Carbon tax on businesses in Thailand inevitable, says Treasury chief

Thailand could not avoid collecting carbon tax for long and therefore Thai businesses should make appropriate preparations, the chief of the Treasury Department said on Tuesday.

Ekniti Nitithanprapas, director-general of the department, was speaking at a forum titled “Generating a Cleaner Future”, organised by BIG and Krungthep Turakij at the Rosewood Bangkok Hotel on Tuesday.

Speaking on “Carbon Tax: Advantage for Future Growth”, as the initiator of the carbon tax policy when he was director-general of the Excise Department, Ekniti said: “No matter whether it happens sooner or later, carbon tax is inevitable for Thailand.”

He explained that Thailand has ratified a pact to reduce carbon emissions by 30-40% by 2030 and to achieve carbon neutrality in 2065, and therefore carbon tax would be a tool to achieve the goals.

Ekniti said the Carbon Border Adjustment Mechanism (CBAM) being enforced by the European Union would also be a precursor to carbon tax collection in Thailand.

The CBAM is a new policy instrument introduced by the EU to address carbon leakage and ensure a level playing field for European industries. It aims to put a price on carbon embedded in imported goods, similar to the price paid by domestic producers under the EU Emissions Trading System.

The transitional period started in October 2023, requiring importers to report on their imported goods and their embedded greenhouse gas emissions. The definitive phase will start on January 1, 2026.

Ekniti said six key industries of Thailand that export to the EU, namely steel, aluminium, cement, fertiliser, electric appliances and hydrogen, now have to submit reports on greenhouse gas emissions.

He said the CBAM measure would definitely affect Thai exporters.
The carbon tax policy would allow business operators to deduct the cost of purchasing CBAM certificates from the carbon tax they have to pay.

Moreover, the carbon tax must be implemented based on a clear law to be enacted, Ekniiti added.

He said the government is seeking cooperation from business operators to reduce carbon emissions on a voluntary basis. From now on, he said, the Excise Department should convert oil excise into carbon tax to allow the country to achieve its goal of 30-40% carbon emission reduction by 2030.

Ekniti said the carbon tax calculation may be modelled after the tax collected in Japan. The tax may be collected at 200 baht per tonne of carbon emission based on the calculation that one litre of diesel could emit 0.0027 unit – around 0.55 baht of carbon tax per litre of diesel use.

Speaking at the same forum on “Energy Strategy to Net Zero”, Wattanapong Kurovat, director-general of the Energy Policy and Planning Office, said the office would play a role in transitioning Thailand towards the use of clean energy with the goal of achieving carbon neutrality.

The current use of renewable energy was just 10% of total energy consumption. The office aimed to raise the ratio to 40-50% and to reduce the use of natural gas from the current 58%.

Reduction in the use of natural gas is stated in the national energy master plan for 2024-2037, he added.

The chief strategy officer at Thailand Post, Waraporn Kongkiewphan, spoke at the forum on “Growth Opportunity in Climate Change”.
He said Thailand Post has tried to reduce carbon emissions in its logistics business by using 250 electric vehicles for delivering parcels.

Thailand Post has also reduced the overlapping areas of its couriers. And the use of EVs and rerouting strategy for couriers had allowed it to reduce fuel cost by 33%, Waraporn said.

Saroj Ruangsakulraj, energy management system senior manager at Delta Electronics, told the seminar that his company’s nine factories emitted about 150,000 tonnes of carbon dioxide each year.

As a result, he said, Delta Electronics was in the process of setting up solar panels to use green energy and reduce carbon emissions. The firm planned to transition to 100 per cent green energy soon, he added.

Dr Pisut Painmanakul, lecturer at the Department of Environmental Engineering at Chulalongkorn University, spoke on “Low Carbon and Resilient Business towards Thailand Sustainability” at the forum.

Pisut said cooperation between the business sector and consumers was important to achieve the low carbon goal with sustainability.

“The business sector plays a key role in the push for sustainability through low emissions because 80% of GDP is generated by businesses,” Pisut said.

“So, if the government wants to push for low carbon emissions, it must start with the businesses.”