Thailand To Become Second In Southeast Asia To Tax Carbon Emissions

Its carbon tax, expected to be introduced by next year, is not likely to make a dent on domestic or regional emissions initially. But it sends an important signal to energy producers and the private sector that reducing their carbon footprint is a government priority, they say. The kingdom's experience, together with Singapore's, could help get more of their neighbours on board and take carbon pricing to a scale that would move the needle on the region's emissions, according to an expert.

For countries that are still heavily reliant on fossil fuels – 85 per cent of Thailand's energy mix is oil, natural gas or coal – introducing a carbon tax is a "no brainer", said Dr Vinod Thomas, a visiting senior fellow at ISEAS-Yusof Ishak Institute and the former director general of the Asian Development Bank.
"The air is free, and so people pollute. And when the pollution is carbon dioxide, the air warms up, causes floods and storms of extreme proportions and then heatwaves and fires, which are already wreaking havoc in Southeast Asia. So, in that context, the question would be, why don't we then price the air?" he saSingapore rolled out a carbon tax in 2019 that covers about 80 per cent of its emissions. The tax was S$5 (US$3.70) per tonne of carbon-dioxide-equivalent (tCO2e) for the first five years and increased to S$25/tCO2e this year. It could reach S$50 to S$80 per tonne by 2030.
Thailand will follow suit, with the government announcing in June it would levy 200 baht (US$5.60) per tonne of CO2e on oil products such as diesel and gasoline.
Existing taxes on oil products will be converted to a carbon tax, meaning no additional revenue will be collected and thus, no costs should be passed onto consumers. It also means no new laws need to be passed.

"At those rates, you don't see any effect, really. People would rather pay that and not cut carbon. And just to be clear, the objective is not to raise money. Your objective is to cut emissions," Dr Thomas said.

"But one cannot ignore the importance of even a US$5 tax, because it's a signalling," he said, comparing it to Singapore's five-cent levy on plastic bags at supermarkets aimed at cutting the use of disposables.

CNA