Thailand | 
Bangkok, November 19, 2024
The Ministry of Finance is moving forward with transforming the specific excise tax on petroleum into a carbon tax. The business sector has announced plans to reduce carbon emissions. BIG suggests that Climate Tech is the way forward for industries. Businesses are no longer competing on low costs but on low carbon emissions. Thiland Post has reduced transportation processes to help reduce carbon emissions. Delta aims to switch to green electricity.
BIG, in collaboration with Bangkok Biz News, organized the Generating a Cleaner Future Forum, providing a platform for the public and private sectors to exchange ideas on driving sustainable business development through thought leaders.
Dr. Ekniti Nitithanprapas, Director-General of the Department of Property, who was the driving force behind the carbon tax while serving as Director-General of the Excise Department, spoke on the topic of “Carbon Tax: Advantage for Future Growth.” He stated that the imposition of a carbon tax in Thailand, whether sooner or later, is inevitable. The carbon tax will serve as an important reminder and tool.
Thailand has made a commitment in international treaties to reduce greenhouse gas emissions by 30-40% by 2030, achieve carbon neutrality by 2050, and reach net-zero carbon emissions by 2065. While these goals may seem distant, the impending implementation of the European Union’s Carbon Border Adjustment Mechanism (CBAM) is a more immediate concern. Other countries, such as Australia, New Zealand, and the United States, are also preparing to announce carbon tax measures.
Currently, six industries exporting to Europe, including iron, aluminum, cement, fertilizers, electricity, and hydrogen, have begun reporting their greenhouse gas emissions. This will come into effect within the next year, and undoubtedly, this tax will impact Thai businesses.
“These mechanisms are causing the global supply chain to change significantly, especially in Europe and Japan, which require suppliers in the supply chain to report greenhouse gas emissions and mandate businesses to use clean energy.”
Thailand currently emits 372 million tons of carbon, with approximately 70% coming from the energy and transportation sectors, 15% from agriculture, and 10% from industry. If no action is taken by 2030, greenhouse gas emissions will increase to 555 million tons of carbon.
Three Framework Concepts for Reducing Carbon Emissions
Dr. Ekniti stated that once there is an international treaty, the Excise Department will immediately proceed with collecting the carbon tax, which is a mandatory mechanism that will be most effective in reducing greenhouse gas emissions. The implementation of the carbon tax is based on three concepts:
- Businesses can offset the CBAM to protect exporters, emphasizing fairness and enhancing competitiveness, avoiding duplication with existing taxes.
- It does not affect the general public.
- The government must have good governance and clear laws.
“Thailand has pledged to reduce greenhouse gas emissions by 30-40% by 2030, but currently, Thailand’s greenhouse gas reduction efforts are voluntary, with no central carbon credit price and no mandatory laws. Therefore, what the Excise Department can do immediately is to convert the specific excise tax on petroleum into a carbon tax.”
For the carbon tax, the Excise Department is using Japan’s model, linking petroleum tax to greenhouse gas emissions, with the carbon tax embedded within. There is a proposal to use a price of 200 baht per ton of carbon. For example, one liter of diesel emits 0.0027 tons of carbon, multiplied by the carbon price of 200 baht, equals 0.55 baht per liter. This 55 satang is included in the 6.44 baht per liter price.
Initially, this will not affect the public but will raise awareness. The Excise Department is collaborating with retail fuel sellers to provide information each time fuel is refueled about the amount of carbon emitted. Meanwhile, businesses that purchase fuel for steel melting and export to Europe can use the receipt to offset the CBAM.
Climate Tech: A Lifeline for Industries
Piyabut Charuphen, Managing Director of BIG, speaking at the Generating a Cleaner Future forum, highlighted the disappointing decline in Thailand’s industrial growth over the past 20 years. Thai industries have been relentlessly cutting costs to the point of diminishing returns, while also striving to increase productivity, but growth has stagnated. In September 2023, Thai industries contracted by 3%.
Moreover, Thailand’s industrial future faces numerous challenges, including the potential for increased trade barriers if Donald Trump is re-elected as US President, as well as the challenges of climate change and fluctuating energy costs.
Three key challenges facing Thailand’s industries are:
- Geopolitical conflicts leading to trade wars and tariffs, causing a flood of Chinese goods into Thailand.
- Technological changes such as AI, digital technologies, and data, where those who can access these technologies will have a significant advantage over those who cannot.
- Climate change, which will significantly increase production costs.
“Today, only a few businesses are still expanding. BJC believes that Climate Technology can turn these challenges into opportunities.”
BIG Aims to Reduce Carbon Emissions in the Business Sector
Piyabut stated that true sustainable business growth must consider reducing environmental impact and creating opportunities for society and communities. As a subsidiary of Air Products, a global industrial gas company, BJC aims to partner with industries through climate technology, such as:
- Carbon Capture: This technology is currently being developed by BIG and will soon be introduced in Thailand.
- Hydrogen Economy: Hydrogen will be a new economy that enables industries to reduce carbon emissions.
- Low Carbon Applications: Tools for using industrial gases with low carbon emissions.
- Carbon Management Platform: An AI-powered platform for calculating, monitoring, and analyzing carbon emissions, enabling the development of plans to reduce greenhouse gas emissions.
- Bio, Circular, Green: Developing biomass energy within the country.
“Going forward, competition in the industrial sector will no longer be about low costs but about low carbon emissions. Climate Tech will be a game-changer, and BJC is ready to assist in developing appropriate technology strategies aligned with the industry’s greenhouse gas reduction roadmap to achieve net-zero.”
Energy Planning Office Emphasizes the Crucial Role of the Energy Sector
Wattanapong Kurovat, Director-General of the Energy Policy and Planning Office, stated in his presentation on “Energy Strategy to Net Zero” that the energy sector plays a vital role in preparing for a clean energy future. This is crucial for Thailand to achieve its carbon neutrality and net-zero greenhouse gas emission goals.
The fuel mix for electricity generation needs to transition toward cleaner energy sources. Currently, natural gas accounts for 58% of all fuels used, while renewable energy stands at 10%. The goal is to increase this proportion to 40-50% and reduce the use of natural gas.
Therefore, the Ministry of Energy has implemented policies to adjust and transition the country’s energy system. This involves developing strategies and regulations aimed at reducing greenhouse gas emissions and achieving net zero. This includes reducing the reliance on fossil fuels and increasing the use of renewable energy. The National Energy Policy Committee (NEPC) has approved the National Energy Plan for 2024-2037, which will come into effect in the first quarter of 2025.
“Thailand Post” Reduces Transportation Steps to Lower Carbon Emissions
Dr. Waraporn Kongkiewphan, Chief Strategy Officer at Thailand Post, spoke at a seminar titled “Growth Opportunity in Climate Challenge.” She highlighted that the transportation industry, including postal services, is a significant contributor to greenhouse gas emissions. Thailand Post, with its extensive network of parcel collection, delivery, and distribution across the country, has initiated a carbon reduction project to streamline operations and reduce redundancies in transportation and delivery. Additionally, the company has introduced 250 electric vehicles (EVs) for parcel delivery.
Previously, Thailand Post had a high frequency of parcel collection, delivery, and distribution in the same areas, averaging three times per day. This resulted in multiple staff members visiting the same locations, leading to excessive carbon emissions. Since 2022-2023, the company has reduced these redundancies by assigning one staff member to handle all products in a specific area. This has led to a 33% reduction in fuel consumption and a 3% decrease in costs.
“Investing in green initiatives may have initial costs, but Thailand Post believes it will be worthwhile in the long run, leading to sustainability and meeting customer needs. Our goal is to promote green logistics, use electric vehicles, and eventually explore the use of hydrogen.”
Delta Aims for Green Energy Transition
Saroj Ruangsakulraj, Energy Management System Senior Manager at Delta Electronics (Thailand) Public Company Limited, stated that Delta currently has nine factories and produces 150,000 tons of carbon dioxide annually. Delta aims to transition to green electricity and has already started installing solar panels. Additionally, the company has received feedback from global partners requesting that Delta produce 100% environmentally friendly products.
“Delta is a globally expanding business. If we don’t take action on green energy today, we may miss out on opportunities. With global warming, we’ve seen advancements in technology, such as electric vehicles, allowing us to develop products to support this trend.”
AAPICO Acknowledges Carbon Reduction as a Challenging Goal
Yeap Swee Chuan, President and CEO of AAPICO Hitech (AH), stated that reducing carbon emissions is a significant challenge and a company goal. If businesses don’t start adapting to reduce carbon emissions now, they will lose their competitive edge and face higher carbon tax costs. Additionally, they will face pressure from suppliers. Therefore, it is something that should be done now.
AAPICO has collaborated with BJC to introduce low-carbon argon gas in the automotive parts industry, aiming to reduce carbon emissions in various production processes.
Businesses Must Collaborate
Prof. Dr. Pisut Painmanakul, Associate Dean for Strategy, Innovation and Sustainability, Faculty of Engineering, Chulalongkorn University, delivered a special lecture titled “Low Carbon and Resilient Business towards Thailand Sustainability.” He emphasized that the current challenge is to ensure Thailand’s sustainability through low-carbon initiatives and building resilience.
To achieve sustainable development, Thailand needs to foster collaboration between businesses and consumers. If these two groups cannot work together, the country will face ongoing challenges that require constant solutions.
“Businesses today are a crucial part of driving sustainability initiatives, as they account for 80% of GDP. Therefore, they must adapt and prioritize this issue. If the government wants to reduce carbon emissions, businesses will be the first to be targeted. Businesses will face significant impacts if they don’t start adapting.”
ที่มา: กรุงเทพธุรกิจ
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