Carbon Credit Registration Options

SRPP Publication l 1 November 2022

Overview

Thailand has designated the Thailand Greenhouse Gas Management Organization (Public Organization) (“TGO”) as the state’s representative to facilitate project developers who wish to register a project and enter into the domestic or international carbon market. There are several markets in which each market segment only recognizes particular mechanisms in order to fulfill the purpose of both the compliance carbon market and the voluntary carbon market. Each market serves particular purposes for different purchasers and only allows certain mechanisms to be used to access the market. Certain countries’ non-governmental organization’s mechanism may be applicable in different markets depending on whether they meet the market’s methodology criteria. There are voluntary carbon markets, results-based finance markets in which public policy provides financial incentives, domestic compliance markets, and international compliance markets. The TGO has continuously developed mechanisms in order to increase the legitimacy for certifying the offset of greenhouse gas emissions (“GHG”). Currently, project developers can register with TGO in Thailand Voluntary Emission Reduction Program (“T-VER”), Thailand - Japan Joint Crediting Mechanism (“JCM”), or Clean Development Mechanism (“CDM”) under the Kyoto Protocol Convention, a United National Framework Convention on Climate Change (“UNFCCC”). This article will explore the general process, conditions, and requirements for T-VER, JCM, and CDM registration with TGO.

T-VER Project Registration

T-VER is currently recognized in Thailand as the independent or domestic crediting mechanism for the voluntary carbon market in Thailand. T-VER registration is only available to projects which have not started or have been reducing greenhouse gas emission for no longer than 3 years prior to the date which the project developer submitted a complete T-VER registration application, or as otherwise exempted by the TGO. In addition, projects must be of a type specified by TGO to be eligible for T-VER registration. Currently, TGO permits projects in the alternative energy, energy efficiency improvement, waste management, transportation management, forestry and green space, and agriculture industries.

To register a project under T-VER, interested project developers must comply with the terms and criteria prescribed by the TGO. Regarding the required registration documents, project developers are required to submit (i) a project proposal which must be assessed by an independent inspector, (ii) a validation report by TGO’s certified validator on whether such project has achieved the methodology as proposed by the project developer, and (iii) a calculation report on how much the project reduces GHG emissions. In addition, because the project construction involves environmental concerns, the project developers must submit a report as required by the applicable environmental laws prior to the construction permit being issued. For example, the Enhancement and Conservation of National Environmental Quality Act B.E 2535 (1992) and related laws prescribes the types of businesses required to submit an Environmental Impact Assessment Report, Environmental and Health Impact Assessment Report, or Initial Environmental Examination in order to receive permission prior to commencing construction. TGO estimates that the registration process for T-VER will take 120 days, including submission, verification, consideration, and certificate issuance.

After successfully registering the project with T-VER, the project developer may begin trading its carbon credits in TGO’s market platform. Different types of projects have different initial crediting periods, for example, energy promotion projects have a 7-year crediting period. Projects have a right to renew its crediting period for another cycle. The duration of the renewed crediting period varies according to the type of projects, for example, TGO only permits renewal crediting period for up to 7 years for transportation management projects. If the project is an agricultural, afforestation or reforestation project, TGO permits an unlimited renewal crediting period. Note that the project developer may re-register for T-VER again even if the project has already exhausted its crediting period renewal right. TGO charges THB 3,000 for T-VER registration, excluding agricultural, afforestation, and reforestation projects, which are exempt from this fee.

JCM Project Registration

JCM has partnered with Thailand to allow Thai projects to be supported or facilitated by Japanese entities or governments in their efforts to reduce greenhouse gas emissions. The Ministry of Environment, Government of Japan has granted a substantial amount of funds in JCM model projects in which other countries seeking carbon credit certification under JCM can participate. As a result, such certification of the projects may offset GHG emissions in Japan or the compliance carbon market states under the Kyoto Protocol. JCM currently approves approximately 17 projects for registration in Thailand.

TGO has the duty to facilitate and support the projects for JCM registration application submission. The Joint Committee, comprised of Thailand's selective members and Japan's selective members will determine JCM registration. In comparison with T-VER, JCM’s requirement focuses more on technical explanation of the project in order to consider whether the methodology’s goals, values, criteria, and outcome of such project satisfy the required JCM methodology under the view of the Joint Committee of JCM. Currently, JCM’s proposed methodology recognizes various scopes which are identical to CDM. In addition to the projects which are applicable to T-VER, chemical industry, construction industry, mining or mineral production, metal productions, and fugitive emissions from fuels or certain types of minerals industry are also applicable to register with JCM. Although the requirements for the documents and details of the projects from both programs appears to be similar, JCM focuses more on the outcome of the project as opposed to the categorical type of the project and how Japan participates or supports the project in Thailand. Once all the required documents are submitted for JCM registration, the Joint Committee will review the application and disclose such information to the public, the certified period of the project, and the appointed validator to assess and provide the report for Joint Committee’s further consideration.

The approved projects may provide their credit offset certification under JCM to Japan, which must comply with the UNFCCC to reduce the GHG emissions below the amount specified in the Paris Agreement, or Thailand for voluntary purposes. JCM does not have a definite period for consideration of the JCM registration for all projects nor definite conditions for all projects. In rendering its decision, the Joint Committee independently assesses each project based on the proposed methodology and the validator’s validation report. However, the processing period of the most recent project will not exceed 6 months from the date of the submission.

CDM Project Registration

If project developers intend to enter into multiple markets without the burden of registering under multiple mechanisms, the TGO facilitates Thai project developers in preparing the necessary documents for submitting their project for registration under CDM. Since CDM was developed by UNFCCC, all state members under the Kyoto Protocol will recognize all CDM projects to certify carbon credit offsets in all market segments. As a result, CDM provides Thai project developers with an opportunity to supply variety of markets to meet the diverse GHG emission-offsetting needs of multinational corporations which are, for example, buyers who operate in the carbon compliance states, buyers seeking financial incentives, or buyers with reputational concerns. Currently, there are 154 total projects in Thailand which have been registered under CDM since 2008.

As TGO is designated as the "Designated National Authority", TGO is considered as an intermediary between the project developers and CDM Executive Board. TGO facilitates project developers in determining whether the project meets the international standards by reviewing the submitted project design, Environment Impact Assessment or Initial Environmental Examination, evaluation reports on the project, etc. The project will be proposed for registration with the CDM Executive Board, once it has been approved by the TGO Committee and the Designated Operational Entity has provided the validation report.

Generally, it takes the TGO registrar more than 20 business days to review each project’s application, depending on whether the project’s developer has submitted the required documents correctly. Subsequently, the TGO Committee will take around 180 business days to consider and review each applicant. However, the CDM Executive Board has discretion over the length of time it takes to decide whether to approve CDM registration for a project, depending on the project's scope and methodology. The minimum processing period of the CDM Executive Board is approximately 60 days. In general, each project has a crediting period of at most 7 years that can be renewed twice, or a crediting period of 10 years that cannot be renewed. For afforestation and reforestation, the UNFCCC allows either a 20-year crediting period that can be renewed twice or a 30-year crediting period that cannot be renewed.

What’s Next

On 4 October 2022, TGO announced that they are in the process of developing a more restrictive mechanism, namely, Premium T-VERs or TCERs, to attract foreign carbon credit markets. Our next article will discuss the purpose of developing the new mechanism and how it may attract other foreign domestic or international markets such as the Carbon Offsetting and Reduction Scheme for International Aviation. Additionally, there are other mechanisms that Thai projects also registered without registering with TGO. The next article will explore the benefits and its mechanism as well.

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Author: Panuwat Chalongkuamdee (Founding Partner), Patchara Hotriem (Associate), and Krisakorn Thongprasert (Associate).

You may view Panuwat's profile here.

You may view Patchara's profile here.

You may view Krisakorn's profile here.