 Perfect, yes thanks. So what where I move to now is where in some sense the South African policy debate is in February earlier on this year South Africa and its budget announced its intentions to explore concretely explore the opportunity of introducing a carbon tax in 2014 and so in a way it's in a period of evaluation how best to design an instrument that could potentially be adopted by the South African government and implemented in a couple of years time. This is some work that we did with the National Treasury with Constantine's group and there's a large number of people involved and I'm the lucky one who gets to present it. It's been a really exciting process. What we're looking at is in some ways picking up where where Allison left off and building on the database that that that Rob was talking about earlier looking at at looking at what the additional economic impacts of a carbon tax would be and whether or not what level of a carbon tax would be needed in order for South Africa to meet to meet those very ambitious emissions reduction targets that Allison was just talking about that came out of that LTMS process that roundtable discussion process. I'm not going to draw too much on this because this is just another way of looking at some of the data that Rob's already looked at except to say that you can see very clearly that emissions you can see very clearly that emissions per unit of energy use which is how dirty is South Africa's energy and you can see that South Africa is as right at the top amongst all the countries in the world as one of the dirtiest energy countries and also a fairly high energy user per person. All I'm drawing from this graph is just to convey just the challenges that are involved for South Africa to adopt a low carbon growth path that it really requires South Africa not to follow the path that the rest of the developed world has followed. It has to sharply turn the corner and so this pledge of reducing carbon emissions by 42 or greenhouse gas emissions by 42 percent by 2025 even though it's relative to a baseline scenario that is very dirty very carbon intensive even that is a very challenging proposition for South Africa. So what we what we did with with Constantine's group as we developed an energy it's it's not really a true energy model that's the work we're doing now but it's an energy it's an economy wide economic model of the South African economy with a lot of energy detail in it right we're at this stage now working with Alison and Bruno and Tara to try and get a proper energy economic model link but we're going to be picking up from where Alison left off we'll get to that in a second what we do is we start with the database that Rob was talking about where it has a great deal of sectoral detail household detail and a lot of information on the on the energy sector and this is a mathematical representation of the South African economy we parameterize the model based on the data that Rob was presenting and then we run the model forward into the future in a way as an unconstrained emissions scenario so without any attempts to try and curb emissions to replicate out well to some extent follow what what Alison was was talking about was the was the baseline scenario for the emissions reduction target and then we're going to impose on the model the energy sector right so what what investments are being made in the energy sector and we're going to treat those as predetermined those are determined by a different policy process than the carbon tax they're determined by South Africa's negotiated the southern government's negotiated investment plan with the national electricity provider so we're going to take that as given and we're going to ask what is the additional implications of a carbon tax right what our what level of carbon taxes needed over and above the electricity build plan in order to meet the national emissions reduction targets and this model which is a dynamic model allows us to trace the the the deviation in economic growth employment and a number of detailed economic indicators from that baseline so not not just changes in emissions right as I said the model has a lot of energy detail Alison was talking about just how complex the South African energy sector is particularly for a developing country we have coal natural gas and crude oil coming into the system a number of ways of producing electricity number of ways producing fuels one of them I think is the dirtiest in the world the coal to liquid or if it's not it's a good contender and and so these these complex interior interactions between fossil fuels in order to produce the electricity in the fuel at the end and then its transmission to the final users all of this complex interactions are included inside the model very simply put we also include inside the model a mechanism for improving energy efficiency so reducing the energy intensity based on prices in other words if prices rise produces in our model start to find ways to try and reduce their energy intensity to have fewer inputs going into the energy inputs going into the production process but they are limited to the extent in which they can just simply respond to prices by just what's happening to the level of investment going into their sectors in other words if you're a sector whose returns are declining you are very limited in how quickly you can you can retool your factory to use more energy efficient machinery right whereas if you are very attractive and fast-growing sector you are far more likely to be replacing your capital and being a bigger recipient of new capital investment every period and so what that means is that you're going to find it much easier to adapt to changes in energy prices so we capture both changes in energy supply and energy efficiency we're going to run a number of scenarios the most obvious one is what is the impact of the domestic carbon tax if South Africa introduces a carbon tax what is the impact of the on the economy we're going to imply this cop this carbon tax at the point at which fuel into the fossil fuels into the economy right so it's it's a tax on the fossil fuels it's going to start at $3 per tonne in 2012 and it's going to gradually rise to 30 US dollars by 2022 right and what's going to happen this is a very important part of the story about carbon taxes what's going to happen to the tax revenues that are collected how are they going to be recycled back into the system and we're going to start with this basic scenario by saying let's just recycle it back into the South African economy by reducing sales taxes uniformly this is a neutral adjustment everybody's buying goods in the economy so everybody benefits by recycling those taxes back into the economy we're going to look at some other options later on then we're going to look at a domestic border tax adjustment as Rob was saying there's a lot of carbon embodied in the imports coming into South Africa the plastic buckets coming from from different parts of the world they could be coming from a very clean Iceland or they could be coming from a very dirty China but there is carbon embodied inside that plastic bucket just because it's not produced in South Africa there are some arguments that if you are consuming it you should pay for the tax that with the carbon that was that was burnt in order to produce it likewise if you are not consuming the goods that you are producing in your country you're exporting them to Europe then it's the Europeans who should pay for using the carbon embodied in the commodities that they are buying from South Africa right so it's a rebate on the carbon within exports and it's an additional tax like an excise tax on the imports coming into the country and then we're going to look at that foreign border tax adjustment what happens if South Africa says I'm not admitting I'm not going to reduce my I'm not going to introduce a carbon tax or reduce emissions but the rest of the world says actually no we're going to tax you based on the carbon inside your products so it's a tax on South African exports into foreign markets this is very much a concern that Allison was talking about that South Africa feels it is very real and then finally we look at some alternative revenue recycling options let's move away from a neutral scenario and let's look at what happens if we reduce corporate taxes in which would favour businesses you will see or if we if we take all the carbon tax revenues and we transfer them to poorer or to households to poorer households right like I said we start from the end of the decision on what to build in the energy sector right so the base case or the baseline the unconstrained emissions scenario for South Africa has an energy profile that looks or an electricity profile that looks something like the graph on the left you can see the gray is coal and coal is going to dominate electricity supply into the future additional analysis that was done on the far right says well what what might the least cost energy plan look like for for South Africa if it wanted to reduce its emissions by 42% and you can see the green there is a much higher composition contribution from renewables right so there's a shift there's a much greater cost to this so the cost on the baseline is 108 billion US dollars over the next 20 years on the far right hand side 25 years on the far right hand side it's 171 billion dollars in energy investments it was decided that that was potentially too expensive and so that South Africa has adopted at least for now the middle case scenario the policy adjusted scenario right which which tries to balance the financial cost of of meeting emissions but also trying to reduce those emissions themselves we don't quite know what the cost is because it was never reported but but you can see it somewhere in between okay presumably it's the cost is somewhere in between as well and we would imagine it's closer to the left what this means is that the energy the electricity sector which accounts for half of South Africa's emissions is only going to reduce emissions by 19% by 2025 so it's going to fall far short of pulling its own weight in terms of meeting the the emissions reduction targets and that means that the heavy lifting is going to have to be done by a carbon tax I'm going to shoot through some slides there's a lot of detail in the paper which is actually I saw it was one of the few that was printed out and being handed out for free despite the carbon implications the what you can see here are changes in emissions reduction scenarios and the the big thing to draw away from this is that what we found is that a 30 US dollar per ton carbon tax is needed in order for South Africa to meet its emissions reduction targets given that the electricity sector is only pulling a certain portion of its weight in in meeting those targets you can see that if we just if we didn't introduce a carbon tax and we just implemented the the electricity bill plan we would only reduce emissions at the national level by 8.6% but but the but with 30 dollars per ton and tax on the rest of the economy we can see that the other sectors reduce there would have to reduce their emissions by by more than 50% and that's what's necessary in order for South Africa to meet its emissions targets what is the implications for economic growth because this is what we're focused on economic growth and changes in employment what we looked at are different levels of carbon taxes and what are the implications for economic growth which is the white line on the left hand graph and what's the implications for employment these are reductions in GDP growth in 2025 relative to the the unconstrained the who cares scenario and so you can see with the 30 US dollar per ton carbon tax South Africa is losing about 1.1.05 1% of GDP as a result of the carbon tax and you can see what what is interesting and then when in a sense this is an abatement cost curve and you can see for at the national level and you can see that the cost ratchet up very quickly after about 20 US dollars per ton right the reason for that is because of course when the carbon tax is first implemented we start to reduce our emissions in the sectors where it's easiest to reduce them right there are a few sectors where emissions are very high and if worst-case scenarios we shut some of them down those are particularly the mining sectors and so to begin with and this is what's being shown on the right hand side most of those emissions reductions or the sources of GDP losses at low carbon taxes are the gray areas which are the mining sectors that's where that's where the GDP is lost but as the tax starts to increase we have to start squeezing a lot of sectors that actually are not that carbon intensive those are the service sectors which are the white at the very the white shaded area at the very top and so it gets increasingly more difficult to reduce those emissions further over time if the electricity sector doesn't play and pull its own share okay what is the implications for income distribution oh one more minute the um what we have there is this is changes in household consumption or in a way a measure of welfare with and without the carbon tax and you can see how we have on the bottom x-axis we have the poorest households on the left and the richest households on the right and we can see that the the sales tax is in fact a very neutral revenue recycling approach households do lose um welfare they do their consumption is lower as a result of the carbon tax in part because the economy is smaller as a result of the carbon tax but the impacts are fairly smoothly distributed across the income distribution on the other hand if we um if we recycle the revenues by reducing the corporate tax rate which is a fairly attractive option for a lot of businesses in other words this could come about through accelerated depreciation of those existing energy intensive technologies so that you can replace them more quickly um you can see that a lot of the benefits accrue to the highest income households who are the major beneficiaries of the dividends that are being paid by um but from corporations likewise this and and of course the situation then becomes worse for the low-income households we're not receiving those benefits or the reduction in the sales tax conversely if we switch to a social a social transfers program where we use these revenues to expand on existing social transfer programs then of course a lot of the benefits fall on to the higher income households and those uh on to the lower income households and the higher income households are then worse off relative to some of the other scenarios what is most interesting for us is remember we did that scenario we said what happened if the rest of the world imposes a tax right and but South Africa doesn't opposes a tax on South African exports and there you can see that that's the black line at the bottom and that's almost the worst case scenario for every single household group and one of the reasons why is because there's no taxes collected by South Africa that could be recycled right so one of the advantages of of being a fast mover and implementing the carbon tax itself is that South Africa then collects the revenues and gets to decide how they're distributed and that will really minimize some of the some of the welfare losses so just to summarize um and I haven't shown you enough evidence to prove all of these points you'll have to read the paper to take my word for it but um but we find yes it's true we need to be honest right there is a lot of opportunity for green growth and green jobs no denying it but overall carbon taxes are likely to reduce national welfare and employment in South Africa and so South Africa is likely to be its economy is likely to be about 1.2 smaller by 2025 and 0.6 percent fewer jobs as a result of the context as a result of trying to meet those emissions targets without the electricity sector um pulling its fair share but these effects are fairly small in terms of economic growth rates right less than 0.1 percent per year in in the annual economic growth rate the welfare and employment losses are much larger if South Africa's trading partners decide to penalize South Africa for its inaction right and so there's a real incentive for South Africa to be a first mover um on this particular uh on on carbon taxes we find and this is fairly controversial South African is probably unlikely ever to see the light of day but we find that a border tax adjustment is actually a very significant instrument for um eliminating some of those competitiveness concerns that Rob was talking about while still not really uh changing South Africa's ability while still being able to meet South Africa's emissions reduction targets right which is the key and so for us this is this is a politically expedient instrument and it's also one which which makes for us a certain amount of economic sense and so we think it's a win-win but like I said it's uh it's a tough sell in the global scene and it's also a fairly difficult instrument to implement and so we recognize that and part of the work that Rob was presenting was to show that it could potentially be done um and that was the very detailed analysis that was in the first presentation and then finally of course the mode of revenue recycling is fundamental for determining the welfare implications um who are the winners and who are the losers for us this is actually some way of saying that the real are actually instruments out there that Salafiq can use to try and smooth the impacts across different household groups and to try and respond to some of those different concerns that Rob was talking about in his first presentation. Thanks very much.