While pursuing its ambition to confirm the growth its economy has been achieving since the 2000s, Thailand is committed to meeting the challenge of decarbonisation and transitioning to a low-emission future in order to achieve climate neutrality by 2050 and zero emissions by 2065.
In order to accelerate this process, the country has actively entered the international arena, participating in numerous multilateral initiatives. The aim is to obtain technical knowledge transfers, attract foreign investments, and facilitate market access. Joining the third pillar of the IPEF (Indo-Pacific Economic Framework for Prosperity) – a US-led initiative – is a concrete example of the country’s willingness to enhance its technical capabilities through knowledge transfer, while also facilitating access to Western markets, which are increasingly oriented towards emission control along the entire value chain.
At the domestic level, the strategic framework is outlined in the “Long-Term Development Strategy for Greenhouse Gas Reduction”, which integrates more than 30 active policies at both national and regional levels.
Energy production is the main source of GHG emissions in Thailand. In order to meet the high increase in energy demand that has accompanied the growth of both real and per capita GDP, the government has promoted a rapid transition from coal to natural gas as the predominant energy source – which is quite the achievement, considering that Thailand ranks among the countries with the lowest coal consumption rates in the region. However, the share of electricity produced from renewable sources – excluding bio-methane – still remains limited, standing at 8% of the energy mix in 2023.
Even in the transport sector, particularly in road transport – which contributes 28% of total emissions – the policies adopted by Thailand focus mainly on the use of biodiesel, despite the electrification of transport being the most sustainable option in the long term. Indeed, a subsidy for the purchase of electric vehicles has been in place since 2022.
Industry, which is responsible for 21% of emissions, is also the focus of attention, and a bill to introduce an Emission Trading System (ETS) is currently being considered by Parliament, as accompanied by an appropriate level of carbon pricing and the reduction of fossil fuel subsidies, which are key measures to promote the transition to more sustainable production models.
Finally, in light of current levels of particulate pollution, the city of Bangkok has joined the global “Breath Cities” network, pledging to reduce air pollution by at least 30% by 2030. This initiative will support the Thai capital in collecting data and building capacity to respond to this challenge.
Green finance to combat climate change
With exports classified as environmentally friendly still accounting for less than 10% of the total, Thailand is trying to bring its economic system in line with international environmental sustainability standards by focusing on green finance. The Thai taxonomy for classifying sustainable economic activities and directing investments towards low environmental impact projects appears to be of great importance in this context. In order to promote greater compatibility with global and regional markets, Thailand has modelled its taxonomy on those of the European Union (EU) and the Association of Southeast Asian Nations (ASEAN).
The first phase focuses on energy and transport, but so far only covers one of the environmental objectives of the nationally adopted taxonomy, namely climate mitigation. Furthermore, there are no international standards for possible “plans of correction”, and the public disclosure of data is not mandatory, leaving room for possible ‘greenwashing’ practices. Finally, in the absence of specific disclosure requirements, financial institutions face difficulties in using taxonomy to classify their clients’ activities.
To overcome these challenges, Thai authorities need to further align with EU and ASEAN taxonomies, as well as develop an ecosystem of green project assessors. Furthermore, like the EU, it is crucial that the Bank of Thailand integrates the taxonomy into its reporting and disclosure regulations for the financial sector.
Meanwhile, the upcoming second phase of the Thai taxonomy will extend coverage to four key sectors – manufacturing, agriculture, waste management and construction
