 So, cwestiynau. Thank you very much, Malcolm Smartrum, DFID. Thanks very much for four really fascinating presentations. I've got three very quick questions. The first one I guess is probably to Alison, which is, did your wedges take account of climate impacts? So maybe this is also a question for James. Your middle one, the option that you seem to be going for on the power sector, seemed to imply more hydro than the 42% reduction one. Question for Alison on the energy, did your energy efficiency projections take into account rebound effects? And the final question is probably for James and Yogesh, why attacks rather than a trading system? Can we answer the three questions and then we'll carry on since we have three. Thanks, Malcolm. Maybe I start with the last one first. I mean, I'm certainly an outsider to the process so for me to talk about cap and trade versus carbon taxes may perhaps inappropriate, but at least from my perspective, it's the same kind of reason for imposing the tax on the fossil fuels that go into the system rather than try to impose them on the emissions that actually come out of industries because it's a whole lot easier. I think they have, at least in some of the meetings that I've sat in, there has been a call for a cap and trade system from some of the business interests and to some extent starting with a carbon tax doesn't preclude moving to a cap and trade system in the future. But holding out for a cap and trade system may delay the entire process. So that would be one reason to start simple and complicate later. I can't actually comment on why there is more hydropower in the policy-adjusted middle-road scenario, but the hydropower that is in there is imported. Yeah. The question wasn't about the hydropower per se. Malcolm, sorry. You have to use the microphone otherwise. So the question wasn't around the hydropower per se. It was whether climate impacts had been taken into account to know whether the hydropower, how credible the hydropower was, or how credible any of the renewable energy is given the impacts of climate change. Well, the answer is no, but the good news is that this is exactly what we're working on right now. So we are now working the Treasury phase two of this to actually say at the moment South Africa has a cap on how much electricity can be imported and constrained on how much of these regional options that Yogesh was talking about can actually be harnessed and taken advantage of. So we're thinking about big dams like Inger in the Congo which could supply a lot of South Africa's electricity in the future at a very clean low emission rate. We're looking at exactly that, looking at the... Adam right there is working on it as well, looking at what are the climate risks associated with a hydro-based system. And Adam's also looking at the climate risks associated with a South African-based solar and wind-powered system. So on both sides of the system. Hi, Jo. So responding to your, did we take impact of climate change into account? No, we didn't, but I think kind of more worrying for us was that we also didn't take into account what the cost of mitigation options might... how that might impact the economy. And that's one of the reasons why we're working with Wider now to kind of link our optimization model to their CGE model and see if that can improve our research. And then in terms of energy efficiency, and I think your question was about re-bound effects. We didn't at the time, but we've given it quite a lot of thought since then. And we've had a couple of studies out through ERC on re-bound in low-income households in South Africa. We haven't yet included it in the model, but I think that's something that would be interesting to look at in the future. I think at the time they're simply just... We've had a bit of a... I mean, the data issue is one thing, but also in South Africa there's been almost a total lack of research into things like re-bound and elasticities of consumption to income in the past sort of decade, decade and a half. And I think we've a lot of work to do to fill that gap so that we can begin to include these kind of interesting things in the work that we do. Yeah, I mean, just adding on the cap and trade, in addition to the reason that James outlined, we feel that we don't have enough firms in the domestic market to have a competitive cap and trade on a domestic level, so unless there is a global market, it is difficult for us to participate. Next set of questions. Okay, thank you very much. My name is Wisdo Macpalu from the State University of New York, but I'm a Ghanaian. When it comes to disbezzing tax revenues, sometimes it comes at a cost. In most cases, there could be leakages and rent-seeking behaviour, which indicates that the estimates that you have there could be, I mean, an overestimate for the growth potentials that you indicated. And I say this because there is evidence that, for example, gasoline subsidies tend to be regressive. They favour the rich more than the poor because the rich spend more on gasoline in proportion-wide than the poor. But any attempt to remove gasoline subsidies and re-channel the proceeds to social programmes is met with fierce resistance, like what happens in Nigeria, because people are not sure that the proceeds will be used for those programmes that are indicated. So I think those estimates could be overestimates, although they are supposed to be reductions. Any thoughts on that? Questions? I'm Sudhakar Reddy from the Indira Gandhi Institute, Moab Bombay. A question to Alison. You have not mentioned about energy intensities and the regarding emission intensity. As far as I know, India's emission intensity is significantly higher than OECD and it is almost equal to China's because I work in this area. But according to you, it is significantly lower when compared to OECD countries. I don't think kindly check. And one question to James. He had mentioned energy efficiency and the variables are, you have mentioned the price, okay, energy existing technologies. But what about the output prices? And finally one small lesson regarding scenarios. If you look at scenarios particularly the 1965 EASA model and they have predicted energy scenarios up to 2030 and you have seen what had happened after 1973, you can check those figures. There are whatever they have predicted and whatever the existing consumption. So baseline scenarios, whatever we predict about baseline scenarios and if you look at the past scenarios, there are significant differences. So one should be careful about, it's not business as usual. It never be. Thanks. Thank you. Philip Adams from Australia. Really a question I think to James but I'll start off with the excitement expressed about biomass. It's probably the most excitement I've ever heard about biomass. So it raises the question for James in his modelling how abatement possibilities from reduced use of biomass or however were modelled and as a follow-up question how abatement from non-combustion sources more generally were handled in his modelling. Joseph. UNUIS. My question is more when you made the calculations, did you include the social costs? For example, coal has a lot of externalities, both economic, both particular in health if these were included in your models. And the second when you calculate the emissions, it's just the production of electricity but also the other cost production of coal. There are a lot of problems in sub-African coal, methane, and there are a visiting goth tank when a lot of mines are just burning and creating a lot of problems in water and particularly in climate. If those, the production of coal, the emissions were included. And also you mentioned the cap and trade. Why not, instead of thinking only the electricity, why not worldwide taxes in carbon generally including transportation and others, it could lead to different outcomes soon. I don't think they were all for me actually. I don't even think about that. I need to just remember the recycling question. But on the energy efficiency story, we do take output prices into account because that's going to determine how attractive a sector is to receive new investment. Remember in the model, even if you want to change, if you're not able in a financial position to be able to invest in cleaner, less energy intensive machines, then you're stuck just facing the higher price and using the machines you've already installed. So the output prices are in a way determining the are being factored into the ability of South Africa to become more energy efficient or for industries to become more energy efficient. On the biomass, we're right now at the moment, as Alison was saying, trying to fully integrate the times energy model with the economy-wide economic model and that would link both the electricity and the fuel sectors together. So it would be the energy model that predetermines for the CGE model in a sort of iterative backward and forward process what the different key energy sources are going to be in the model. In this particular case, we locked down, in this analysis, we locked down the electricity sector and so if that South African bill plan said no electricity from biomass, for example, we stuck to whatever they were projecting. For biomass, for fuels, for biofuels and so on, we actually assumed that there were very few options for South Africa, which I think is fairly consistent with some of the policies as they stand, but not necessarily where they could go in the future. And then on the external costs, and I shouldn't speak for Alison, but certainly from the economic side of things, we didn't take pollution and some of these other potential benefits from switching away from coal. We didn't include the health benefits in our analysis and that would actually, that might make a less coal intensive path look more attractive. We did take the emissions from the non-electricity sector, and there's an economy wide in us. Every sector is included, transport, mining and so on. Interestingly enough, and this is an argument that a lot of South Africans, well, we've heard that the energy intensive industries talk about in South Africa is that actually they argue that yes, the coal they mine is a very dirty product, but the process of mining it in South Africa is amongst the most difficult. So if someone has to mine coal, they argue it should be South Africa. So that's a fairly interesting argument. It's a difficult one to actually argue against. Someone has to produce aluminium, which uses lots of electricity, or mine coal is a better example. And then on the recycling, sorry, which was now that I remember, absolutely right. We don't take the leakages into account. We assume that the national treasury doesn't pocket the money. I think Constantine can talk to this. The funds are not earmarked. So they're not specifically designed for programs. They just go into the pool and then they are rolled out or intended to be rolled out as part of the general budget. And so they would be subject to the same monitoring that would be afforded to other activities or existing activities. The other thing we don't take into account is the actual administrative cost of implementing the carbon tax. So that's another shortcoming. On the pollution and external effects. So on the emissions on coal production, there are emissions from mining in the model. But also South Africa's emissions, methane emissions from mining are actually pretty low. I can't remember exactly why. It's something to do with there being seams in the coal and basically what methane is in there largely escapes before. There's not much to escape during the mining process. I think Phillip Lloyd has a good paper on methane emissions from coal mining. Externality costs weren't included and that's interesting because because all of this went through the scenario building team process at some point even though there were strong lobby groups WDF, Earthlife Africa amongst others who were lobbying for inclusion of externality costs for some other reason there must have been, at some point a decision was made that they would not be included. I can't remember exactly why but it's probably in the documentation somewhere. And then the same comment applies to the choice of the words business as usual for that's an agreed term from the scenario building team. So it's not something we came up with as researchers. It's what industry government and others decided it should be called. But I totally agree that this is going back to Basia 2003. This research is now somewhat out of date and yes things have changed considerably since then. Including economic growth which has not happened as was agreed upon during the SBT meetings. And it would be great to see this work being updated and repeated regularly. But that is not the case. When you ask if you want to it. Just on the recycling side we're pretty confident that if we recycle through the tax system that will be very efficient however it is unlikely that this is how we will be recycling at least in the initial stages when the revenue is very small. It's also that the sales tax which in our cases mostly VAT is very low in South Africa it's 14%. So it is unlikely that recycling will take place through VAT but we have indicated that there is a big chance that as the revenue increases we will be recycling through personal income tax and corporate income tax. So recycling through the tax system is I don't think that they are massive linkages. It is recycling through other channels that may lead to linkages and inefficiencies. So on that note I want to thank our panel for very useful and interesting presentations and I want to remind you again that in the last session we will take some of the research into the political economy and we will talk also my boss will talk rather about what we are doing going forward. So thank you very much to our panel.