Attempts to reduce carbon dioxide emissions are not restricted to environmental and technological approaches, as economic instruments are meant to support campaigns against global warming.
New markets have been established to trade carbon credits and promote renewable energy, with the goal to cut greenhouse gas emissions.
The Bangkok Post explores how supply and demand as well as market prices can help build a better climate.
Q: How does carbon credit trading work?
Carbon credit trading is designed to encourage companies to reduce carbon dioxide emissions and sell carbon credits to other companies that are committed to lower emissions, but are unable to reach reduction targets.
The term "carbon credits" refers to the amount of carbon dioxide emissions reduced by environmental projects, including clean energy development. The amount can be sold to other companies to offset carbon dioxide they release into the air.
The trade is made on a platform that serves as a market to facilitate the selling and buying of carbon credits.
One trading platform in Thailand is the Carbon Markets Club, led by Bangchak Corporation Plc (BCP), developed in 2021.
The platform opened with a price for carbon credits of 25 baht a tonne of carbon dioxide equivalent (tCO2e).
During the first day of trade, 2,564 tCO2e were sold, amounting to the planting of 298,140 trees on 1,491 rai of land, according to carbon credit articles compiled by Bangkok Bank.
BCP formed an alliance with 10 firms, including Kasikornbank and Bank of Ayudhya, to set up the Carbon Markets Club.
Eleven firms signed a memorandum of understanding to brace for stricter trade rules in the post-pandemic period when European countries, under the European Green Deal, impose a non-tariff barrier on Thai exports from factories that emit high levels of carbon emissions.
The companies included state-owned Electricity Generating Authority of Thailand, Charoen Pokphand Group, Shell Company of Thailand Ltd, BTS Group Holdings, Tetra Pack and Bangkok Industrial Gas Co.
Chaiwat Kovavisarach, group chief executive and president of BCP, said factories and firms that still emit carbon dioxide may encounter more operating costs in the future because they may need to buy carbon credits or pay taxes on carbon emissions.
Credits can also be used for investment in green industries. Tools such as new taxes can play an important role in speeding up work to curb global warming, said Mr Chaiwat.
The club wants to promote projects aimed at reducing carbon dioxide emissions, including giving financial support to renewable energy development, he said.
According to Bangkok Bank, Thais generated 3.87 tonnes of carbon dioxide on average in 2020. The calculation is based on carbon dioxide emissions in the power, transport and manufacturing sectors, tallying 224 million tonnes in total.
Electricity generation accounted for 40% of the emissions, followed by manufacturing (29%), transport (25%) and other businesses (6%).
Q: What is the status of the carbon credit trade in Thailand?
The prices of local carbon credits increased, but they are still lower than in other countries, especially in the EU.
Last year the carbon credit price in Thailand soared to 107.23 baht per tCO2e, a sharp increase from 21.37 baht in 2018, according to Bangkok Bank.
Though the global price is around US$25 per tCO2e, it varies among countries that run their own carbon credit markets.
The EU is the largest market and the carbon credit price is 2,769 baht per tCO2e.
In Asia, the price in South Korea is six times higher than in Thailand, according to Bangkok Bank based on a World Bank report in April last year.
One factor responsible for the relatively low prices of carbon credits in Thailand is the low number of "high-quality carbon credits" from afforestation and the use of carbon capture, utilisation and storage technology. Carbon credits from these sources are usually expensive.
According to the report, another reason is the reduction of greenhouse gas emissions is not mandatory in Thailand.
Q: Can new carbon trade platform FTIX help boost the market?
FTIX, which debuted in 2022, is expected to help the government better promote the carbon credit market in the country and fight global warming.
The platform was jointly developed by the Federation of Thai Industries (FTI) and Thailand Greenhouse Gas Management Organization.
The platform was designed to be reliable and easy to access for companies of all sizes, said Somphote Ahunai, vice-chairman of the FTI.
He is also the chief executive of Energy Absolute Plc (EA), a renewable energy and electric vehicle (EV) developer and operator.
FTIX helps sellers and buyers shorten the selling and buying time because they can quickly check the supply of carbon credits as well as their demand and prices on a trade board, said Amorn Sapthaweekul, deputy chief executive of EA.
The platform ensures the trade is made at real market prices, driven by demand and supply.
All transactions are recorded digitally, which are traceable to prevent any dishonest practices, he said.
So far, 31 companies, including shopping malls, have joined FTIX, said Mr Amorn.
During the ceremony to launch FTIX last year, Natural Resources and Environment Minister Varawut Silpa-archa urged the state and private sectors to work together to make Thailand a low-carbon society.
He voiced concern over natural disasters occurring in many areas around the globe.
These phenomena alerted people to the impact of climate change caused by global warming, said Mr Varawut.
In 2021, Prime Minister Prayut Chan-o-cha vowed during the 26th UN Climate Change Conference in Glasgow that Thailand would be more aggressive in addressing climate change and strive to reach carbon neutrality, a balance between carbon dioxide emissions and absorption, by 2050, along with a net-zero target, a balance between greenhouse gas emissions and absorption, by 2065.
According to Mr Varawut, Thailand is one of 10 countries that have encountered a serious impact from climate change.
The country is ranked 21st globally for greenhouse gas emissions, generating 0.8% of the world's greenhouse gas emissions.
Environmental officials are working on various measures to help the government reduce greenhouse gas emissions, including the promotion of renewable energy, waste-to-energy power plants and greater use of EVs.
In the agricultural sector, he said rice farming needs to be improved to reduce methane emissions.
Methane emissions are considered a greenhouse gas, said Mr Varawut.
