Pavich Kesavawong, deputy director-general of Thailand’s Department of Climate Change and Environment (DCCE) revealed plans to cut the nation’s greenhouse gas emissions by 60 per cent by 2035, compared with the 2019 level, through improvements in decarbonisation measures for its energy, transportation, waste management and agriculture sectors.
However, the government is still awaiting the latest power development plan – which is expected to be released this year – from the energy ministry to ensure alignment with its new 2035 climate plan, he added. Kesavawong was speaking on a panel at International Emissions Trading Association (IETA)’s Asia Climate Summit in Bangkok.
By accelerating its timeline to reach net zero emissions, Thailand will join regional peers – including Malaysia and Vietnam – in aligning with the Paris Agreement’s 1.5°C global warming target. The move also marks a shift away from the use of a business-as-usual scenario, which previously served as a benchmark for its climate plans, and the setting of the country’s first absolute emissions reduction target.
Thailand’s prevailing NDC – which has been deemed “critically insufficient” and “far from being 1.5°C compatible” by non-profit Climate Action Tracker (CAT) – had targeted a 30 per cent reduction in greenhouse gas emissions by 2030, with the aim of reaching carbon neutrality by 2050. Even the country’s conditional target to raise its 2030 emissions reductions target to 40 per cent, if it gets the technological and financial support it needs, remains incompatible with 2°C warming, though it “shows greater ambition,” stated CAT.
The UN pushed back its original February deadline after 95 per cent of countries, including large emitters like China and India, failed to submit their updated NDCs on time. To date, only 28 countries have submitted their new national climate targets.
Kesavawong shared that Thailand is in the process of developing guidelines to generate carbon credits from nature-based solutions, such as lower emissions rice cultivation, that can be used to meet other countries’ climate targets under Article 6 of the Paris Agreement. The guidance – which will include a set of criteria and list of eligible credits – is expected to be ready in “the very near future,” he added, without sharing further details regarding the timeline.
Germany, Switzerland and the Seoul-based intergovernmental organisation Global Green Growth Institute (GGGI), have been actively involved in supporting Thailand’s readiness for international carbon trading. Last year, Switzerland and Thailand concluded the first ever transfer of Article 6 credits generated from electrifying a fleet of buses in Bangkok.
“Article 6 can now help Thailand to meet our long-term target. We previous targeted to reach net zero by 2065, but when we revised the NDC, perhaps we can speed up to achieve our net zero goal earlier, by 2050, in line with international intentions,” said Kesavawong.
Carbon markets ambition
Alongside GGGI, Thailand is looking to advance another Asean carbon market integrity initiative based on its domestic standard for voluntary credits it seems high quality, known as the premium Thailand Voluntary Emission Reduction (T-VER), said Kesavawong.
Currently, the premium T-VER has yet to be recognised by CORSIA, the UN-led global offsetting scheme to address aviation emissions. Thailand is looking to capitalise on demand for CORSIA-eligible credits, which are set to grow 5 per cent annually until 2035 as airlines come under pressure to meet their decarbonisation obligations. The limited supply of such credits is on track to push prices up to US$97 per metric tonne of carbon dioxide equivalent in 2027 – roughly 28 times higher than the average price of voluntary offsets today.
On the sidelines of the conference, Kesavawong told Eco-Business that CORSIA had rejected Thailand’s application for the premium T-VER to be endorsed twice so far, due to insufficient details on its guidance. He said that the government had just made its third submission, and is hoping to get endorsement for its domestic standard by the end of this year.
“Meeting the independent standards like Verra, Gold Standard and CORSIA is very expensive [for project developers in Thailand]. That’s why we developed our domestic standard,” said Kesavawong.
In 2022, Thailand enhanced its domestic standard to meet international best practices after signing a memorandum of understanding with the world’s largest carbon credits certifier Verra.
One of the new policy instruments to drive decarbonisation in Thailand is its carbon tax scheme, which is expected to be implemented some time this year after gaining cabinet approval in January. It will initially be applied to oil and petroleum products at a rate of 200 baht (US$6.15) per tonne, making Thailand the second Asean country after Singapore to implement a carbon tax.
Kesavawong told Eco-Business that the government is studying which other hard-to-abate sectors – including the petrochemicals sector – should be covered by the carbon tax, emphasising the need to not to “put the burden on the people.”
The full draft of Thailand’s Climate Change Act, which will include an emissions trading system (ETS), is currently pending approval from the cabinet and parliament. According to Kesavawong, it is expected to be finalised by 2026.
The Thai government has identified approximately 2,166 facilities across sectors, such as energy, construction, transportation and agriculture, that would be covered by its cap-and-trade mechanism. Companies will be able to offset up to 15 per cent of their taxable emissions with carbon credits – which is more lenient than Singapore’s 5 per cent limit. Elsewhere in Asia, South Korea has a 5 per cent limit, while Taiwan and Vietnam have proposed a 10 per cent and 20 per cent offset threshold, respectively.
Exploring a Thai CBAM
A provision for a Thai carbon border levy was recently included in the draft Climate Change Act – modelled after the European Union’s Carbon Border Adjustment Mechanism (CBAM), where imported goods exceeding specific emissions thresholds would have to pay a tariff.
Dechakom Boonma, general manager at GJ Steel, one of the largest steelmakers in Southeast Asia, and the vice chairman of Thailand’s Steel Industry Club told Eco-Business that domestic manufacturers had proposed a Thai CBAM to level the playing field for manufacturers who will be subjected to domestic carbon pricing mechanisms.
Thailand’s steel industry has been reeling from an influx of cheap Chinese steel, which forced at least 71 factories out of business earlier this year – all of which were using electric arc furnaces (EAFs) for production, which are less carbon-intensive than blast furnaces but bring up operating costs.
Boonma said that the EU’s CBAM, which kicks in next year, had triggered thinking around whether Thailand should enact its own carbon border tariff. The country’s steel manufacturers are “more vulnerable” to cheap steel imports than counterparts in the EU – many of which are “high grade steel producers,” said Boonma. “Why should [the government] let the industry pay for carbon taxes in the EU and the United States? Why not keep the money in Thailand?”
With Thailand’s new carbon pricing scheme, the money can be kept within the country and the government will be able to use revenues raised to offset costs incurred when exporting products to the EU, US and Australia, said Boonma.
In April, the US proposed a foreign pollution fee on imports that have a higher carbon footprint than goods made in the country – a rare pro-climate policy that president Donald Trump administration’s has mooted. Meanwhile, Australia energy minister suggested imposing a carbon border tariff on imports of cement and steel last month, spurring talks of a potential Asian CBAM.
