The Thai government has agreed to formally implement a carbon tax from 2025
The Thai government has agreed to formally implement a carbon tax in 2025 to combat climate change, connect with the European Union's Carbon Border Adjustment Mechanism (CBAM) and promote the country's low-carbon transition. The Thai cabinet has agreed to impose a carbon tax of 200 baht per tonne on carbon emissions as a measure to reduce greenhouse gas emissions. The tax would be included in existing fuel taxes and would not affect oil prices or retail prices. Thailand's carbon tax is expected to cover the energy, transport and industrial sectors, with the goal of reducing emissions by 30 percent. The tax office will apply international standards to implement taxation and levy taxes at the source of emissions.
(1) Subsidies and tax incentives
At present, the Thai government provides a number of financial incentives for photovoltaic projects, such as photovoltaic projects can enjoy up to 25 years of FIT subsidies (2.16 baht/degree), and light storage projects are more subsidized (2.83 baht/degree). These policies not only reduce the upfront cost of investors, but also provide strong support for the long-term development of the photovoltaic industry.
(2) Green certificate mechanism
Thailand has introduced a Renewable Energy Certificate (REC) mechanism where companies can meet carbon reduction targets by purchasing green certificates. This mechanism will both help drive clean energy market demand and provide investors with additional revenue channels.