April 10, 2023
BANGKOK – The Excise Department plans to impose a carbon tax on the energy, transport and industrial sectors to help Thailand achieve its goals of carbon neutrality by 2050 and net zero greenhouse gas emissions by 2063, as well as cut the cost of imported fuel.
The carbon tax will encourage more companies to use cleaner or renewable energy and reduce carbon dioxide (CO2) emissions by up to 30%, said Nutthakorn Utensute, director of the Tax Planning Bureau of the Finance Ministry’s Excise Department.
Nutthakorn did not provide details on the tax, including when it will be implemented, saying only that a study of the tax is underway and will be completed this year.
The energy sector accounts for 35% of CO2 emissions in Thailand because most electricity is generated by burning oil, natural gas, and coal, Nutthakorn said, adding that the transport sector accounts for 32% of CO2 emissions, the industrial sector 27%, and households 6%.
The European Union, China, and the United States are also studying carbon taxes.
Nutthakorn said Thailand will face rising costs for fuel imports if it does not reduce CO2 emissions.
Moreover, exporting countries will need to reduce CO2 gas emissions when Europe imposes its carbon border adjustment mechanism in October 2023 on seven goods imported to the bloc.
Starting from May 31, 2026, the mechanism will require companies to report their CO2 gas emissions annually, including on goods imported. Failure to comply will result in higher taxes.
Thailand is promoting electric vehicles, greater use of renewable energy, and the carbon tax to help it meet its environmental goals.
Rosalind Amornpitakpun, director of the Climate Change Management and Coordination Division, said the country’s carbon tax and carbon-credit trading measures should be included in the Climate Change Act, including action plans for reducing CO2 gas emissions in the energy, transport and industrial sectors.
This will help Thailand prepare for an upcoming climate-change forum, she said, referring to the 28th Conference of the Parties to the UN Framework Convention on Climate Change in November in Dubai.
The Climate Change Management and Coordination Division is a unit of the Office of Natural Resources and Environment Policy and Planning. The office is expediting a study on carbon capture and storage technology, while trading of carbon credits involving electric buses with Switzerland is underway.
The newly formed Department of Climate Change and Environment is expected to play a significant role in Thailand’s efforts to reduce CO2 emissions.