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

2. 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

3. 6/13/12 South Africa is in a difficult position Electricity demand may reach 78000 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 Demand @ 4% if GDP @ 6% Demand @ 2.3 % if GDP @ 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.

4. 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.

5. 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. 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

7. 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.

8. 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

9. 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

10. 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

11. 6/13/12 Thank you Gerhard Fourie Chief Director Green Industries Gfourie@thedti.gov.za Brendan Vickers Chief Director Research and Policy Bvickers@thedti.gov.za Department of Trade and Industry