Taking Charge on Climate
Thailand took a bold step forward at the UN Climate Change conference (COP 26) in Glasgow, Scotland in November 2021, with Prime Minister Prayut Chan-o-cha declaring the country’s aim to reach carbon neutrality by 2050 and net zero greenhouse gas emissions by or before 2065, together with accelerated greenhouse gas (GHG) mitigation targets joining with other states to keep the global temperature rise below 1.5 degrees Celsius. As one of the largest commitments Thailand has made to the UN, the prime minister signaled the government’s seriousness on climate action – and that the country will do its part to reduce the use of fossil fuels as part of the global effort.
A Significant Transformation
The government’s climate focus, together with the specific ambitions announced at COP 26, will have positive effects for Thailand and impact important sectors, reorienting industries towards carbon neutrality while contributing to innovations, growth and achievements on sustainability. Many companies have already taken action, announcing their own net zero goals and sustainability objectives helping further support the country’s climate objectives. Notably, Energy Absolute (EA), the largest renewable energy company in Thailand, is operating its largest wind power farm in Chaiyaphum Province, a 260-megawatt project consisting of five wind power units in two of the province’s districts. In addition to solar projects, EA is moving aggressively into energy storage, charging stations for electric vehicles (EVs).
The government has taken the lead having specifically pledged to increase the share of renewable energy to 30% of total final energy consumption by 2037. Solar, wind and biomass are playing a more prominent role in the country’s industrial sector as the government reorients policies to focus and support renewables. In November last year, the world’s largest hydro-floating solar farm at Sirindhorn reservoir, went live in the country’s northeast province of Ubon Ratchatani, equivalent in size to 70 football fields. A total of 145,000 solar panels harness solar power during the day, with three turbines converting energy from flowing water at night. Seagate Technology (Thailand), meanwhile, signed a renewable energy certificate sale and purchase agreement – at the highest value – with EGAT, giving an important boost to renewable energy use as well as the government’s efforts to reduce GHG emissions and transition to carbon neutrality.
Benefiting from a BCG Economy
While such large projects provide substantial clean energy contributions, further changes in-store will also have positive impacts on the economy and society, including the push to make Thailand a regional leader in EV production as the government is targeting 30% EV production by 2030, with all vehicles sold domestically to be zero-emission by 2035. As part of the newly launched EV3 incentives, the Thai cabinet approved subsidies from 70,000-150,000 baht, depending on the type and model of EV (including electric pick-ups), with electric motorcycles eligible for a cash subsidy of 18,000 baht. This will support the national strategy to reduce air pollution, while the BOI is helping further drive the focus on EVs through updated incentives for investors. Thailand’s BCG economy, an integrative framework promoting sustainable economic development, will be instrumental in supporting the government’s COP 26 announcement, the SDGs, and the push to address climate change. The BOI is focused on promoting environmentally friendly BCG activities, a trend that is accelerating in recent years representing almost 15.2 billion baht in the January to December period in 2021. The shift to EVs is a natural progression given Thailand’s strong presence in the automotive sector. However, the country is continuing to play to its strengths harnessing its abundance in bio-based materials which can further strengthen its position as an agricultural leader, as roughly 40 billion tons of biomass remain unused. An important example that makes the case for BCG is the upcoming Bio Base Asia Pilot Plant, a collaboration involving the NSTDA and Bio Base Europe Pilot Plant, and a first for ASEAN. This multi-purpose biorefinery pilot plant, set to begin operations in 2024, will develop and scale-up sustainable bio-based products and processes and address the gap in under-utilised biomass by using biorefinery technology that enables the conversion of biomass to energy, chemicals and biomaterials, significantly raising the value of these crops and their by-products.
A Future-Friendly Approach
BCG involves not just projects or investments but shifting the carbon neutral paradigm and getting the public’s support, so they understand the full benefits. Whether farmers able to better monetise their agricultural crop waste or consumers purchasing an electric vehicle recognising its environmental value, this fundamental shift is already underway, driven by the government’s pledges made at COP 26 and backed by the BCG economy. The BOI’s investment scheme promoting sustainability and decarbonisation, valid until December 2022, which is separate from existing BCG activities, offers qualified projects an import duty exemption on machinery and a 3-year tax holiday with a CIT exemption ceiling equal to 50% of the relevant investment, covering machinery replacements, upgrades and/or additions that lead to reduced energy consumption, renewable energy use, reduced environmental impacts, and reduced GHGs. The BOI is striving together with the Thailand Greenhouse Gas Management Organisation and the private sector to reduce CO2 emissions. This coordinated approach on the part of the BOI, and the public and private sectors, can strengthen industry supply chains in the country, using more innovative processes to better meet demand in regional and global markets. And with Thailand set to host the upcoming Asia-Pacific Economic Cooperation conference in Bangkok from November 18-19, 2022, the country’s drive to go green sustainably through BCG will take centre stage.
