Policymakers are preparing for the commercial sale of B10 biodiesel nationwide by 2018, according to the Energy Policy Administration Committee (Epac).
The use of the fuel, a blend of 10% palm oil and 90% diesel, is part of the National Alternative Energy Development Plan to raise renewable usage to 30% over the next few years, up from 12% at present.
Thailand now sells B7, a blend of 7% palm oil and 93% diesel.
Twarath Sutabutr, the director-general of the Energy Policy and Planning Office, said the B10 will be produced by hydrogenating fatty acid methyl esters (H Fame), which could be compatible with existing diesel engine vehicles.
Diesel engines in Thailand are currently only B7 compatible. The country, however, is on track to study means of making all diesel engines B10, and even B20 compatible, in the future.
To encourage motorists to use B10, policymakers are considering tax incentives to make the fuel more attractive, he said.
B10 usage for vehicles employed by state agencies and the military will be mandatory when the fuel blend is introduced. B7 will remain commercially available as an alternative.
"The study and implementation of industrial standards may take one year, and commercial sales will follow a few months thereafter," said Mr Twarath.
Targeted demand for pure biodiesel is 14 million litres a day by 2035, up from 4.23 million litres at present.
Biodiesel was first introduced in Thailand in 2001 at 5% concentration, with commercial sales starting in 2005.
Trial tests using B20 with old trucks were first conducted in 2013, but an action plan to encourage the commercial production and sale of the fuel based on those tests was put on hold due to the collapse of global oil prices.
Pure biodiesel averages 34.65 baht per litre, compared to 24.09 baht for B7.
Meanwhile, Epac yesterday sought to encourage the use of solar rooftops in residential, commercial and factory buildings by waiving the power metre fee by the Metropolitan Electricity Authority (MEA) and the Provincial Electricity Authority (PEA).
The fee on residential properties is 10,000 baht, while factories and commercial buildings are charged 15,000 baht at volumes lower than 12 kilovolts.