Click to edit Master subtitle style 6/13/12 Introduction and General Overview of the National Climate Change Response Policy and Framework for implementation

6/13/12 Agenda Item Climate change mitigation, in respect of trade and industry, with a focus on: Relevant policy directives Planning processes that will reduce emissions Existing programmes and projects focused on reducing emissions

6/13/12 South Africa is in a difficult position Electricity demand may reach MW with economic growth 86% of power generation capacity from coal87% of primary energy supply from fossil fuels 2006 data, Source: DoE 2011 data, Source: Eskom 95% of crude oil requirement is imported Source: Eskom 4% if 6% 2.3 % if 4% Climate change mitigation is an imperative from both a climate and trade and industry perspective SA production and trade will become increasingly vulnerable to carbon sensitive policies and private standards, some of which are being deployed with protectionist intent.

6/13/12 Adapt to climate change Adapting to climate change requires a massive technological shift in the SA economy from a capital intensive resource dominated economy to a relatively more value-adding, labour intensive and less carbon-intensive economy. It is a transition that will not happen automatically with the introduction of 'one size fits all' instruments across the economy. It will require more instruments than a carbon tax and carbon budgeting with a need to 'front-load' measures to promote relatively value-adding, labour intensive and lower carbon-intensity manufacturing. It will also require measures to manage the transition of our traditional resource- processing sectors so that they do not collapse under increasing electricity prices and a carbon tax.

6/13/12 How would this transition work? Group 1 - Electricity and capital intensive resource processing (MEC) sectors (e.g. aluminium, steel, petro-chemicals, cement) Carbon tax which can be rebated if they e.g. – introduce globally leading mitigation technology and processes – support downstream sectors through shift from import parity pricing to competitive pricing relative to developing country competitors – invest themselves in diversification into green technologies and sectors

6/13/12 How would this transition work? Group 2 - Value-adding, labour-intensive and less energy-intensive sectors (e.g. clothing, footwear, textiles: agro processing; plastics fabrication, metal fabrication; capital equipment; transport equipment; furniture) Fiscal and other mechanisms to promote increase in their share of overall manufacturing through: – Addressing currency overvaluation and volatility constraint – Lower rail and port rates and higher operational efficiencies – Investment in freight rail and public transport linked to localisation (trains, buses etc.) – Investment in resuscitating water treatment and distribution (30% of water is lost through inefficiencies) linked to localisation

6/13/12 How would this transition work? Group 3 - Green industries / energy efficiency sectors Fiscal and other mechanisms to promote rapid growth of new industries: – Investment in green energy, industrial energy efficiency and demand side management linked to localisation – Componentry into green electrical generation, and demand side management equipment – Goods and services related to industrial, commercial property and household energy efficiency. (e.g. SWH's) – Support R&D and commercialisation of green products and materials such as organic food, bio- composites etc.

6/13/12 Implementation Support for sector groupings 2 and 3 must be front loaded to ensure this transition starts happing now 2. Value-adding, labour-intensive and less energy- intensive sectors 3. Green industries / energy efficiency sectors

6/13/12 Relevant existing programmes IPAP Minimum local content requirements on renewable energy projects Designation of Solar Water Heaters Building regulations National Cleaner Production Centre MCEP

6/13/12 Green Protectionism Monitor and Assess the impact on SA Forum on the impact of the implementation of response measures (UNFCCC) – Adopted a work programme – SA submission to the Forum Mutual supportiveness between trade and environment regimes

6/13/12 Thank you Gerhard Fourie Chief Director Green Industries Brendan Vickers Chief Director Research and Policy Department of Trade and Industry