Implementing the OECD Framework for Industry’s Net‑zero Transition in Thailand

4. Financial solutions and enabling conditions for bioplastics

Abstract

Referring to the “Step 4” of the Framework, this chapter explores the financial solutions and enabling conditions to drive investments in bioplastics (option No. 1 and option No. 2). Building on the outcomes of the economic assessments, the financial solutions to be prioritised are further analysed, complemented by a selection of enabling conditions. The analysis of the state of play and implementation gap for each one of these solutions inform the recommendations developed in chapter 6.

Objective and scope of analysis

Referring to the “Step 4” of the Framework implementation, this chapter focuses on the financial solutions and enabling conditions needed to foster investments in bioplastics (option No. 1 and 2). The solutions are classified in two broad categories:

1. Financial solutions, covering the economic, risk mitigation and financing instruments assessed in the previous chapter.

2. Enabling conditions, covering the conditions that create a conducive environment to invest in bioplastics. They include for instance policy instruments, regulatory frameworks, or access to infrastructure.

First, the financial solutions identified in Table 3.4 with a ‘high” or “medium” potential to close the competitiveness gap are further analysed. They constitute the instruments that would need to be prioritised for implementation, given their higher potential to close the gap compared to others. For each one of these solutions, an assessment is conducted on: i) the status in Thailand; and ii) the identification of potential gaps in the coverage and/or implementation for bioplastics and how these could be addressed. The resulting conclusions feed the recommendations developed in chapter 6.

Next, a selection of enabling conditions is analysed, following the same rationale (state of play in Thailand, gaps and solutions). These enabling conditions were identified and discussed through stakeholder consultations all along the Framework implementation and a survey (Annex H). It is important to note that this chapter does not intend to cover all the enabling conditions, but some that can address the most pressing challenges identified for the selected low-carbon options and/or that can have a direct impact on stimulating investments for bioplastics. For example, although considerations on the very upstream segments of the supply chain (such as agriculture for biomass production and effects on social and community aspects) are important, they fall outside the scope of the Framework.

As mentioned in chapter 2, the solutions identified to support bioplastics need to be aligned with policies aiming to curb plastic pollution. Thailand’s policy choices for reducing plastic pollution may drive the design of some of the solutions highlighted in this report. For instance, the extent to which a plastic pollution fee or a ban on SUP can support bioplastics deployment would depend on the scope of application of these measures (which types of plastics are subject to these measures, which are exempted). Likewise, the scope of application of policies to stimulate demand for bioplastics (i.e. whether they cover both options No. 1 and 2) may be also driven by plastic pollution policies considerations.

Table 4.1 displays the financial solutions and enabling conditions developed in this chapter, based on the barriers they intend to address.

Table 4.1. Overview of the financial solutions and enabling conditions to support the development of bioplastics

Challenge	Type of solution	Solution	Option to which the solution refers
Competitiveness	Financial solutions (economic instrument)	Excise tax exemption for bioethanol	Option No. 1
Competitiveness	Financial solutions (economic instrument)	Import duties exemption for bioethanol	Option No. 1
Competitiveness	Financial solutions (economic instrument)	Subsidies for bioethanol (Oil Fuel Fund Act)	Option No. 1
Competitiveness	Financial solutions (economic instrument)	Green premium	Identified for option No. 2, but linked to demand side solutions applicable to options No. 1 and 2
Competitiveness	Financial solutions (economic instrument)	Plastic pollution fee	Identified for option n°2, but the conclusions could equally be applied to option No. 1.
Competitiveness	Financial solutions (economic instrument)	Carbon price	Identified for option No. 2, but the conclusions could equally be applied to option No. 1.
High upfront investment coupled with high cost of capital	Financial solutions (financing instruments)	Concessional loans1 (domestic and international financial assistance)	Identified for option No. 2 but the conclusions could equally be applied to option No. 1.
Restrictions on bioethanol use for industrial purposes	Enabling conditions	Lifting regulatory restrictions on alcohol production and sales	Option No. 1
Shortfall in bioethanol supply volumes	Enabling conditions	Long-term vision / national plans for bioethanol production (AEDP and Oil Plan)	Option No. 1
Lack of demand / lead markets for bioplastics	Enabling conditions	Deduction on taxable incomes	Options No. 1 & 2
Lack of demand / lead markets for bioplastics	Enabling conditions	Green Public Procurement	Options No. 1 & 2
Lack of demand / lead markets for bioplastics	Enabling conditions	Labelling schemes	Options No. 1 & 2
Lack of demand / lead markets for bioplastics	Enabling conditions	Mandates on bio-based content	Options No. 1 & 2
Lack of demand / lead markets for bioplastics	Enabling conditions	Ban on SUP	Options No. 1 & 2
Lack of strategic signalling	Enabling conditions	Domestic targets for bioplastics	Options No. 1 & 2
High upfront investment coupled with high cost of capital	Enabling conditions	Taxonomy	Options No. 1 & 2
Lack of suitable infrastructure for end-of life management	Enabling conditions	Mechanisms and infrastructure for composting	Option No. 2

Financial solutions to be prioritised for option No. 1

Excise tax exemption for bioethanol

As evidenced in chapter 3, bio-ethylene competitiveness is hindered by the current excise tax on ethanol. Bioethanol produced domestically is subject to an excise tax of THB 6 /L under the Ministerial Regulation Prescribing the Excise Tax Tariff (No. 2), B.E. 2560 (2017) and its relevant notifications (The Excise Department, 2017[1]; The Excise Department, 2018[2]; The Excise Department, 2019[3]).

Following the Resolution of the BCG Model Development Committee, the Excise Department (Ministry of Finance) has taken efforts to set a zero-tax rate for ethanol use in bioplastic production and to amend regulations restricting liquor production to lift barriers for pure ethanol sales to industries within the country (The Secretariat of the Cabinet, 2023[4]; NSTDA, 2022[5]). However, as of 2025, the excise tax on bioethanol has not been lifted.

Under the current regulations, the bioethanol manufacturers could be exempted from the excise tax only if they produce themselves bio-ethylene from the bioethanol. Under this approach, the products are no longer subjected to the excise tax since bio-ethylene is not considered as an alcohol product when being sold to the bioplastic manufacturer. However, this would require considering a vertical integration of the industrial value chain (covering the manufacturing of both bioethanol and bio-ethylene), which is not the model envisioned for the on-going bio-ethylene project in Thailand.

The Excise Department would thus need to issue an amendment of the notification on “Criteria, procedures and conditions for applying for zero-tax rate privileges for triple-distilled spirits (Sura Sam Thap) used in industry” to allow a zero-tax rate for ethanol use in the bioplastic industry. Such exemptions have been granted to the use of ethanol in medicine, pharmacy, science and other selected industries. They could therefore be equally considered for the bioplastic industry.

Another implementation approach being raised by stakeholders could be to establish a “free trade zone”, where the excise tax would be waived for the bioethanol and/or bioplastic industry located in the designated area(s).

Import duties exemption for bioethanol

Import duties on ethanol further widen the competitiveness gap for bio-ethylene production. Imported ethanol (which includes bioethanol) is subject to a custom duty of THB 80 /L under the Customs Tariff Decree (No.7) B.E. 2564 (2021) (The Custom Department, 2021[6]). The BOI offers customs duty exemptions specifically for the imports of machinery and raw or essential materials used in manufacturing export products for one year. However, these exemptions have limited applications for bio-polyethylene producers in practice: to be eligible for this exemption of customs duties, they would need to produce bio‑polyethylene solely for the purpose of exports and would only be eligible for the exemption for one year. Bio-polyethylene manufacturers would need to get approval from BOI every subsequent year to maintain the exemption.

The Customs Department (Ministry of Finance) would thus need to amend the Customs Tariff Decree (No.7) B.E. 2564 to provide a custom duty exemption for imported bioethanol used in the bioplastic industry. This conclusion is aligned with the Resolution of the BCG Model Development Committee and the resulting MOF strategy to promote ethanol utilisation for bioplastic production (NSTDA, 2022[5]; The Secretariat of the Cabinet, 2023[4]). This amendment would be an effective solution for eliminating this import barrier that can widen the competitiveness gap for bio-ethylene. Additionally, to prevent the misuse of this imported ethanol for alcoholic beverages production, industry would have to declare that the sole intention is the use for industrial purposes, specifically to produce bioplastics.

Exemption of a custom duty requires however additional consideration due to competition with domestic bioethanol. Attention should be paid to ensure that such exemption would be compatible with the strategy envisioned for the domestic bioethanol industry (for example, under the AEDP), as the use of domestic bioethanol could be a preferred option.

Subsidies on bioethanol (Oil Fuel Fund Act)

The Oil Fuel Fund Act., B.E. 2562 (2019) establishes a framework for managing Thailand’s Oil Fuel Fund to stabilise domestic oil and gas prices, support energy policies and enhance energy security (Oil Fuel Fund Office [OFFO], 2019[7]). The Fund also promotes alternative energy, funds energy conservation and supports government initiatives. Domestic fuel producers and fuel importers are eligible to receive a subsidy disbursed from the Oil Fuel Fund (Tilleke & Gibbins, 2020[8]). Compensation payments for biofuels are addressed in Section 55 of this Act and the use of bioethanol in biofuels in the energy and transportation sector is supported under this Act (EPPO, 2025[9]). However, starting from December 2023 until the present, the compensation has been reduced to zero due to financial difficulties of the Oil Fuel Fund. Given that subsidies for biofuels are set to end in 2026, with no indication of extension, there is a possibility that future subsidies will not be provided, further reinforced by the direction of the newly AEDP previously discussed.

Subsidies for domestically produced bioethanol provided under the Oil Fuel Fund Act., B.E. 2562 could be reconsidered for extension, instead of termination. They could be considered beyond transportation application, to cover the use of bioethanol for industrial applications. Additionally, if revenues from the Oil Fuel Fund are insufficient, alternative funding sources could be considered, such as revenues generated by the Climate Change Fund under the Climate Change Act.

Financial solutions to be prioritised for option No. 2

Green premium

As previously noted, there is currently limited market demand in Thailand (as well as at the global level) for low-emission products and a low willingness to pay a green premium. For option No. 2, addressing this challenge requires a focus on stimulating demand for bioplastics. A range of tools, such as green public procurement regulatory mandates and labelling schemes are examined in greater detail as enabling conditions below. While specifically highlighted for option No. 2, this challenge and related solutions also apply for option No. 1.

Plastic pollution fee

A plastic pollution fee (or tax) would be a key instrument to reduce the competitiveness gap for option No. 2, but only if bio-based and biodegradable plastics are exempted from the fee. The concept of a plastic pollution fee could be developed at the national level to support the reduction of plastic pollution (SWITCH-Asia, 2024[10]). To help address plastic pollution, some countries and regions (such as the UK or the EU) are indeed introducing taxes or fees on non-recycled plastics.

It should be noted that plastic pollution fees are designed to put a price on plastic pollution and finance the necessary costs of preventing or managing plastic waste but not focus on addressing the GHG emissions. For this reason, this instrument could benefit option No. 2 while posing a challenge on option No. 1 due to its non-degradability nature of the bio-based polyethylene. This is a clear example where policies to reduce plastic pollution and those to reduce GHG emissions from plastics are intertwined, as highlighted in chapter 2.

Carbon price

As of 2024, there is a strong commitment to initiate an ETS under the Climate Change Act. Under the draft Act published in November 2024, this scheme will be a cap-and-trade system to be mandated by the National Committee on Climate Change (NCCC) (Office of the Council of State, 2024[11]). The NCCC will establish a national allocation plan for emission trading, specifying the total allowances, timeframe, criteria and procedures for trading by different sectors.

With the implementation of ETS in parallel to the carbon tax, a different scope of consideration will be applied: ETS will be enforced on the manufacturing phase, whereas a carbon tax will be applied on products that are used based on the direct GHG emissions associated with consumption of the fuel (i.e. combustion of a fossil fuel). The revenue generated from ETS will go to the Climate Change Fund to be used directly for climate-related purposes (Office of the Council of State, 2024[12]).

To support the low-carbon options, the ETS would need to be implemented and explicitly include the petrochemical sector among its covered manufacturing industries. In practice, Thailand could consider utilising the existing Voluntary Carbon Market (VCM) platforms for ETS to reduce bureaucracy and accelerate implementation. To ensure transparency and measurable progress in emission reductions, this would need to be supported by an MRV system.

To cope with the challenge of low carbon prices (which would not meaningfully reduce the competitiveness gap), introducing a minimum carbon price could be considered. This mechanism has been developed in other countries, such as the UK, the Netherlands and Denmark, with a carbon price floor ensuring that the domestic carbon price under the EU ETS does not fall below a certain level (World Bank Group, 2023[13]).

Concessional loans

Domestic market

Domestic commercial banks have developed a wide range of financing and de-risking instruments for sustainable projects in Thailand. Examples of financial products (including concessional loans and other products such as Sustainability Linked Bonds or Loans, green bonds) proposed by 13 different banks for such projects are provided in Annex I. It can be noted that these products mostly apply to clean energy, energy efficiency, clean transports, waste management or circular economy related projects. Some examples of concessional loans offered by domestic banks are further outlined below.

Several Thai commercial banks offer green soft loans, including below-market interest rates or grace periods. These loans are eligible for projects related to the low-carbon transition and sustainable activities, such as solar rooftop, energy efficiency, renewable energy, waste management. Kasikorn Bank has developed such products (K-Energy Saving Guarantee Program, Top-Up Loan for Energy Saving), as well as Siam Commercial Bank (SCB) (SME Go Green program, offering over THB 2 billion in credit lines). Bangkok Bank proposes the Bualuang Green Loan for SMEs, which covers biodegradable packaging (Bangkok Bank, n.d.[14]). Relating to bioplastics, a notable transaction is a USD 350 million loan provided by Krungthai Bank PCL in 2024 to NatureWorks for a new PLA manufacturing facility (NatureWorks, 2024[15]).

This well-developed domestic green finance ecosystem could be leveraged to more systematically cover manufacturing sectors such as bioplastics.2 This could be enabled by the Thailand Taxonomy, as detailed later in this chapter.

International financial assistance

In addition, Thailand could tap into international financial assistance to support bioplastic projects. Thailand could leverage existing international funds and programs for which bioplastics projects are eligible to access to concessional finance. These include multilateral programs and funds that target for instance sustainable manufacturing, recycled plastics, or compostable alternatives. For instance, the Global Environment Facility (GEF) has developed a portfolio of programs and funding mechanisms to support sustainable plastics, including bioplastics, through circular economy and pollution reduction strategies. Other relevant channels include the Asian Development Bank (ADB), as well as the World Bank and IFC programs on sustainable manufacturing.

Enabling conditions specific to option No. 1

Lifting regulatory barriers on alcohol production and sales

Regulations on licensing alcohol production hinder the use of bioethanol in industrial applications. The Ministerial Regulation on the Licensing of Alcohol Production, B.E. 2565 (2022) and its relevant notifications permit producers of distilled spirits (including ethanol-based spirits) intended for exports to operate only as companies established under the Thai law (The Excise Department, 2022[16]; The Excise Department, 2023[17]). In addition, the production for domestic sale must be held by a Thai state enterprise. Currently, there is only one such enterprise: the Liquor Distillery Organisation. As a result of these regulations, bioethanol manufacturers in Thailand are not permitted to sell pure bioethanol products in the country: it can only be sold through the Liquor Distillery Organisation (PMUC, 2022[18]). This restriction may limit bioethanol market development in Thailand, thus the use of domestic bioethanol in the bioplastic industry.

Under the current regulations, the bioethanol manufacturers could be exempted from this restriction only if they convert themselves the bioethanol into bio-ethylene. Under this approach, the products are no longer subject to the sale restriction since bio-ethylene is not considered as an alcohol product when being sold to the bioplastic manufacturer (similarly to the excise tax on bioethanol). However, this would require considering a vertical integration of the industrial value chain (covering the manufacturing of both bioethanol and bio-ethylene), which is not the model envisioned for the on-going bio-ethylene project in Thailand.

There is a need to revise the related laws and regulations3 to allow domestically produced bioethanol to be sold and used for the bioplastics industry. This conclusion is aligned with the Resolution of the BCG Model Development Committee and the resulting MOF strategy to promote ethanol utilisation for bioplastic production (NSTDA, 2022[5]; The Secretariat of the Cabinet, 2023[4]). The revised laws and regulations could in addition require companies to provide proof that bioethanol is used for industrial purposes (i.e. for bio-polyethylene production) and no other ones.

Securing bioethanol supply for bioplastic manufacturing

Ensuring availability of bioethanol is a key enabling condition to support the development of option No. 1. In terms of supply, there are currently 28 ethanol manufacturing plants in Thailand with a total capacity of around 6.8 million L/day (DEDE, 2024[19]). Ethanol manufacturing plants use different types of feedstocks, including molasses (11 plants), cassava (10 plants) and hybrid (7 plants). Despite the current production capacity, Thailand’s bioethanol consumption is only about 3.6 million L/day. This consumption volume is mainly directed towards gasohol E10, E20 and E85.

In terms of raw materials, Thailand has plenty of sugarcane, molasses and cassava raw materials to supply the bioethanol industry as mentioned in Annex C. From the current situation, Thailand is assured to have plenty of raw materials, including cassava, sugarcane and molasses, to support bioethanol and biofuel production. When combining local and imported supply, Thailand’s domestic consumption of cassava is approximately 11 Mt/year, of which only 30% is currently used for bioethanol production (Krungsri, 2025[20]). Beyond these relatively important volumes, it is important to ensure that any further increase in biomass use for bioethanol production does not result in adverse impacts. These include competition with food production and both direct and indirect land use changes, which may lead to environmental and social impacts - such as biodiversity loss, water degradation or disruptions to community stability. As noted earlier, while these considerations on the very upstream plastic value chain fall outside the scope of the Framework, they remain important considerations when planning for increasing bioethanol production.

In terms of demand projections, the most recent draft of the AEDP envisions a reduction of bioethanol demand to 1.55 million L/day by 2037, due to the uptake of electric vehicles (DEDE, 2024[21]; Energy News Center, 2024[22]) The Oil Plan 2024 further sets directions for other uses of bioethanol including for Sustainable Aviation Fuels (SAF), bioplastics and other industries (Energy News Center, 2024[23]). Forecasts from the Department of Energy Business conclude that, amid the decreasing demand of bioethanol in the energy sector (down to 1.55 million L/day by 2037), the volume of bioethanol used in SAF, industry and bio-ethylene production, together with the promotion of E20 gasohol as primary grade, will increase the total bioethanol demand in the country and could meet the national production capacity of 6.65 million L/day by 2030.

The Oil Plan and AEDP highlight Thailand’s potential to ensure a reliable supply of bioethanol in response to growing demand across various sectors. The proposed new applications (which include bioplastics) that aim to leverage existing bioethanol production capacity reflect the Government of Thailand’s commitment to sustaining and supporting continuous bioethanol output. However, considering the range of potential applications, a more comprehensive bioethanol strategy would help to: i) prevent negative environmental and social impacts from increased biomass use (such as competition with food production and land use change); ii) avoid supply conflicts between sectors like aviation, bioplastics and road transport. This would ensure that bioethanol supply can meet demand across all sectors and prevent bioethanol market price pressures, which could undermine the bio-ethylene competitiveness.

Enabling conditions common to options No. 1 and No. 2

Deductions on taxable income (“Green Tax Expense”)

Green tax expenses for biodegradable plastics purchases can stimulate demand but have ended in 2024 without new incentives announced. Under the Notification of the Director-General of the Revenue Department on Income Tax No. 425, Royal Decree No.749 and Royal Decree No.702, CIT deduction concession was provided for the purchases of biodegradable plastic products between 2019‑2024 (The Revenue Department, 2022[24]; The Revenue Department, 2022[25]; The Revenue Department, 2022[26]). This incentive allowed corporate expenses incurred from purchasing biodegradable plastic products to be recorded for 125% of the actual costs. This mechanism aimed to motivate existing plastics companies to transition to bioplastics and to aid other businesses in acquiring bioplastic goods from Thai manufacturers.

Through these incentives, this measure has the potential to stimulate demand for bioplastics. However, by targeting specifically biodegradable plastics, it would only cover option No. 2. In addition, these incentives ended in 2024 and no future incentives have been made available.

Pursuing and expanding these incentives would support the consistent adoption of bioplastics and sustain domestic demand in the market. In terms of design, an increase in tax deduction rate (e.g. from 125% to 200%) could further support demand for bioplastics. Moreover, expanding the scope of application to bio-based non-biodegradable plastics (namely covering option No. 1) would better promote bioplastics of all types. If expanded to non-biodegradable plastics, the eligibility requirements should include a mechanism that helps to guarantee proper waste management of the product (e.g. recovery, recycling, EPR). This would ensure consistency with policies to tackle plastic pollution.

Box 4.1. OECD has been supporting policy development of EPR for several decades

EPR is a policy approach that makes producers responsible for their products along the entire lifecycle, including at the post-consumer stage. An EPR policy is characterised by the shifting of responsibility (physically and/or economically; fully or partially) upstream to producers; and the provision of incentives to producers to take into account environmental considerations when designing their products (OECD, 2024[27]).

First established in the 1970s, the adoption of EPR policies has grown substantially, in particular over the last two decades. To date, nearly a thousand EPR legislations are now adopted around the world for various product groups. EPR is most commonly used for electronics, packaging, vehicles, and tyres, but countries are also increasingly adopting the EPR approach to other product groups including pharmaceuticals, tobacco product filters, fishing gear, paint or textiles.

EPR has successfully contributed to (i) shifting end-of-life (EoL) management costs of products from the public sector to producers and consumers, (ii) increasing separate collection of waste that can be problematic when mixed into the general waste stream, (iii) increasing material recovery rates and (iv) improving information, data and transparency on the generation and fate of waste streams (Brown, Laubinger and Börkey, 2023[28]). In addition, EPR has the potential to provide producers with incentives for the design of more easily recyclable or re-useable products. However, to create effective product design incentives, careful modulation of EPR fees is needed, something that has only emerged relatively recently (Laubinger et al., 2022[29]).

Some of the challenges in implementing EPR include ensuring full producer participation in the system and cost-effective services by producer responsibility organisations and setting EPR fees that accurately reflect end-of-life costs whilst ideally also incentivising upstream improvements through sustainable product design and reuse. In countries with less developed waste management systems, an additional challenge lies in integrating the informal waste sector into formal EPR schemes.

The OECD has had a central role in the policy discourse around EPR for more than three decades. The OECD Guidance Manual for Governments (OECD, 2001[30]), which was updated in 2016 (OECD, 2016[31]), continues to be a key resource to help governments design and develop effective EPR policies. The manual provides a systematic and practical analysis of EPR policies and offers advice on their design and development. Recent working papers have complemented the Guidance and discussed emerging policy question, such as the inclusion of online marketplaces in EPR systems (Hilton et al., 2019[32]), the more granular modulation of EPR fees to better stimulate eco-design (Laubinger et al., 2021[33]), the interplay of deposit refund systems (DRS) and other EPR approaches (Laubinger et al., 2022[29]), as well as the expansion of the EPR policy approach to new product groups (Brown, Laubinger and Börkey, 2023[28]), including the garment sector (Brown and Börkey, 2024[34]). A policy paper from 2024 provides concise policy guidance on basic facts and key principles (OECD, 2024[27]).

In addition, the OECD is a founding member of the “Global Action Partnership (GAP) for EPR” together with the German Development Agency (GIZ), the World Wide Fund for Nature (WWF), as well as the Ellen MacArthur Foundation and the UNEP as supporting and collaborating partners (EPR, n.d.[35]). The GAP for EPR provides capacity building, holds webinars on key policy topics and supports countries on their EPR journey

Green Public Procurement (GPP)

Thailand is currently implementing its third GPP Promotion Plan, known as the Green Integration Policy, covering the period from 2022 to 2027. GPP implementation is currently voluntary, but policy dialogues are underway to assess the feasibility of transitioning toward mandatory GPP, recognising its potential to drive market demand for green products. GPP in Thailand is operationalised through the ‘Green Cart’ mechanism, which serves as a registry of products and services eligible for government procurement under the GPP policy.

A key requirement is the certification of products under recognised eco-labelling schemes, including the Thai Green Label and the Green Leaf Certification (United Nations Environment Programme, 2017[36]). The Thai Green Label is the country’s only ISO 14024 Type I4 ecolabel. Managed by the Thailand Environment Institute (TEI) in collaboration with the Ministry of Industry, it certifies products that meet stringent environmental standards across their life cycle, including reduced emissions, energy or resource efficiency and minimal use of hazardous substances.

In terms of scope, bio-based biodegradable plastics (option No. 2) are currently eligible to be certified by the Thai Green Label. The TEI provides clear requirements and verification methods for this product type (Thailand Environment Institute, 2021[37]). Bio-polyethylene (option No. 1) is currently not eligible for a certification under the Thai Green Label because bio-polyethylene is not biodegradable. However, Thailand’s GPP broadly covers a variety of eco-labels, which could potentially support option No. 1 in the future.

To support the adoption of both options No. 1 and No. 2, the categories of eco-labels that are eligible for GPP would need to reflect different characteristics of bioplastics: biodegradability, bio-based content, GHG emissions reduction and other potential environmental impacts. With this coverage, multiple aspects of bioplastics would be addressed, and option No. 1 could be covered. Should option No. 1 be eligible, GPP should also include a form of requirement for proper waste management (recovery, recycling, EPR) to align with the objective to tackle plastic pollution.

In terms of implementation, GPP remains limited. Currently, there is no legal requirement for governmental entities to procure green products and services. The existing law for governmental procurement also does not include GPP in its mandates. This results in a low adoption rate throughout the years, further constrained by a lack of an harmonised labelling scheme (see below). In 2022, only 13% of government agencies reported GPP activities, though around 50% of their procurement value was comprised of environmentally preferable products (Global Ecolabelling Network, 2023[38]). Therefore, to effectively support the adoption of options No. 1 and No. 2, policies and regulations for GPP should be further enforced.

International examples of GPP enforcement include the European Union (EU) and Japan. In the EU, GPP is integrated in the Packaging and Packaging Waste Regulation (PPWR - Regulation (EU) 2025/40). It requires minimum mandatory requirements for packaging or packaged products in public contracts, given that the products represent more than 30% of the estimated value of the contract (Official Journal of the European Union, 2025[39]). In Japan, the Japan’s Green Procurement Act mandates the purchase of eco‑friendly goods and services by the national government and other public entities. The law outlines evaluation criteria for specific product categories. It includes criteria such as recycled content, easy waste separation and recycling or reduced environmental impacts such as GHG emissions. The use of bio-based plastics are specifically promoted for some products (Ministry of the Environment [Japan], 2025[40]).

Labelling schemes

Several labelling schemes are currently implemented in Thailand, but in a fragmented way. Labelling schemes provide validation to make bioplastic products and materials eligible under different demand-side measures (such as GPP or bio-based content mandates). In addition, the implementation of labelling schemes helps raise consumer awareness, identify and choose bio-based plastic products. The following three types of labels could be relevant for supporting adoption of bioplastics (options No. 1 and No. 2):

• Bio-based content: This type of label specifies that the product or material contains a certain percentage of the produce is made of bio-based materials. Examples of this type of label include OK biobased (EU), DIN Geprüft Biobased (EU), BiomassPla (Japan) and BioPreferred Program (United States).

• Biodegradability: This type of label specifies that the product or material can degrade through natural processes in the environment. Examples of this type of label include OK compost (EU), Seedling logo (EU), Home Compostable Logo AS 5810 (Australia) and Composter Approved (United States).

• GHG emissions: This type of level specifies GHG emissions performance-related characteristics such as the actual GHG emissions of the product or material, or the amount of GHG emissions that can be reduced when consuming the product or material in comparison to another product or material. Examples of this type of label in Thailand include the Carbon Footprint Reduction Label, Cool Mode Label.

Since 2024, the TBIA and the Thai Industrial Standards Institute (TISI) have been developing a bioplastic labelling system to enhance consumer awareness, promote sustainable materials and improve waste management. However, other eco-labels have been introduced and applied to promote GPP (as explained in previous section). Certified and non-certified labels are also used for marketing purposes of bio-based and/or biodegradable plastics in the market. Examples include:

• ISO 17088: 2021 (or TIS 17088-2562) : Specifications for compostable plastics (TISI, 2020[41]).

• GC Compostable: Compostable material certificate by GC Group (Thai Green Directory, n.d.[42]).

• Self-claimed labels: “Compostable”, “biodegradable” and “made from biomass-based resources”. These labels are self-declared and are used with various symbols voluntarily designed by each manufacturer or distributor.

Moreover, the Carbon Footprint Reduction Label (CFR), a GHG emissions labelling scheme under TGO, could be applied to bioplastics (Carbon Label, n.d.[43]). This label indicates that a product has a certified Carbon Footprint of Product (CFP) and meets emission reduction standards established by TGO. As of 2024, benchmark GHG emission thresholds for plastic products have already been defined using three references: HDPE plastic pellets, LLDPE plastic pellets and PP plastic pellets. Therefore, bioplastic products could be certified under this labelling scheme if the GHG emissions are lower than the specified thresholds.

In conclusion, while Thailand has already introduced labelling schemes that apply to bioplastics, these labels are established independently by different organisations and require separate certification procedures. This fragmentation hinders bioplastic producers from fully benefiting from the labelling schemes and may also lead to consumer confusion. Therefore, the implementation of bioplastic labelling schemes should be streamlined, while ensuring that they align with international standards to support export of bioplastic products.

To support labelling schemes for bioplastics, a single methodology should be developed for calculating the GHG emissions of bio-based (option No. 1) and bio-based biodegradable (option No. 2), supported by a MRV system. This methodology could be submitted to TGO under the Thailand Voluntary Emission Reduction Program (T-VER) program to also support eligibility for carbon credits trading.

Mandates for bio-based content

Bio-based content mandates can accelerate the market adoption and growth of bioplastics through regulatory drivers. Table 4.2 provides examples of bio-based content mandates implemented in other countries. These mandates require the use of bioplastics or a certain percentage of bio-based content in a specific product.

Table 4.2. Examples of mandates for bio-based content in selected countries

Country	Mandates for bio-based content	Key features
France	Decree on Single-Use Plastic Bags (2016)	The decree mandates that the SUP bags must meet specific bio-based content requirements: at least 30% bio-based content in 2017, increasing to 60% by 2025
Japan	Mandatory Plastic Bag Fee: Exempts biodegradable and bio-based alternatives (2020)	Since 2020, Japan requires all retailers to charge a fee for plastic shopping bags, with exemptions for biodegradable bags and those containing at least 25% renewable plant-based materials.
United States	Biopreferred Program (2018)	Managed by the U.S. Department of Agriculture (USDA), the goal of the BioPreferred Program is to increase the purchase and use of bio-based products. The two major parts of the program are: Mandatory purchasing requirements for federal agencies and their contractors A voluntary certification and labeling initiative for bio-based products USDA identifies eligible product categories and specifies the minimum bio-based content required for each category.

Source: Authors, based on). (Légifrance, 2016[44]; European Bioplastics, 2016[45]; European Bioplastics, 2022[46]; Ministry of the Environment [Japan], n.d.[47]; U.S. Department of Agriculture, 2020[48]; Ministry of the Environment [Japan], 2021[49]; Kyodo News, 2020[50]; Department of Agriculture [United States], n.d.[51])

To support the implementation of options No. 1 and No. 2 in Thailand, mandates for bio-based content could be considered. The mandates could include conditions that require bioplastic companies to provide proof (e.g. traceability through label, certification) of the bio-based product, the type of feedstock used and its GHG emissions and should factor in end-of-life management to be qualified as a product eligible under the mandate. To be implemented, such mandates would require setting traceability and verification systems. A mandate could be implemented at a national scale or for certain organisations or company types. Before implementation of the mandate, relevant stakeholders would need to be engaged to determine how the mandate would be best enforced and identify other implications.

Bans on SUPs

SUP bans could support bioplastics, provided they are recognised as sustainable alternatives that are exempted from the bans. Therefore, bans on SUP could either incentivise or disincentivise the development of options No. 1 and No. 2, depending on its scope of application. Similarly to the plastic pollution fee previously discussed, there is an example where policies to reduce plastic pollution and those to reduce GHG emissions from plastics are intertwined, as highlighted in chapter 2.

Thailand has implemented a roadmap and action plans that include a ban to reduce and stop the use of SUPs. The Roadmap on Plastic Waste Management (2018–2030) aims to reduce and stop the use of targeted SUPs; to replace them with environmentally friendly alternatives; and to achieve 100% circularity of plastic waste. This roadmap has already banned oxo-degradable plastics, cap seals and microbeads since 2019. It intended to ban four types of SUPs by 2022 including plastic bags, styrofoam food containers, plastic straws and SUP cups (Pollution Control Department, 2021[52]). However, the plan was compromised during the pandemic period. The Action Plan on Plastic Waste Management (Phase II) (2023-2027) is a continuation from the previous plan. Currently, the only SUP that has been banned by law in Thailand is microbeads in cosmetic products (Ministry of Public Health, 2019[53]).

These plans should be further legally enforced to ensure the effective ban of the targeted SUPs, as implemented for instance in Indonesia and in the Philippines (Annex J). The bans would need to clearly state if bio-based and/or biodegradable plastics are officially recognised as alternatives. If so, SUPs bans would act as an enabling condition for the deployment of option No. 2 and potentially option No. 1.

Setting domestic targets

On the supply side, Thailand could consider setting a long-term target to provide a strategic direction. Such target could be defined by a quantity or a share of bioplastics in the total domestic plastic production for specific bioplastic materials or specific applications (bags, packaging, utensils, containers). This strategic signalling demonstrates government commitment to support bioplastics, bringing confidence to the industry to invest such projects. It is also worth noting that this type of target has been developed in Thailand for instance for CCS, with an objective of 40 Mtpa of CCS capacity by 2050 (chapter 2). Such target could be informed by the roadmap that would cover both plastic pollution and GHG emissions, as outlined in chapter 6.

For bioplastics, one example of domestic target setting can be found in Japan with “Japan’s Roadmap for Bioplastics Introduction”. This roadmap aims to increase the introduction of bio-based plastic products from 50 000 tonnes to 2 million tonnes by 2030. The plan emphasises on increasing domestic production capacity. It identifies suitable bioplastics for various applications, including general-purpose and high‑performance bio-based plastics that do not adversely affect recycling processes (Ministry of the Environment [Japan], n.d.[54]; European Bioplastics, 2022[46]).

Thailand taxonomy

Thailand taxonomy has the potential to help aligning and guiding capital flows towards bioplastics activities. Taxonomy provides a common framework for classifying economic activities that are aligned with climate goals. For instance, Taxonomy can be used i) by financial institutions to design credible green and transition financial products, ii) by public funds to design the financial support to crowding in private investment in low carbon activities and transition away from emission intensive activities, iii) by companies to raise finance to support their low-carbon transition.

The Thailand Taxonomy Board (TTB) launched in 2023 the “Thailand Taxonomy Phase I” as a reference tool of standardised classification of low-carbon activities in the energy and transport sectors (Bank of Thailand, n.d.[55]). The “Taxonomy Phase II” launched in 2024 complements the “Taxonomy Phase I” by including four additional sectors: agriculture, buildings and real estate, manufacturing and waste management (Bank of Thailand, n.d.[55]). Thailand Taxonomy builds on international taxonomies such as the ASEAN Taxonomy, the EU Taxonomy, the Singapore Taxonomy and the Climate Bonds Initiative sectoral criteria to define the activity categories as well as the underlying criteria (ASEAN Taxonomy Board, 2025[56]; Monetary Authority of Singapore, 2023[57]; Climate Bonds, n.d.[58]). It classifies activities based on a “traffic lights system”, including green, amber and red categories:

• Green activities are those considered being compatible with near zero emissions. This category can generally be applied to new facilities meeting the criteria of the Taxonomy.

• Amber activities refer to activities that allow a transition towards net-zero through the compliance of certain conditions or the application of specific measures (e.g. transition plan defined, reduction of emission intensity…). For the manufacturing sector, the amber category has a sunset date of 2040, thus limiting the eligibility of these measures.

• Red activities refer to activities that are not compatible with a net-zero pathway.

Annex K provides the detailed analysis of how these two options are covered in the Taxonomy.

Option No. 1 would fall into the “Hard to abate activities – Manufacturing of basic chemicals – HVC” category. Bio-ethylene produced from bioethanol could be considered as a “green activity” provided that i) the emission intensity of ethylene production (scope 1 and scope 2) meets the threshold set by the Taxonomy, ii) and that the biomass used as a feedstock meets the “green criteria” defined in the Taxonomy for bioenergy (i.e. on the type of biomass and certification). If the carbon intensity threshold is not met, the activity could still be considered as “amber activity”, should the above-mentioned criteria on biomass be fulfilled. It is worth noting that for option No. 1, biomass does not constitute the direct feedstock input for bio-ethylene production (bioethanol is the direct input). Therefore, for option No. 1 to be fully covered by the Taxonomy criteria, it would be needed to explicitly mention the case of “bioethanol as a feedstock”, both for the “green” and “amber” criteria.

Option No. 2 would fall into the “Interim activities – Manufacture of plastics in primary forms” category. These activities can be considered as “green activities” provided that specific requirements relating to the type of biomass, certification and life cycle GHG emissions are met.

Finally, ensuring that the coverage of bioplastics in the Taxonomy is aligned with that of other countries or regions could further attract international finance.

Enabling conditions specific to option No. 2

Mechanisms and infrastructure for facilitating composting biodegradable plastics

Proper end-of-life management of bio-based biodegradable plastics is critical to prevent plastic pollution into the environment and prevent GHG emissions at the end-of-life during material biodegradation. Infrastructure, namely industrial composting facilities and anaerobic digesters, are needed to properly manage biodegradable plastic waste. Such waste management infrastructure and technology prevent emissions of methane (CH₄) from biodegradable plastics along with other organic waste that is currently sent to landfills or open dumps. When sent to a landfill (anaerobic conditions, water but low/no oxygen), PLA could, for instance, have equal or higher life cycle GHG emissions than PET.

In Thailand – as well in other countries – most bioplastics are not separated from general waste and are not being disposed at industrial composting facilities. This is due to several challenges:

• Lack of industrial composting infrastructure: there are very few industrial composting facilities available for treating biodegradable plastics. Bioplastic industry stakeholders in Thailand are strongly supportive of establishing industrial composting facilities across the country.

• Limited to no separation of bioplastic waste: most consumers are not aware about the need to separate biodegradable plastics from general waste.

• Bioplastic labelling: a bioplastic labelling system to support separation of bio-based biodegradable plastics for composting has been developed by TBIA and TISI, but it has not yet been widely implemented.

To enable bioplastic deployment, more industrial composting facilities would need to be established. In addition, there is a need for more public engagement and participation that are essential for facilitating separating and composting biodegradable plastic waste. In promoting bio‑based biodegradable plastics, awareness needs to be raised to informal waste collectors about the different types of bioplastics and how to identify them based on labelling. This knowledge can ensure that bioplastics are correctly sorted, preventing contamination with conventional plastics and are ideally sent for composting.

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[15] NatureWorks (2024), NatureWorks’ Ingeo PLA Manufacturing Expansion Attracts Record Financing from Krungthai Bank PCL of Thailand, https://www.natureworksllc.com/about-natureworks/news/press-releases/2024/2024-05-15-natureworks-krungthai-bank-financing.

[5] NSTDA (2022), Resolution of the BCG Model Development Committee Meeting (October 31, 2022), https://www.bcg.in.th/eng/bcg-policy-board-greenlights-new-measures-to-drive-bcg-agenda/.

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[30] OECD (2001), Extended Producer Responsibility: A Guidance Manual for Governments, OECD Publishing, Paris, https://doi.org/10.1787/9789264189867-en.

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Notes

← 1.  The case for public guarantees is considered less of a priority compared to concessional loans, thus not detailed. Given the maturity of Thailand’s bioplastics sector, guarantees are likely to be used selectively, rather than as a primary choice of financing instrument.

← 2.  While specifically highlighted for option No. 2 (based on the outcomes of the economic assessments), these solutions can be also applied for option No. 1.

← 3.  The Ministerial Regulation on the Licensing of Alcohol Production, B.E. 2560, the Notification of the Excise Department on Criteria, Procedures and Conditions for the Production of Alcohol for Commercial Purposes and the Removal of Alcohol from Industrial Factories for Analysis during the Production Process.

← 4.  Namely certified by a third-party.