SRPP Publication l 21 March 2022
In 2002, Thailand has joined the Kyoto Protocol Convention, a United National Framework Convention on Climate Change, where state members were invited to partake in limiting and reducing their own greenhouse gas ("GHG”) emission. The Protocol has initiated the Clean Development Mechanism ("CDM"), establishing two types of carbon market: compliance carbon market and voluntary carbon market. Compliance carbon markets require states under Annex B of the Protocol to comply with the carbon reduction schemes, whereas voluntary carbon market is bound to states under Non-Annex I which enables private sectors to invest voluntarily. Since Thailand is considered as a state under Non-Annex I, Thailand will participate in reducing greenhouse gases through the voluntary carbon market.
Furthermore, Thailand is a member state of Intergovernmental Panel on Climate Change (“IPCC”), an organization that provides government from each member states a scientific information for the development of any policies, conventions, treaties, or agreements. The scientific assessments include the current impacts from climate changes, the projections on environmental impacts which may occur in the future, and scientific recommendations, response, and implication which should be taking into consideration. These reports will help state members to negotiate on how to solve carbon emission issues and climate change, including on carbon credit trading. Therefore, if there are any implications showing that Thailand or its neighboring countries cause a considerable impact to climate change, other state members may put more pressure against Thailand to tackle climate change.
Back on 13November 2021, the 26th UN Climate Change Conference of Parties (“COP26”) has tackled an issue on carbon credit market: double counting. As there are no definite terms or criteria set out for any states to regulate on how to offset the carbon emission, there is possibility that the project might overstate the benefits and falsify its carbon emission reduction. For example, the carbon credit may be claimed by private entities for CSR purposes, and the state might claim the same carbon credit for the emission reduction to comply with Paris Agreement. Accordingly, during COP26, the latest draft of Article 6 of the Paris Agreement was introduced to prohibit double counting of emission reduction, and the new UN standard will be used to certify and verify carbon credits to comply with the latest draft.
Although Thailand did provide support in Paris Agreement amendment, Thailand is still far behind in the progress in reducing GHG emission. Despite its promise to reduce its GHG emission by 20% compared to the business-as-usual trajectory by 2030, Thailand was absent in signing the agreement to end deforestation, the agreement to cut methane emission by 30%, and the agreement to end coal use before 2030. It seems to appear that Thailand’s contribution to COP26 was rather a PR than to show its dedication and concern toward tackling climate change. It is to be seen whether the government will draft more regulations or provide new initiation to reduce the level of GHG according to what they have promised in COP26.
There is, however, slight progress Thailand is trying to reduce the GHG emission. Even though the state still heavily relies upon fossil fuels to generate electricity to supply the whole nation, there is an increasing movement in both private and public entities to conduct clean and renewable energy. As clean energy has become more profitable and competitive in energy industry, Thai private entities start to invest and conduct clean energy related business. The government also implement regulations to encourage environmental business industry. For instance, the Security Exchange Commission in Thailand has drafted a regulation for SMEs with environmental business to issue “Green Bonds” to investors without any license required. Issuing green bonds can be an alternative solution in finding suitable investors for financial support for SMEs as investment channels for SMEs groups can be limited. Consequently, with more contributions in reducing GHG emission from private entities and the government’s statement to the COP26 on the state’s contribution, Thailand’s action to reduce GHG emission is still in progress as a contribution under the Paris Agreement.
Establishment of Thailand Greenhouse Gas Management Organization (Public Organization) ("TGO")
TGO is established as a public organization and the designated national authority of Thailand by the government in 2007 under the Royal Decrees on the Establishment of Thailand Greenhouse Gas Management Organization (Public Organization) B.E. 2550. It has the authority to manage and expedite development and implementation of GHG emission reduction projects and to support public, private, and international organization partnerships to promote implementation of climate actions. TGO will adopt international standard to achieve the following objectives:
to develop and promote GHG emission reduction tools and mechanisms;
to certify the quantity of GHG emission and track GHG emission reduction in support of national policies;
to develop carbon business, carbon pricing instruments, and carbon market to support GHG emission reduction;
to be a center of GHG information and knowledge management and provide technical advices;
to build capacity, knowledge, awareness, and participation in climate action; and
to promote and support implementation relating to climate change.
TGO has established Thailand Voluntary Emission Reduction Program (“T-VER”), a program that promote and support projects which voluntarily participate in GHG emission reduction and sell or exchange the carbon credit in Thailand’s carbon credit market. T-VER projects can sell carbon credits certified by TGO directly to buyers. In addition, TGO have the authority to register the projects under CDM or Joint Crediting Mechanism (“JCM"), a joint contribution with Japan to provide carbon credit to buyers in Thailand and Japan, for certification which allows carbon credits to be sold in international markets.
T-VER Registration Criteria
According to TGO’s procedures and criteria for T-VER registration of 2020, TGO only permits Thai registered companies to be certified as T-VER project. Additionally, TGO only recognizes companies conducting the project relating to (i) energy efficiency improvement, (ii) alternative energy, (iii) waste management, (iv) transportation management, (v) forestation and greenspace, (vi) agriculture, or any other projects approved by the Board of Directors of TGO where the applicants must provide an academic support as proof to apply for T-VER. The applicant must also comply with the following criteria in order to be qualified for T-VER certification:
business activity within the project must be in accordance with the regulations or related regulations and must be in accordance with the guideline of T-VER standards;
business activity must be clearly proven to be related with the project without any positive list or additionality provided as prescribed by the Board of Directors of TGO;
the project must be in accordance with the T-VER Methodology prescribed by the Board of Directors of TGO;
the ability of the projects to reduce carbon or GHG must be in accordance with T-VER Methodology;
the project must receive validation from the independent evaluator for T-VER appointed by the board; and
the project must adopt the monitoring and reporting method as prescribed by T-VER.
The next article will explain the registration process for T-VER, CDM, and JCM to acquire certification for the trades in carbon credit market both locally and internationally. Each certification has different benefits, process, and conditions for each type of project that is certified to sell carbon credits. Once the registered projects are permitted to sell carbon credits, the article will explain how the carbon credit will be certified and how to calculate the amount of reduced carbon emission against the reduced GHG emission. Not only does TGO offer Thai company to sell carbon credit voluntarily for the purpose of CSR, but TGO also offers Thai company to sell in the international market to fulfill the demand in the compliance carbon credit market.
Author: Panuwat Chalongkuamdee (Founding Partner) and Patchara Hotriem (Associate)