CARBON PRICING: KEY DRIVER OF GREEN ECONOMY
published : 16 Sep 2021 at 17:25
Thai corporations are pushing forward carbon pricing as a cost-effective mechanism to facilitate lower carbon emissions to raise their environment,
social and governance (ESG) performance and fulfil the country’s commitment under the Paris Agreement1 of cutting greenhouse gas emissions by one-fifth from the business-as-usual level within a decade.
In this respect, the recently launched “Thailand Carbon Neutral Network” (TCNN) aims to build the capacity of members to participate in the carbon credit market which incentivise businesses to fight the climate crisis with investment in green technology such as energy efficiency enhancement, renewable energy and waste management, and support tree planting and forest conservation.
One of TCNN’s core missions is to accelerate local businesses’ engagement in the Thailand Carbon Credit Exchange Platform, co-developed by the Thailand Greenhouse Gas Management Organization (TGO) and the Federation of Thai Industries in 2015. The platform has facilitated Thailand Voluntary Emission Reduction Program (T-VER)2 which is a mechanism for individuals or organisations to certify and register the amount of greenhouse gas emissions they have cut as T-Ver credits. These credits will be exchanged in TGO’s carbon market which enables those having carbon footprints exceeding their targeted levels to offset their extra emissions by buying carbon credits from companies which perform better. To offset the GFG emissions, they can also adjust their operations through projects such as increasing the use of renewable energy, lowering carbon emissions through better waste management, improving energy efficiency in transportation and investing in tree planting projects.
By 2020, there were 91 registered projects on the platform committed to reducing emissions by 5.28 metric tons of carbon dioxide equivalents (Mt CO2eq). With Thailand’s business-as-usual level of GHG emissions expected to reach 555 Mt CO2eq in 2030, the country’s aim to cut its emissions by 20.8% equates to 115.6 Mt CO2eq. of reductions, highlighting the need for further adjustments.
According to TGO, the projects which contributed most to the reduction of carbon emissions in 2020 were renewable energy (39%), followed by energy efficiency enhancement (19%), renewable energy from waste (18%), waste management (17%) and greeneries and forest plantation (6%).
The carbon credit scheme is one of the Thai government’s key approaches under the National Climate Change Master Plan to strengthen the ecosystem of greenhouse gas reduction and energy efficiency as it offers a flexible mechanism for businesses and instils confidence among investors in the energy security and cost-effectiveness needed for the economy to progress toward a green economy.
In June 2021, the Carbon Markets Club was set up by large companies from the energy, banking and transportation industries to promote carbon trading through T-VER and the Renewable Energy Certificate issued by the Electricity Generating Authority of Thailand (EGAT). The club’s action plan includes transitioning from over-the-counter mode to a digital platform for trading, registration and accreditation as well as integrating blockchain trading technology.
Taking into account the shift from fossil fuels toward renewable energy, local businesses, led by the Federation of Thai Industries, have also founded the RE 100 Thailand Club3 with more than 500 members to promote adjustments across the economy, including in the industrial, transportation, financial and retail sectors. The club aims to promote the use of renewable energy, investment in clean energy, and development of the ecosystem for greenhouse gas reduction.
Meanwhile, findings from Bank of Thailand research reveal that green financing by local banking has increased steadily to reach 2.5% of total lending at the end of 2020. The growth has been led by loans taken out to finance renewable energy production. There were 844 renewable energy plants in Thailand in 2020, compared with 357 in 2013. Excluding green energy, the banking system’s financing grew to approximately US$3 billion in 2020, up from US$ 2 billion in 2013.