The Excise Department is advising business operators to accelerate adjustments by focusing on manufacturing products in line with the environmental, social and governance (ESG) approach to prevent an embargo on imports, says director general Ekniti Nitithanprapas.
He said from Oct 1, the European Union (EU) will pilot its Carbon Border Adjustment Mechanism (CBAM) measures for 2-3 years, which are expected to impact industries at high risk of carbon leakage in their production process such as steel, aluminium, cement, fertiliser and hydrogen.
Entrepreneurs that export these goods to the EU must manufacture products with carbon emissions not exceeding the specified limit, while non-compliance would be subjected to export sanctions.
In addition to the EU, the United States is also considering adoption of the Clean Competition Act to regulate carbon pricing on products that generate higher greenhouse gas emissions, both domestically and through imports via CBAM.
The world attaches great importance to the impact on ESG, and the department may be the first state agency to drive the economy with an excise tax under ESG principles to help build a sustainable and environment-friendly economy in the future.
"Our principle is to collect less tax or not collect any taxes for environment-friendly products and services, while taxing products and services that are not in line with ESG principles," said Mr Ekniti.
He added that in the recent past, the department reduced excise tax on imported electric vehicles (EVs) from 8% to 2%, which aligns with the department's strategy.
In addition, it also plans to reduce excise tax on ethanol (considered a renewable energy produced from plants) which is used to produce bioplastic pellets which are biodegradable instead of regular plastic made from ethylene which is produced from petrochemicals, the production process of which tends to release carbon dioxide.
The excise tax rate for ethanol to be used in the production of bioplastic pellets will be comparable to ethanol to be mixed in gasoline (as gasohol) at a rate of 6 baht per litre, while the import duty is collected at a rate of 80 baht per litre, which the department has drafted as a ministerial regulation and is awaiting for approval by the new government.
The cabinet has endorsed the use of ethanol to produce bioplastics which is in line with the global agenda for environmental protection including the government's bio-circular-green (BCG) economic model.
In a related development, the department, in collaboration with the BCG Committee and the Ministry of Higher Education, Science, Research and Innovation, will promote and support the development of ethanol production standards.
Moreover, the cabinet has appointed the National Ethanol Committee to set guidelines for crop production, particularly sugar cane or cassava as raw materials for the production of ethanol, which meet industry needs and to determine the amount of ethanol imports in case domestic producers are unable to produce ethanol in accordance with standards or to cope with local supply shortage.
A looming environmental challenge is the global commitment to reduce carbon dioxide emissions.
Thailand has joined the Conference of the Parties (COP20) and aims to collaborate in reducing carbon dioxide emissions by 40% by 2030, targeting carbon neutrality by 2050 and achieving net-zero emissions by 2065, Mr Ekniti added.