing views of what would be a good or even an acceptable outcome in Bali, and negotiations were not easy. Finland and the European Union are satisfied with the results. We went there to get an agreement on launching a global and comprehensive negotiation process that would lead to a global and comprehensive agreement on a post-2012 climate regime in 2009.

This is exactly what was decided – we now have a road map outlining the elements, organisation and timetable of such a process. It is our understanding that this was also the goal of the United States, and indeed, I am very happy that the United States
decided to join the negotiating process.

But you may ask at this stage: are countries not free to choose their way to develop their economies and their way of life? Can people not choose what they wish to do, and not be dictated to by international organisations or bound by all sorts of restrictions?

Of course, for all people, for all of us, freedom should be the basis of all human action, and I am conscious of saying this in the land of freedom, as laid down in the constitution of the United States.

But freedom always entails responsibility. In exercising our freedom to choose to lead our lives in the way we want, we cannot trample on the freedom of others, nor erode the freedom and rights of the generations to come. And this is the crux of the problem when we are talking about climate change.

The extent of human-induced climate change depends on the sum of human actions. All nations have a responsibility - some bigger, some smaller. Industrialised countries, such as the member states of the European Union and the United States, have a greater historical responsibility for the greenhouse gases already accumulated in the atmosphere. This situation will change as new economies take their rightful place in the global arena.

All countries also have a responsibility to address the issue. Any investment made in any country is an opportunity. Rapidly developing emerging economies offer especially wide opportunities in this respect. They also have to take into account the threat of
climate change.

Ladies and Gentlemen,

The total energy use of the US and Finland are per capita at the same level. The reasons for this are our climate, our long distances and our energy-intensive industry. Finland, however, uses more electricity per capita than the US. Nevertheless, per capita Finland produces less CO2 emissions than the US.

In fact, Finland is fully committed to decrease CO2 emissions in the framework of Kyoto Protocol and as a member state of the European Union. The EU objective is to achieve at least a 20% reduction of greenhouse gas emissions by 2020, compared to 1990. In case a global and comprehensive post-2012 agreement is reached, the objective for the reduction of greenhouse gas emissions will rise to 30%.

Finland strongly believes that working together will benefit us all. Global action makes climate efforts more cost-efficient and effective -- we can achieve more with the same investment.

Global agreements can also make everybody's contribution visible and thus create the necessary mutual trust. Such a framework can thus avert the fear of some nations related to carbon leakage and competitiveness. It is extremely important that competition in the global market is fair. Therefore, all countries should be committed to decrease CO2 emissions. We cannot afford free-riders.

A global approach to addressing climate change is also conducive to more ambitious action. With all its shortcomings, the United Nations is the only institutional arrangement that can provide such a wide framework.

The topics of upcoming negotiations as identified in Bali are the right ones – mitigation, adaptation, technology and finance. Obviously the building blocks of future agreement and the details involved are to be negotiated on the basis of these topics. The EU has already presented its general ideas in this respect. We will come with more specific ideas as the negotiations evolve. We are also happy to exchange views with other countries.

The key issue is how we will all contribute. The UN Framework Convention on Climate Change currently has some 190 Parties, representing a wide variety of circumstances, responsibilities and opportunities. It is obvious that a post-2012 regime must respond to this variety in order to be feasible and effective. Contributions expected of countries at different stages of development need to reflect their capabilities. For industrialised countries, binding targets are more flexible than often thought – they define the level of effort and outcome but leave the selection of instruments and policies to reach this outcome to national decision-making.

Let me in this context touch briefly on one particular sector, deforestation. In my understanding this is an area of high interest to the US. This is also the case in Finland, and being a highly forested country we have special know-how in this field. In our view, sustainable forest management in all countries can make a crucial contribution to reducing greenhouse gases, not only through the sink effect but also by providing a source for renewable energy and material substitution through harvested wood products.

The outcome of the negotiation in Bali is an important step towards a global and comprehensive agreement how to tackle climate change, but it is only a start. The international community will now be engaged in very intensive work. Everybody needs to participate in an active and constructive way.

The role of the US is crucial given its economic and political weight and its contribution to the global emissions of greenhouse gases. The importance of your full involvement cannot be overemphasised. Let me also at this point commend your “Methane to Markets” programme as a good example.

Within the EU we welcome the new initiatives of the current administration in this respect. We also appreciate the special challenge posed by the election year. It is of utmost importance that also the coming administration will become an active partner in negotiations as soon as it has taken office.

In the EU we are proud of the leadership that we have been able to show in the international, regional and national climate policies. But leadership is not a zero-sum game. All nations need to show determination and leadership in the efforts to tackle climate change. The United States is in a unique position.

And we need results from the Copenhagen summit next year. It happens far too often that international negotiations tend to go on too long. This time we cannot wait.

Ladies and Gentlemen,

To combat climate change we need commitment, passion and action. Let me point out three important measures how we can decrease CO2 emissions globally.

Firstly, policy-makers have to develop new approaches and solutions to promote cleaner and greener technologies. It is of utmost importance to launch specific research and development programmes that focus on developing environmental and energy technologies. This is an investment that will pay back in future.

Secondly, especially in the northern part of the world we can make a difference in the way we build and insulate our buildings and how we heat them. Energy efficiency is taken into account when we design and build new buildings and houses but we should also find ways and means to encourage people to make changes in houses already built. This will open new business opportunities in construction and for companies equipping houses.

Thirdly, road traffic is one of the biggest polluters. In the US, road traffic produces about 27% of all CO2 emissions, in Finland about 18%. In this sector there are huge possibilities to cut emissions by creating technological solutions for engines and developing biofuels.

As part of our own climate and energy strategy, the Finnish government proposed to Parliament that car taxation should be based on carbon-dioxide emissions. The car tax levied on passenger cars upon registration and the annual vehicle tax levied on all registered vehicles depend on the vehicle's carbon dioxide emissions. The tax rate will vary between 10 and 40 per cent of the consumer price.

I believe that this constitutes a clear incentive for consumers to choose cars which use less fuel. It is important to give clear signals to car manufacturers to develop and produce cars with significantly lower emissions and fuel consumption. Should we
succeed in this, we will be able to pave the way for a substantial reduction of
emissions.

Ladies and Gentlemen,

No speech about energy and climate in the European context is complete without discussing the role of Russia. Russia is the most important energy supplier of the European Union. About one quarter of the natural gas and one third of oil consumed in the EU comes from Russia.

On the other hand, the EU is an important source of income for the Russian energy companies. In Russia, energy provides over 50 % of budget revenue and over 60 % of export income. The importance of the EU is especially clear in the natural gas sector.

For Finland, Russia has been a reliable supplier of gas and electricity for years. But we have noticed that during the coldest winter spells when power consumption is at its highest, Russia has some difficulties to deliver electricity in agreed quantities. This is not a problem for Finland as we have appropriate fallback systems but there is a clear lesson for both parties: new generating capacity is needed.

Russia is clearly interested in exporting more energy to Europe. The reason is simple, there is a buyer and there is a seller. Europe needs the energy, they need the money. That is what trade is all about.

But increased deliveries require new infrastructure. In our neighbourhood a joint venture owned by Gazprom and its German and Dutch partners is planning to build a new major pipeline from Russia across the Baltic Sea to Germany.

The Europeans are indeed interested in importing even more gas from Russia as the gas demand is rising and as domestic production in the North Sea declines.The main question raised in this context is not whether energy might be used as a political weapon but is there enough gas to be exported?

The reason for this question is Russia's quick economic growth and rising demand for gas and electricity. At present more than half of electricity is produced at gas-fired plants. In spite of Russia's ambitious plans to build more nuclear and coal-fired power stations, gas will dominate power generation in the coming years as it will take years before new planned generating capacity is in place.

Probably the quickest and environmentally best way to have more natural gas
available for export would be to increase energy efficiency in Russia. The Russian government is taking steps in this direction. Domestic prices of natural gas will be increased by 25 % each year until 2011.

Even though Russia is our number one supplier of natural gas, it is not the only one. In addition to Russia we have other major suppliers. Gas comes from Norway and North Africa through several pipelines. And the EU is interested in diversifying its import
pipeline network further. Supplies from the Caspian region and the Middle East are often mentioned. The latter control 40 % of world's natural gas reserves. Another possibility for European consumers is liquefied natural gas (LNG) which is presently imported from North and West Africa and the Middle East.

When talking about the natural gas market it is clear that imports will grow to
compensate the declining domestic production. But how much new demand there will be in addition and as a result of our climate policy is more unclear. Will coal be replaced by gas or will energy efficiency and increased use of renewables provide the solution? We have to remember that natural gas is also a fossil fuel and its consumption cannot grow unhindered if we want to take our climate commitments
seriously.

In any case we need huge investments both in European and Russian energy production and transport.There are already several investments by European companies in the Russian energy sector as well as Russian investments in European energy markets. We hope that these mutually beneficial investments could continue and strengthen the EU-Russia energy and economic ties.

Let me try to summarise: European Union will be more and more dependent on imported energy. In consequence, we must improve energy efficiency and develop a feasible energy mix, with more renewables. At the same time, alternative import sources and routes must be found. And we will need a strategic partnership with Russia.

Mr President, Distinguished Journalists, Ladies and Gentlemen,

I would like to thank you for giving me this opportunity to share our ideas with you. And now – without further ado – I am more than willing to move on to the really challenging part of the visit – questions from the audience.