Thailand will become the second Southeast Asian country that introduces a carbon tax next year, after Singapore. While it may not have a significant impact on emissions initially, the move sends an important signal that reducing carbon emissions is a priority for the government and will encourage the adoption of clean technologies to slow global warming.
Dr Vinod Thomas of the ISEAS-Yusof Ishak Institute said the introduction of a carbon tax was a wise decision for a country still heavily reliant on fossil fuels, such as Thailand, where 85% of the energy mix consists of oil, natural gas or coal.
Singapore launched its carbon tax in 2019 at S$5 (US$3.72) per tonne of CO2e, rising to S$25 (US$18.62) this year and expected to reach S$50 to S$80 (US$60) per tonne by 2030. Thailand will follow suit, imposing a tax of 200 baht (US$5.60) per tonne CO2e on petroleum products such as diesel and petrol from next year. The existing tax will be converted to a carbon tax with no additional revenue or cost to consumers, and without the need for new legislation.
The carbon tax rate in Thailand is expected to evolve, with the possibility of higher taxes on sectors like battery production and transportation. The initial tax of 200 baht per ton CO2e may increase in the future.
This tax will be part of Thailand's Climate Change Act, which includes mandatory emissions reporting, a climate change fund, and an emissions trading scheme that allows companies to buy and sell carbon credits. Implementation is expected to take one to three years.
In the emissions trading scheme, the government will set a maximum emissions cap, and companies that reduce their emissions can sell unused quotas to high-polluting companies. This provides flexibility for companies to buy carbon credits or adopt new technologies, depending on their costs and needs.
The experiences of Thailand and Singapore in implementing carbon taxes may encourage neighboring countries to follow suit, expanding the scale of carbon pricing and reducing emissions in the region.
Several countries in the region are also taking steps related to carbon pricing. Indonesia, which initially planned to introduce a carbon tax in 2022, has postponed it to 2025 to ensure the scheme aligns with existing laws.
Malaysia is also planning to implement carbon pricing and considering a carbon tax ahead of the European Union's Carbon Border Adjustment Mechanism (CBAM) in 2026, which will impose tariffs on imported goods based on carbon emissions. The Thai government will negotiate with the EU to avoid double taxation on Thai exports and promote Thai products as more climate-friendly.
Source: CNA
