BANGKOK — Thailand’s Draft Climate Change Bill is expected to be presented to Cabinet by October 2024, after which it will be submitted for parliamentary consideration and approval, in order to come into effect in 2025.
However, there are worries that companies might engage in “greenwashing” rather than making genuine efforts to achieve net zero emissions.
Prachachat Business reported on a lecture given by Wiwat Kositskul, Carbon Advisor at the Clean Energy Foundation for the People. The lecture highlighted Thailand’s progress in the fight against climate change and was delivered during the sixth year of the Energy Transition and Climate Change Management (ETC6) course.
Thailand officially confirmed its participation in the Paris Agreement in October 2011 and has set a target to reduce greenhouse gas emissions by 20 percent by 2030. The country is also aiming for carbon neutrality by 2050 and net zero emissions by 2065.
Less than a month later, incumbent Prime Minister Gen. Prayut Chan-o-cha attended the United Nations Climate Change Conference (COP26), where he announced a more ambitious target. Thailand aims to reduce carbon dioxide emissions by 40 percent by 2030 instead of 20 percent, maintain the goal of carbon neutrality by 2050, and achieve net zero emissions by 2065.
“It is an ambitious and challenging target,” Wiwat commented, noting that Thailand’s updated target surpasses India’s but remains less ambitious than those of China, Indonesia, Saudi Arabia, and Russia.
Private companies operating in countries with former Net Zero targets will face pressure to adapt to the stricter targets of their stakeholders.
Greenwashing Concerns Rise
It is already evident that companies listed on the Stock Exchange of Thailand (SET) are taking steps in this direction. Statistics show that nearly 900 companies listed on the SET are increasingly reporting on their carbon footprint.
In 2022, 342 companies reported, and by 2023, the number increased to 445, representing 50 percent. However, only 10 percent of these companies, i.e., around 40-50 companies, have taken all the necessary steps, including engaging an auditor to review their reports.
The low number of cases of full compliance is due to the extensive reporting that covers the entire scope of the financial statements, as well as the high cost of engaging auditors, especially those with reputable names that add credibility to a company’s report.
Looking ahead, many fear that the pressure to reduce greenhouse gas emissions will cause companies to rush to produce carbon footprint reports, especially at the organization (CFO) and product (CFP) levels. Buyers may start to demand environmentally friendly criteria in their purchasing terms and conditions.
Announcing carbon neutrality or net zero targets without adequate preparation or a real understanding of the necessary adjustments can lead to a new problem known as “greenwashing”
This refers to the practice of announcing net zero targets for image purposes without making real efforts to reduce global warming in line with stated targets.
Thailand’s Draft Climate Change Law
Thailand is accelerating mandatory measures to reduce greenhouse gas emissions through legislation. The Ministry of Natural Resources and Environment has recently renamed the Department of Environmental Quality Promotion to the Department of Climate Change and Environment, also known as the “Department of Climate Mitigation”
In 2017, the first draft of the Climate Change Act was introduced, requiring private companies to report their CO2 emissions. This legislation is crucial for Thailand to reduce carbon emissions by 20% by 2030.
“The first step for Thailand is to establish a comprehensive database for greenhouse gas emissions from various sectors,” Wiwat said. Government ministries, private companies, standard buildings and power plants must contribute to building this national emissions database. Despite long debates, the first draft of the bill was not passed.
Due to the increasingly stringent greenhouse gas reduction targets set at COP26 and the shortcomings of the original draft bill, a revised version was introduced. The latest version of the Climate Change Act was published in February 2024.
This version comprises 14 chapters and 40 pages of content. One major difference from the first draft is that the new law no longer limits reporting to power plants and buildings, but obliges “legal entities” to report their greenhouse gas emissions.
Subsequent regulations will specify which legal entities must disclose their greenhouse gas emissions. There are currently almost two million registered legal entities in Thailand, and it remains to be seen how the ministry will classify them — whether by revenue, area or employment criteria.
Steps Toward GHG Emission Rights
Once greenhouse gas emissions have been reported, the government will set “greenhouse gas emission allowances” or appropriate emission levels by 2031. For example, a plastics factory may report a carbon footprint of 120 million tons, but the government may only grant it 100 million tons, which means the factory exceeds its emission rights by 20 million tons.
This means that the factory exceeds the emission rights by 20 million tons. The factory would then have to find ways to reduce the excess emissions by increasing renewable energy (RE) production and improving energy efficiency (EE). Alternatively, if a competing factory emits less than its allocated GHG allowances, it could sell its excess emission allowances to the factory that has exceeded its limits. The law also allows for a third option: a carbon tax, or a fourth option: carbon credits that can be traded as valuable assets.
Carbon credits essentially reward companies that make a positive contribution to climate change efforts by either reducing greenhouse gas emissions or capturing/storing greenhouse gasses. These credits can be sold or traded, with the value and price varying depending on the type of climate protection measures taken.
If factories fail to comply with GHG reporting requirements, penalties are imposed under Chapter 14 of the Act.
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