Calls for a concerted effort

Calls for a concerted effort

Climate change is affecting households and businesses, with the government and private sector urged to cooperate to adopt more friendly practices

Thailand is projected to be among the top 10 countries affected by climate change.
Thailand is projected to be among the top 10 countries affected by climate change.

With household electricity bills surging in April as the temperature topped out at 44.6° Celsius in Thailand, followed by a record high average global temperature in July, businesses and governments are factoring in climate change when designing their forecasts.

The UN issued a striking warning regarding the arrival of an era of "global boiling" as more people take steps to address the impact of climate change, as it is increasing costs for business operations and household living.

Some governments and companies started to implement policies to deal with this issue, such as pushing a bio-, circular, and green (BCG) economic model or adopting environmental, social and governance (ESG) principles, but these efforts could prove too little, too late given the accelerated degree of global warming.

LIMITED AWARENESS

Sanan Angubolkul, chairman of the Thai Chamber of Commerce, said the business sector realises the importance of climate change and the impact of global warming on Thailand's agriculture and food segments.

This issue is a primary concern for food security and agricultural production, which is a crucial source of income for Thailand and provides a livelihood for the majority of the country's population. Climate change also has implications for Thailand's agricultural exports in the future, he said.

Mr Sanan said he believes Thailand is genuinely committed to addressing climate change as the government has announced goals to achieve carbon neutrality by 2050 and net-zero greenhouse gas emissions by 2065, as stated at the COP26 meeting.

Thailand is pursuing a "Climate Change Pathway on BCG Economy" concept, aiming to address global warming and push towards sustainability.

He said many private organisations in Thailand are well aware of the significant challenges posed by climate change and are adopting policies to transform.

However, Mr Sanan said this awareness is mostly limited to large businesses with more resources.

He said these large companies can play a key role in supporting the transition by small and medium-sized enterprises (SMEs) within the supply chain through knowledge sharing and technology transfer, helping to transform business operations to be more environmentally conscious and socially impactful. These goals should align with the growth of their enterprises, said Mr Sanan.

Chaichan Chareonsuk, chairman of the Thai National Shippers' Council, echoed Mr Sanan's suggestions, adding that businesses should monitor volatile weather conditions and rising global temperatures because they could have significant impacts.

If the increasing air and global temperature fluctuations are more severe and prolonged than anticipated, it could impede Thailand's economic growth as exports play a crucial role, he said.

Mr Chaichan said the potential consequences from climate change could affect the entire production and economic supply chain of the country. This could cascade to other sectors related to agriculture and their supply chains, from upstream to downstream, he said.

Especially vulnerable are the staple crops that could suffer damage from drought, such as rice, sugar cane, cassava, rubber, seasonal fruit (such as durian, mango, mangosteen and pineapple), and oil palm, said Mr Chaichan.

Moreover, the impacts of drought can also affect industrial agriculture, both directly and indirectly, he said.

The Excise Department says using ESG principles to operate a business is 'a path to survival'.

SLOW RESPONSE

Despite the UN's stark warning about the severity of natural disasters, not all stakeholders are treating this as a serious issue and adopting eco-friendly measures, said SET-listed TPC Power Holding (TPCH), the renewable power generation arm of construction firm Thai Polycons Plc.

Only large companies and organisations seem to be eager to join global campaigns to reduce carbon dioxide emissions and have announced plans to curb emissions, said Cherdsak Wattanavijitkul, president of TPCH.

Mr Cherdsak said the combined effort from much of society to seriously combat global warming remains at a low level.

The UN warning mentioned climate change causing more frequent severe flooding, drought and other weather events for decades to come.

"We can no longer say we should do something," he said.

"We have to say we must act better."

Without more serious efforts to cut carbon dioxide and other greenhouse gas emissions, experts said it is likely the global average temperature will rise by more than 2° Celsius, exceeding the UN's goal to limit global warming to 1.5° Celsius by 2100.

"If that scenario occurs, we will have passed the point of no return. Our usual weather patterns will have changed irreversibly," said Mr Cherdsak.

KEY DRIVING FORCES

"Collaboration between the government and private sector is crucial in this scenario. Establishing specialised task forces can facilitate more targeted action," said Mr Chaichan.

"Farmers must plan and manage water resources more carefully, especially water storage outside of irrigation zones. They should prepare for potential drought situations or consider shifting to drought-resistant crops to reduce risks in the short term until 2024."

He said the private sector must prioritise reducing greenhouse gas emissions in production and transport processes.

Forests and green areas need to be increased to help absorb gases and store carbon dioxide, while consumers should adopt more environmentally friendly consumption habits, said Mr Chaichan.

These behavioural changes could lead business operators to adopt more environmentally friendly production processes to meet the demands of both domestic and international consumers, he said.

The government must communicate and raise awareness about intensified environmental threats and upgrade its disaster response plan for environmental disasters as a national agenda item, said Mr Chaichan.

To promote the transition to the BCG model, Mr Sanan said the government should support the various needs of different business sectors, including offering additional tax privileges to motivate large enterprises to increase investments in businesses related to the BCG model.

Capital resources and technology can facilitate the transition towards a BCG-oriented business approach for medium-sized enterprises, he said.

For SMEs and micro-SMEs, which make up the majority of businesses in the country and may be unaware of the BCG model, the government needs to promote BCG via successful models, said Mr Sanan.

The government should develop incentives to encourage large enterprises with skilled personnel and various resources to help transmit knowledge to SMEs, he said.

Apart from government funding and special assistance, state regulations should align with the BCG model, said Mr Sanan.

COOPERATION NEEDED

Instead of individual efforts, Mr Cherdsak urged state and private organisations to jointly educate the public on energy issues, waste management and methods to take a better care of the environment.

In Thailand, large companies such as national oil and gas conglomerate PTT Plc and Siam Cement Group (SCG), the country's largest cement maker and industrial conglomerate, already announced campaigns for carbon neutrality, a balance between carbon dioxide emissions and absorption.

There should be new measures to inspire or incentivise other small businesses to follow suit, he said, stressing efforts from the entire society are crucial to help curb global warming.

Prime Minister Prayut Chan-o-cha vowed at the 26th UN Climate Change Conference in Glasgow in 2021 that Thailand would be more aggressive in addressing climate change, striving to reach carbon neutrality by 2050, along with a net-zero target, a balance between greenhouse gas emissions and absorption, by 2065.

TPCH is helping the government through its operation of 11 biomass and waste-to-energy power plants, with combined electricity generation capacity of 106 megawatts.

The company is building another two biomass power plants and drafting a plan to develop six new waste-to-energy power plants.

TPCH wants to expand its business overseas by investing in a 100MW solar farm in Laos this year.

Carbon credits refer to an amount of greenhouse gas reduction generated by environmental projects, which can be traded by companies to offset the carbon dioxide they release into the earth's atmosphere.

ESG APPROACH

Ekniti Nitithanprapas, director-general of the Excise Department, said Thailand is among the top 10 countries that are projected to be greatly affected by climate change.

He said an integrated outlook and approach to the impact of business on the environment, society and governance is vital to preventing trade sanctions.

Mr Ekniti said the Thai economy is dependent on the global economy, with 66% of the country's income derived from the export of goods and services, of which 50% is exports and 15-16% from services, mostly in the tourism sector.

"Operating businesses based on ESG principles is not an option, but rather a path to survival that should not be ignored," he said.

As the country's No.2 collector of revenue following the Revenue Department, the Excise Department collects taxes amounting to 500-600 billion baht per year, in line with ESG principles, said Mr Ekniti.

"The department collects reduced taxes or no taxes for environmentally friendly products and services," he said.

"Excise fully taxes products and services that are not in line with ESG principles."

The department recently reduced the excise tax on imported electric vehicles (EVs) from 8% to 2%, and plans to reduce the levy on ethanol used to produce biodegradable bioplastic pellets.

In addition, Mr Ekniti said the department is conducting a study on collecting a tax for carbon-emitting products.

Lamonphet Apisitniran

The Federation of Thai Industries (FTI) is promoting sales of carbon credits as a way to encourage companies to act against global warming and earn money.

Carbon credits refer to an amount of greenhouse gas reduction generated by environmental projects, which can be traded by companies to offset the carbon dioxide they release into the earth's atmosphere.

"The trade is done on FTIX," said Kriengkrai Thiennukul, chairman of the FTI, referring to the name of the carbon credit trading platform, jointly launched last year by the FTI, the Thailand Greenhouse Gas Management Organization (TGO) and the Stock Exchange of Thailand.

FTIX is a reliable and easy-to-access platform for all companies, he said.

Carbon dioxide emission reduction projects are certified under the TGO's Thailand Voluntary Emission Reduction Program, also known as T-VER, before the credits are traded on FTIX.

Some 52 companies have registered to use FTIX, with trade of 10,000 metric tonnes of carbon dioxide equivalent, worth 450,000 baht, in March, the highest tally for the first five months this year, according to the FTI.

FTIX is a second-phase project of the ERC sandbox, which is overseen by the Energy Regulatory Commission (ERC) to test new technologies related to energy businesses.

Carbon credit trade can prompt companies to invest more in clean energy as a promising source of new revenue, said Mr Kriengkrai. The trade should be carried out in tandem with BCG economic development, he said.

Declared as a national agenda item by the Prayut Chan-o-cha government, BCG encourages manufacturers to adopt technologies that add value to their products while minimising the negative impact on the environment.

"This policy can support the manufacturing sector," said Mr Kriengkrai, referring to exporters pressured by non-tariff barriers on products made from carbon-intensive manufacturing.

Domestically, new investment projects, especially those sponsored by foreign businesses, must be align with BCG principles, he said.

During the three-day World Chinese Entrepreneurs Convention in Bangkok in June, the FTI chairman encouraged prospective Chinese investors to venture into next-generation industries in Thailand.

Mr Kriengkrai was referring to supporting industries with green manufacturing, clean energy and a sustainability concept. The Thai government is not promoting more labour-intensive industries or businesses that create a negative impact for the environment.

Next-generation industries are in line with "ONE FTI", the federation's three-pronged policy to promote BCG, campaigns that combat climate change, and a push for S-curve industries, which refer to innovation-driven industries that can boost Thai economic growth.

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