 Good morning everyone. Let me begin by saying that I'm going to draw on work done with several co-authors and the usual caveat applies. Any distortions of their work are entirely my responsibility. Just to put the context of this, the other presenters are talking about very specific things in South Africa and I think my presentation is really providing a background context within which their more detailed analysis and particularly James's takes place. I'm going to be concentrating, although we're talking about emissions, I'm going to be concentrating on CO2 emissions throughout this talk. I won't say much more about that. I was wondering how I'm going to get through all of this and one way is to get the chairman to preempt what you're going to say. So let me start with what Constantine's already said about what I call South Africa's climate change dilemma. It's the same dilemma that all developing countries face, but in many ways it's a much sharper dilemma because the problems are much bigger on both sides, on both the development and the climate change side. So South Africa faces enormous development challenges, some figures there for you. Obviously the consequences of these immediate things, unemployment, poverty, inequality, the social, the moral, the political consequences are enormous and on the other hand South Africa's a a dirty energy user. As Constantine said, it's a big emitter. It's actually the 13th largest emitter of CO2 in the world in absolute terms. It's got accounts for 1.4 percent of global emissions, although it's 0.7 percent of the world's population. So it's a country with very large development problems and very large emission problems. Governments in Copenhagen committed itself to 42 percent reduction against baseline in 2025, but this is very difficult to manage both technically. How do you do it? And one of the things we'll be looking at, that he has with carbon taxes, I think with Allison, the issues of electricity generation, which main source of these emissions, it's technically difficult to do. And how do you manage this without damaging development efforts and so on? That's the problem we all face, all developing countries face, is there a trade-off between these things and governments as in South Africa talk about green growth and green jobs and trying to put a positive side to it. But it's a level less is a problem. And there's a political challenge. Obviously, we get from a lot of the work, there's the usual business challenges, concerns about competitiveness, if you internalize the externalities of carbon emissions, firms say they're going to be disadvantaged. Unions and labor are concerned about reduced employment and we're concerned also about impact on the poor of any measures. One way of looking at this is very aggregate level. Just a little decomposition that we've done. Looking at the emissions per head, you can break that down in a fairly straightforward way into what the World Bank calls the carbon CO2 intensity, how much CO2 is related to the energy use, how much energy is related to the GDP you produce and what is your GDP per capita. And we can break down into these components. And you can see South Africa, it emits nine tons of CO2 per person per year. That's high relative, if you look at the bottom of this table, developing sub-Saharan Africa is less than a ton. So it's an outlier in Africa. And you can see that this is broken down. Mainly, if you compare South Africa with the rest of the world, the world average income, it's pretty much the same income per capita. It's much dirtier. The energy they use issues more CO2 and they use more energy per unit of GDP that they produce. One can play around with these figures and do things quite simple to say, if South Africa had Japan's technology, what would its emissions be? And you'll find it goes down roughly by 75%. So if it had Japan's GDP, it would be producing three and a half times as much emissions per head. And you can get some idea of this aggregate. What's driving this? Now, this decomposition helps us to think about low-carbon development. Just a very quick general impression we get on the right-hand side there. As income per head rises on the right-hand graph, you can see energy use goes up. To produce more, you need more stuff, more inputs and particularly more energy inputs. And we see a long-term, sorry, we see a cross-sectional set of data. You'll see how that's a fairly straightforward relationship. On the left-hand side, as income per capita rises, we tend to see energy use getting dirtier. The energy used is dirtier and after a while it starts coming down again. Whether that's because of efforts, technological change in developed countries or because of efforts to clean up the environment or whatever we need and get into. But there's that sort of relationship. If we go back to the decomposition again, we can see the development targets, basically we are talking that entail, and no matter what we think about it, they entail rising GDP per head. And therefore, to reduce emissions, we either have to reduce the energy intensity of production, produce things more efficiently in terms of energy, or we have to have cleaner energy or both. We have to do, we've got no choice about that. It's an accounting relationship. This requires, we make technological changes. We find more efficient energy technologies or cleaner energy technologies, which can take time. It's something which, for many developing countries and for South Africa, the technologies are not necessarily developed locally, and it's a question of technology adaptation. So the other thing is to change the composition of production. Can we switch to producing goods that require less energy or producing things that have cleaner energy? To examine the potential for this latter option, we did some work looking at disaggregating this decomposition a bit more and going into the actual products. What is the carbon content of products produced in South Africa? What are the possibilities of shifting around? This is actually something that's important for thinking about what the impact of carbon tax is going to be, which sectors will they hit will depend upon which ones are almost carbon intensive. Now there's a fairly standard way of doing this. We did some work, you can see the reference there. Fairly standard way using input output analysis. We want to look at the carbon content of products, which is what most input output analysis focuses on. We use a technique which also distinguishes between products and sectors. Sectors are fairly aggregated things and they may produce a wide range of products, each product having a different kind of carbon content. Then we look at the relationship between carbon and exports, the sort of thing that the business sector is concerned with, carbon and employment, the sort of thing that unions and carbon and households, the sort of thing that we're concerned with with poverty, does impact on the poor. The methods needn't go through this too much. We're basically using a supply use table method, sort of extension, actually a precursor in many ways of input output where we pump into the system, we pump actual carbon, primary things, crude oil, coal, natural gas into the system, and we trace it through the whole production system so we can get the direct and the indirect carbon content of products. It's not your carbon content, it's not simply how much you use directly, but it's also the carbon embodied in the other things that other stuff use. Some quick point slides, and here I'm going to take a leaf out of Lunt Pritchard and just flip through some slides quickly giving you an impression. The carbon within products, we find obviously the primary fuel producing things are the most carbon intensive, transformed energy, electricity is the highly carbon intensive, and then we've got a whole lot of products down there. One of the most interesting things that came out of this is the margins, in other words the costs of getting the grid from factory to the market are actually one of the main sources of carbon inputs, and you can see that come for 7% of carbon within products. If we look at carbon and exports, we actually find business in a way is right to be concerned. Carbon intensive products are also export intensive, the large, you can see other mining there which includes gold mining, it's a large share of total exports the size of the bubble, and it's got a high carbon intensity and it's export intensive, most of its output is being export. So raising the price of carbon does affect exports. If we look at employment and how we're doing a full employment multipliers, looking at an input output rate, it's actually less important. The big employers are not the same as the big carbon intensive producers. When we look at households, we see that household emissions are less than the national average compared to production sectors, but looking at the goods they consume, looking at the goods they consume, we find it's very uneven. The poorest 20%, the carbon consumption, if you like, is 0.3 of a ton of CO2 which is equivalent to some very underdeveloped country like Benin. If we look at the richest 4% on the right-hand side, close to 40% of CO2 per capita. So there's a very uneven distribution of carbon. So the question then comes when we look at the distribution of the carbon intensity, it depends, what we find is the lower income are mainly getting it because of the foods and fuels they use, upper incomes are many because of the services and they consume a lot more electricity directly and that's where it's coming from. So our conclusion, from this whole thing, we find a big range of carbon intensities across sectors and across products. The major exports do have a high carbon content that raises issues of if you're introducing a carbon tax, should you have a border tax adjustment to try and equalize things so that selling stuff locally and actually taking the tax off when you export rather like we do with VAT. Those kinds of issues come up to try and maintain competitiveness. I think there's something James is going to go into. The key employment sectors tend to be less carbon intensive and the middle income households tend to be more carbon intensive, although the high income households consume far more carbon than others. So the concerns about a carbon tax hitting poor households are maybe not quite as sharp as we might think they would be. That's pretty much what I want to say.