 Thank you very much for having me and I'm quite impressed that the room is full at this time and we're really hopeful. Okay, some facts on South Africa. South Africa is amongst the top 20 global emittors in the world. We have a population of about 49 million people and you're probably wondering why we're amongst the top 20 global emittors since we're such a small country. Mae'r unig yma yw'r cyfnodd ar gyfer colla. Yn 68% yma yw'r unig yw colla. Yn y bach yw'r colla yw'r unig yw'r cyfnodd. Yn 53% yw'r totol ymgyrch. Yn y cyfnodd cyfnodd. Yn Eiskam, y cyfnodd cyfnodd yw'r unig yw'r top 3. Yn gyfnodd liLL ond y cyffredin cyffredin ymgyrch, y gallw hir yw'r cynyddoedd. Yn ddefnyddiad yma yna yw'r top 20 sydd cyd-au cyffredin ac ymgyrch ymgyrch ymgyrch ymdegddydd yma, ym eich hwn yn eu cynyddu cyffredin a dearbyn ymy ymgyrch. Yn cyfnodd cyffredin, y cîn ymddir hwn ymgyrch i teachers ymgyrch yn cael ei gair sydd gyda, aис ymgyrch gyda'r gyfer cyffredin. Yn wych yn ei bobl sydd y bydd y byd, mae'n eich bod noddolwyr cael yn cyfnod o modd. Rwy'n gy botherdd yr hynny i ail yn ei bobl, ac mae'n meddwl araf i'w meddwl, felly rywbeth ymddangosolol yn maen nhw'n meddwl ar y cyfyrd yn i'r gwath. Felly, gallwn bod y pethau'r ysgol ymddangosol anodd yw'r byd yn rhan, ond mae'n mynd yn ei gobl ysgolol am rhai rwyde i gael i wathio. to various countries, so I've compared South Africa in this slide to other developing countries and just for interest's sake have also included Germany and you can see that our energy intensity across sectors is quite high. So what are we doing around policy interventions to mitigate? I've kept this slide at a very high level. We do have a national development plan. This is a newly released document that focuses on various aspects of the country's development but the environment is quite prominent in the plan. It gets a chapter all on its own largely because there is wide recognition and acceptance that we have to do something because South Africa will be adversely affected by climate change. There are a series of energy policies and plans that also take climate into account. This would be through our integrated energy plan as well as our integrated resource plan which is for electricity which has started to internalize some of the climate impacts by adding some elements of renewable energy. We have got some strong work around climate response and what we are doing. We have a national strategy for sustainable development and there's a number of sectoral policies that are aimed at developing green industries. We are doing very specific work. There was a session this morning in which some of my colleagues from the ERC presented on the long-term mitigation scenarios work that has been done. There is work that is being done on mitigation at sectoral level. We are also beginning to do some work around long-term adaptation scenarios and specific programmes around waste management and these growing areas such as recycling and local production and installation of solar water heating. The areas that I have put in a light grey such as development of a green growth strategy are light grey because it is work being developed. On top of that I have reflected on some of the commitments that we had made in Copenhagen. This is light grey because the commitments hinged on us getting some international climate finance so that hasn't come through so this is a great area. We still have some level of commitment to reducing emissions. Just taking a picture of the economy because one does have to from a policy analysis perspective look at the economy and how the South African economy performs and where do we see climate coming in. The current economic environment in South Africa is not supportive of accelerated growth and job creation and this is due to a number of factors. There are some capacity limitations in certain areas to implement policy as well as to lift up potential growth particularly at a sub-national government level and of course this does have implications for how one goes about mainstreaming climate issues. We have got electricity shortages and rapidly rising electricity prices. What this means is if you've got no electricity and you have to choose between building another coal fire station and building renewables because you do not have carbon pricing you pick the coal fire station. It appears to be cheap so that does have some implications. We have infrastructure bottlenecks in terms of ports, rail and the road network and we need to add capacity in all of these areas and at the moment we in quite a constrained fiscal environment not as constrained as the rest of Europe but for us we see it as a constrained fiscal environment due to the weak global economy and also weak investor confidence domestically and there's been fairly slow progress on the global climate front so for us this sort of lends itself to the bits in the grey bar that if you continue along these lines and not much is happening you will have low growth, you'll have lower job creation, you are likely to achieve your emissions reductions so we see a lot of things as having to change for South Africa to internalise what we have to do on the climate front. This is a picture of the electricity situation. I put this slide just to give you a sense because when I start to talk about some of the political economy considerations electricity is going to come up a lot but our electricity prices have had to increase quite sharply over the last five years and our integrated resource plan sees electricity prices increasing quite sharply between 2010 and 2030 but it's largely because prices have been or were quite low in the mid 90s and we took too long to make decisions around building new capacity so now we've basically run out of power, we need to build new capacity and we haven't priced in the fact that we would have had to replace current assets so prices have had to adjust quite rapidly but at the same time we have to manage electricity demand. Okay, so to get to the gist of the presentation, South Africa is considering a number of carbon pricing mechanisms. For this presentation I'm only going to focus on the carbon tax because of time but there is work being done on carbon budgeting approaches across various sectors and also some work being done around whether we need to have an emissions trading scheme and how that would work. We have done some modelling of the carbon tax, I'm not going to discuss this much but you're welcome to go and read James' paper which he presented on this morning which will give you an indication of the type of work that we had to model but in 2010 at the end of 2010 we published a discussion paper on a carbon tax and how it might work, we've done some internal modelling with the assistance of UNUIDA and from the modelling work that we've done we have an indication that given the level and mode of recycling carbon taxes could have a small negative impact on the economy but revenue recycling is an area that we will have to seriously consider to ensure that we manage the growth and distribution outcomes in the economy and that we could use the additional revenue to resolve bottlenecks in the economy which could give us a double dividend but of course in a political economy set up all of this is quite debatable. The elements of the carbon tax, we have taken the approach that we will face in the carbon tax gradually over a period but we need to have some exemptions for trade exposure and to have some offsets to retain some elements of competitiveness and that we're looking to have incorporated into the design some exemptions for efficiency gains and in terms of border tax adjustments we have decided we cannot have border tax adjustments at this stage but if you read James' paper it will present both sides of the argument. You might be wondering why carbon pricing is important for a country like South Africa primarily because of the threat of border tax adjustments that could be imposed on South Africa, we do rely on our minerals quite heavily for export revenue and that loss of competitiveness would be quite a big dent and then there's of course our own developmental needs because we will be so adversely affected by climate we would also lose some of our tourism and agriculture revenue. How much time do I have, Channing? Five minutes. Right, there's a lot to say. Okay, political economy considerations. So while South Africa has been very good at actually participating on climate for a globally and being part of the UNFCCCC discussions around climate and these broad acceptance that we need to do a lot about climate change, the climate discussions has gone in parallel with the economic discussions. The two just haven't converged and meet where they're supposed to meet and we're getting to the stage where after the 2009 Copenhagen commitments we had to then bring the two together to say okay we've made these commitments so what does it mean? And when the discussion started and all of us realised there would be pain of course we've had to manage some vested interests. So I've divided the vested interests both in two ways. So there's private sector vested interests and the private sector vested interests have largely not been a rejection about the fact that we have to do something about climate change but they've been about policy uncertainty and risk and it's largely because there is currently policy uncertainty and risk in the economy and they feel we are just adding now a new layer to the policy uncertainty and risk and that the timing is not right and that there are too many competing policy objectives in the South African economy. This is the area of discomfort. And the fact that government is not talking as one. So you will have some government departments that says you need to become more energy efficient, you need to do a lot and that should be the primary focus but at the same time we want to localise, we want more employment and they're saying well we don't know what exactly you're asking us to do and a lot of these are international firms that feel that they have to compete with their counterparts elsewhere in the world and they don't understand what we are saying to them as government. So that's come up as an issue but largely it's a transition issue for them as well. They would like to hear from government so they agree with our numbers in terms of the in-state. But they want to know how we are going to help them manage the challenges that they will have to go through in making the adjustments around climate change because all of the costs are increasing at the same time and of course we are being threatened with closure of firms and lower FDIs and the list continues. The vested interests are also there in the public sector in that departments at all spheres of government actually expect to have parallel economic processes and announcements at once. So they don't want to change existing programmes, they're happy to have climate programmes in addition to their current work but they don't want to change or review any of their programmes quite radically and that's also understandable because there is social pressure in a number of areas for departments to deliver and it's really difficult to say well let's take a bit more time and think about how we're going to do this when there's been a delay in actually the delivery of services. So dealing with trade-offs has had to be about ensuring that there's better alignment between planning and implementation. It's involved some review of institutions and figuring out what it is that we're doing at least at a national government level. Starting with at least managing our domestic climate finance programmes and exactly what we're doing there and also having some sort of agreed conduit on how we will deal with international climate finance once we receive it in South Africa, which we have not done very well in the past. There's also the issue around reporting. The deployment of additional tools also refers to the analysis and the type of analysis that we've had to do to manage some of the trade-offs that we'll have to deal with and also messaging of some of these reforms to politicians and the public. This is the list of questions that we've been confronted with. You think everyone is happy, you put out a carbon tax paper and you've got a multitude of questions that you have to deal with. Electricity comes up quite a lot. Largely the issue in the electricity sector is we want to have a carbon tax but we also have an integrated resource plan that tells the utility what to build. You have an in-built carbon budget so what are you saying? Again the mixed messages that industry has been referring to and it's also brought about some questions about well okay if we only have coal where are we going to get this clean energy from and how much energy will we have to import from our neighbours because a lot of the clean energy will have to come out of South Africa will be from outside South Africa yet we have a cap on how much energy we can import into South Africa. There's been questions about border tax adjustments, what should the role of border tax adjustments be, will we have first move advantage if we do this while we're just penalising our firms for no reason. Okay so in terms of the work that we've had to do we've had to look at cost and benefits measured in terms of jobs, equity and economic growth terms because temperature rises, water level increases have no meaning to households and politicians. It's sort of seen as another layer of bureaucracy that we're saying well we will take the most expensive route as usual so we've had to be quite innovative. So we have started some partnerships one of which is with wider in developing economic tools that link climate change and energy models to economic models so that area of work is developing very well. Also evaluating economic impacts of various energy paths because in the past this has not been done very well and also integrating our regional energy options and trying to see what the climate change impacts will be as well within the region because it's no point considering hydro. If your source for the hydro scheme is going to dry up in a few years and you've sunk in a significant investment there as well as evaluating the economic impacts of climate change and various mitigation and adaptation options. And then of course the management of the internal politics has been quite challenging but it's been something that we've had to invest in quite a lot. So what have we learnt in doing this work around the carbon tax? I think for me personally it's just the realisation that the development path of course is never simple. We've had to accept that there will be lags between the policy decisions, programme implementation and then the realisation of the results. There are real trade-offs. It's an issue that came up I think in the opening plenary that climate is seen as a soft issue if you've got some real challenges on the ground that you have to deal with. So the trade-offs are important to recognise and also understanding that you'll have to compromise. And the compromise for me is much better to ensure that this gradual mainstreaming of climate change rather than fighting too hard to make sure you get things right and then nothing does happen. So the preference that we are going for is starting small and seeing where the quick wins are because in some areas making the adaptation or even mitigating is not as costly. But building capacity is quite important before we roll out any large schemes in South Africa. So I think I will end off there. Thank you very much.