International Finance
Industry Magazine

Is Thailand environmentally sustainable?

IFM_ Thailand environmentally sustainable
Thailand does not have a good track record when it comes to committing to sustainability goals and combating climate change

According to Germanwatch, an independent development and environmental organisation, Thailand is ranked ninth in the “extreme risk” category of countries that are most vulnerable to the effects of climate change over the next 30 years. Thailand is highly vulnerable to the effects of climate change. The nation is threatened by rising sea levels, which pose a threat to Bangkok, the nation’s capital, which is on average 1.5 metres above sea level. Thailand’s 6% of GDP and 30% of all jobs are in the agricultural industry. Therefore, extreme and unpredictable weather patterns, such as drought and flooding, are crucial, especially for the rural population.

Around less than 1% of the world’s emissions come from Thailand, and per-person emissions are lower than average, but recent years have seen an increase in air quality-related worries. Thailand’s carbon dioxide (CO2) emissions increased by 0.8% yearly from 2011–21, which is greater than the global average of 0.6% but still less than the Asia–Pacific average of 1.8%, according to statistics from the BP Statistical Review of World Energy 2022.

The International Energy Agency predicts that CO2 emissions will reach their peak before 2030. Thailand gains from having a large portion of the service sector, which produces less pollution than industry. Nevertheless, 36% of Thailand’s CO2 emissions were from power generation, followed by industry (30%) and transportation (28%). This highlights Thailand’s need to diversify the energy source of its manufacturing industry by moving away from fossil fuel-based power, as well as expanding the fleet of low carbon transport.

Thailand continues to be heavily dependent on fossil fuels. The country’s energy use was strongly skewed towards oil and natural gas, which together accounted for 77% of all energy consumption in 2021, according to data from the BP assessment. Overall energy consumption includes coal at 17%, which is low compared to the average for Asia-Pacific at 47%, which was mostly driven by high usage in China (55%), India (57%) and Indonesia (39%). Similar to regional peers, renewable energy consumption took up only 6.3% of the total, but between 2011 and 2021, it increased significantly, averaging 18% annually.

A sense of urgency is rising
Thailand does not have a good track record when it comes to committing to sustainability goals and combating climate change. The nation has a history of demonstrating insufficient commitment despite having strong intentions, according to the Climate Efforts Tracker, a research organisation that tracks government efforts to prevent climate change. The Thai government most recently established targets for carbon neutrality by 2050 and a net-zero GHG emission target in 2065 at the Glasgow UN Climate Change Conference in 2021, ranking Thailand among the laggards. It did not sign an agreement to end deforestation by 2030.

However, there are indications that the situation is becoming worse. The rise in gas and oil prices brought on by the conflict in Ukraine and the political unrest in Myanmar—Thailand’s main natural gas supplier—add the need to increase renewable energy in the mix, in addition to the concern for the environment.

A noticeable policy change towards a more ambitious goal and higher priority for the promotion of sustainable practice became apparent in 2022. Thailand’s second updated nationally determined contribution, which included a more aggressive goal to cut its greenhouse gas emissions by 30–40% from the predicted business-as-usual level by 2030, was revealed in November 2022. The Thailand government also announced a revised version of its Long-Term Low Greenhouse Gas Emissions Development Strategy, which proposed accelerated efforts to combat greenhouse emissions.

In response to worldwide criticism of Thailand’s lack of action, the BCG model, in place since 2021, attempts to demonstrate a better public commitment to climate change risk and sustainability. During the meeting of the Asia-Pacific Economic Cooperation in November 2022, it was given a more prominent position as a cornerstone of economic policy. The government’s initiatives actually concentrate on four economic sectors: food and agriculture, health care and wellness, energy, materials, and biochemicals, as well as tourism and the “creative” economy. In order to increase interest in the industries where Thailand currently has an edge, the BCG policy effort blends Thailand’s sustainable drive with an investment promotion policy. The Climate Change Act, which is now in draught form, is another measure that suggests that change-related actions have advanced.

Regulators are also developing finance industry policies to assist sustainable practices. The Securities Exchange Commission and the Bank of Thailand, the country’s central bank, are currently working on the Thailand Taxonomy, a set of standards that will serve as the foundation for a system of sustainable financial services and the development of related products.

Thailand’s solar energy market
The Thai solar energy market is anticipated to grow at a CAGR of 8.5%, between 2022 to 2027. The COVID-19 pandemic slightly affected the solar photovoltaic (PV) installations in the country during Q1 and Q2 2020, but due to lockdown limitations, supply chain disruptions, decreased solar PV output, and delayed project implementation. The 45 MW floating solar farm’s operation was delayed by the government-run Electricity Generating Authority of Thailand (EGAT). During the projection period, the solar energy market in Thailand is anticipated to be driven by elements such as significant government support for solar power development in the form of feed-in tariffs, the Alternative Energy Development Plan (AEDP), and falling prices for solar PV systems.

The ground-mounted solar PV category holds the largest proportion of the country’s solar energy market due to the installed capacity of ground-mounted solar PV and the huge number of forthcoming projects in Thailand. The region is anticipated to increase the chances for solar energy firms to develop solar PV facilities over the next few years because it has an aim of decreasing GHG emissions to 20.8% by 2030. Additionally, the area has ambitions to lessen its reliance on foreign fossil fuels like crude oil and use renewable energy sources like solar to cut costs associated with imported oil. The market is also driven by favourable government policies, particularly those developed by the Ministry of Thailand to promote the production of electricity based on renewable resources.

The solar PV segment is predicted to hold the greatest market share during the projection period due to the decreasing cost of solar modules and the ability of these systems to be used for a variety of purposes, including the production of electricity and water heating.

The installed solar PV capacity in Thailand increased from 1,420 MW in 2015 to around 2,983 MW in 2020, according to the International Renewable Energy Agency (IRENA), registering a growth of almost 11% over the course of the year. Large-scale solar PV installation deployments in India, notably for utility projects, are to blame for the growth. The Indian government intends to boost installed solar PV capacity as well.

Meanwhile, a 12 MW solar rooftop PV project was launched by BCPG Public Company Limited (BCPG) in 2020 and is situated on the roof of Chiang Mai University in Thailand. In December 2021, Dezhou Dingzhuang floating solar photovoltaic park’s second phase (120 MW) was connected by Huaneng Power International Inc. The plant has a 320 MW installed capacity overall, and the project can produce about 550 million kWh of power annually.

New opportunities in renewable energy sectors
The pathway to carbon neutrality and net zero will be challenging and will require a strong political will to see it through. According to a report by Economist Intelligence, Thailand should create an energy transition plan for the transport and energy sectors in particular. The country’s power sector, which accounts for the majority of its emissions, has to shift away from natural gas (coal’s role has already diminished over time) and towards renewables, particularly solar and wind in the long term. The transformation requires new infrastructure, including grid management, energy storage, and efficiency enhancement. If fossil fuels are used for direct consumption, Thailand’s heavy industries and manufacturing sectors that are export-oriented will also need to increase their energy efficiency.

Thailand will need to increase the effectiveness of its public transport system and encourage electrification through infrastructure, such as charging stations, as well as financial incentives for consumers. Thailand will eventually need to reduce emissions from the agricultural sector through compensatory measures including carbon sinks (like reforestation) and carbon capture and storage. In the near to medium term, Economist Intelligence anticipates additional opportunities to focus on renewable energy and electric vehicles (EVs), which are now drawing a lot of investment and garnering more government support.

What's New

ROSHN: Shaping Saudi’s Urban Vision


Regulation around AI is needed: iQmetrix Senior VP of Revenue Jason Raymer

IFM Correspondent

The battle against SIM card theft

IFM Correspondent

Leave a Comment

* By using this form you agree with the storage and handling of your data by this website.