Energy Minister Akanat Promphan has announced stronger government backing for biofuels in a bid to reduce the country's heavy reliance on imported oil, which currently makes up 90% of total consumption.
Only 10% of oil used domestically comes from local sources.
Mr Akanat highlighted biodiesel B20 -- a blend of diesel and 20% palm oil-derived methyl ester -- and gasohol E20, which mixes gasoline with 20% ethanol from sugarcane and cassava, as the fuels set to become primary choices for motorists.
At present, most drivers still opt for gasohol E10 and biodiesel B7, which contain lower levels of biofuel.
Thailand has sold gasohol E10, E20, and biodiesel blends since 2007, but biodiesel B20 only entered the market last month.
The move comes as the ongoing US-Israeli conflict with Iran has disrupted global energy supplies, prompting policymakers to accelerate biofuel adoption.
Subsidies from the Oil Fuel Fund are being used to lower retail prices of E20 and B20, making them more attractive to consumers.
Discussions are underway with automakers, agricultural producers and energy authorities to establish E20 and B20 as the country's main fuels in the long term, Mr Akanat said.
However, challenges remain. Ethanol and methyl ester have historically been more expensive than fossil fuels, requiring government subsidies.
Wattanapong Kurovat, director-general of the Energy Policy and Planning Office, noted that the Oil Fuel Fund law may need amendments to extend subsidy programmes beyond September.
Palm oil stock management is also under review, as cooking oil demand has often outpaced energy sector needs.
Seksan Phrommanich, vice-chairman of the Renewable Energy Industry Club under the Federation of Thai Industries, revealed that Thailand's 28 ethanol plants can produce up to 7 million litres daily, with 3.3 million litres currently used for gasohol.
Despite assurances from car manufacturers that engines built since 2008 are compatible with E20, motorists remain hesitant.
Mr Seksan said that many believe E20 reduces performance and accelerates engine wear, while its lower price has led to perceptions of inferior quality.
As a result, E10 and gasoline still dominate 83% of the market, with E20 accounting for 16% and E85 just 1%.
