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

5. Financial solutions and enabling conditions for CCS

Abstract

Referring to “Step 4” of the Framework, this chapter explores the financial solutions and enabling conditions to drive investments in CCS projects (option No. 3). 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 “Step 4” of the Framework implementation, this chapter focuses on the financial solutions and enabling conditions needed to foster investments in CCS (option No. 3). As for chapter 4, the solutions are classified in two broad categories:

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

• Enabling conditions, covering the conditions that create a conducive environment to invest in CCS projects. 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 CCS 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 CCS. For example, although considerations on the low-carbon transformation of power systems are important, they fall outside the scope of the Framework (see chapter 2).

The analyses and conclusions developed in this chapter can benefit to CCS development in general, well beyond the petrochemical sector. Transport and storage business models, infrastructure or regulatory framework development are challenges pertaining to the CCS value chain in general and not specific to one sector. Therefore, Thailand can consider these outcomes to support its CCS strategy implementation across sectors (e.g. cement, power generation).

Table 5.1 displays the financial solutions and enabling conditions developed in this chapter, based on the barriers they intend to address.

Table 5.1. Overview of the financial solutions and enabling conditions to support the development of CCS

Challenge	Type of solution	Solution
Competitiveness	Financial solutions (economic instrument)	Carbon price
Competitiveness	Financial solutions (economic instrument)	Carbon credits (mechanisms monetising the CO2 avoided)
Competitiveness	Financial solutions (economic instrument)	Carbon contracts for difference (mechanisms monetising the CO2 avoided)
Competitiveness	Financial solutions (economic instrument)	Green premium
High upfront investment coupled with high cost of capital	Financial solutions (financing instruments)	Concessional loans*
High upfront investment coupled with high cost of capital	Enabling conditions	Taxonomy
Lack of demand / lead markets for low-emission plastics	Enabling conditions	Instruments to stimulate demand: Labelling schemes, GPP, deduction on taxable incomes
Lack of CCS infrastructure / hubs operationalisation	Enabling conditions	Transport and storage (T&S) infrastructure and its related business model
Lack of CCS regulatory framework	Enabling conditions	Development of a comprehensive CCS legal and regulatory framework
Limited CO2 geological resources assessment	Enabling conditions	Exploration campaigns for CO2 storage assessment
Lack of streamlined CCS governance	Enabling conditions	Establish a CCS governance

Note: (*) Concessional loan has not been identified among the most impactful instruments to close the competitiveness gap, however the analysis and conclusions developed for bioplastics in chapter 4 equally apply to CCS. These conclusions are thus highlighted for CCS too. In addition, stakeholders raised the point of international financial support to be leveraged for CCS.

Financial solutions to be prioritised for option No. 3

Carbon price

Implementing the ETS system under the Climate Change Act is key to support CCS development. An overview of the current status of carbon pricing in Thailand is provided in chapter 4. To foster CCS projects, the ETS should 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.

Furthermore, CCS would need to be formally recognised as a mitigation measure to ensure that its associated emissions reductions are appropriately valued and accounted (ICSC, 2025[1]). The existing TGO’s CCS methodology could be also leveraged for easing the emission accounting process. 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, 2023[2]).

Carbon credits

Thailand’s Voluntary Carbon Market (VCM) can be leveraged to value CO₂ emissions avoided through CCS. Thailand’s VCM was launched in 2022 by the FTI in collaboration with TGO. Projects developed in Thailand can register for carbon credits through national or recognised international standards. Thailand-specific standards are issued under the Thailand Voluntary Emission Reduction Program (T-VER) while eligible international standards include the Verified Carbon Standard (VCS), Gold Standard, or others. As of 2024, a total of 482 projects have been registered under T-VER standards, which account for approximately 13.6 MtCO₂eq/year (TGO, 2024[3]).

CCS is listed as eligible under the T-VER registration criteria, with a dedicated methodology already developed (TGO, 2023[4]). Carbon credits generated from CCS can thus be traded in Thailand’s market. However, several structural challenges hamper the growth of Thailand’s VCM and thus its contribution to close the competitiveness gap for the selected low-carbon options:

• Lack of incentives: Businesses in Thailand are not currently required to reduce their GHG emissions to meet specific targets unless they voluntarily set their own ambitious goals. Therefore, the demand is mostly driven by corporate social responsibility initiatives or internal policies of the companies. However, the upcoming ETS could incentivise demand for carbon credits since the system would allow up to 15% ETS permit offsets using credits from the voluntary market.

• Low carbon prices: Currently, the average carbon price in Thailand is only USD 2.7 /tCO₂ (Kasikorn Research Center, 2024[5])_.

• Mismatch between demand and supply: There is a relatively low alignment between the willing-to-buy price and the willing-to-sell price, with only 25% of buyers willing to purchase carbon credits at the price offered by sellers (Kasikorn Research Center, 2024[5]).

• Market distortion: Carbon credits currently lack an expiration date, causing market distortions with stockpiling of credits. As of 2024, less than 25% of the credits have been indeed traded in the market (TGO, 2024[6]).

Expiration dates for carbon credits would therefore need to be enforced in Thailand. For example, in Alberta, Canada, the expiry is limited to 5 years for the Emission Performance Credits and 6 years for the emission offsets (Government of Alberta [Canada], 2023[7]). This measure could be effective in preventing the stockpiling of credits.

To strengthen the VCM, the trading of domestic carbon credits in the international market should be promoted through existing mechanisms such as Article 6.2 of the Paris Agreement, including the Joint Crediting Mechanism (JCM) with the Government of Japan. A successful example of Article 6.2 implementation was the sale of government-to-government carbon credits between the Thai company Energy Absolute Public Co. Ltd. and the Swiss-based KliK Foundation in 2024 (S&P Global, 2024[8]). On August 26, 2025, the Thai Cabinet approved the International Carbon Credit Guideline to serve as a framework for authorising the use of carbon credits for international purposes under Article 6 of the Paris Agreement. The guideline, developed by the DCCE, aims to support Thailand’s national GHG emissions reduction and facilitate the international transfer of mitigation outcomes. The first international transfer of JCM credits from Thailand to Japan was completed in accordance with these guidelines in November 2025.

In addition, a carbon floor price in the compliance market would serve as a reference point for the actual price of carbon, which could indirectly stimulate upward carbon price within the VCM.

Carbon contracts for difference (CCfDs)

As carbon markets mature, carbon incentives that reward avoided emissions are essential to bridge the competitiveness gap. The order of magnitude required for carbon price to close the competitiveness gap is significantly higher than current carbon prices in Thailand. This suggests that transitional support measures such as CCfDs, a mechanism supporting OPEX, would be needed until carbon markets matures.

A CCfD guarantees a fixed carbon price (strike price). If the market carbon price falls below the strike price, the CCS project receives the difference as a subsidy. In a two-way contract, if the market price exceeds the strike price, the project pays back the surplus. This mechanism ensures a predictable revenue stream, reducing exposure to carbon price volatility and cross-chain risks.

Under this scheme, CCS projects offer a price and quantity of carbon they can cut and compete for funding (based on price or other parameters). The CCS projects successfully awarded a contract are guaranteed to be paid the difference between the strike price and a reference price for CO₂ emissions (usually the ETS price). Importantly, this implies that the subsidy amount is projected to decrease over time.

CCfDs for CCS projects are currently implemented or envisioned in several countries (Global CCS Institute, 2025[9]; Clean Air Task Force, 2024[10]; Government [UK], n.d.[11]). In the UK, CCfDs for CCS projects are implemented through the Industrial Carbon Capture (ICC) Contract. Under this scheme, eligible projects can receive up to 50% of CAPEX as a grant from the Carbon Capture and Storage Infrastructure Fund, along with OPEX support. The OPEX support is structured as a CCfD, where the project specific strike price reflects the full cost of CO₂ abatement (including transport and storage and a rate of return) and the reference price is based on projected UK ETS carbon prices. Payments are made per tonne of CO₂ captured and stored. Contracts typically last 10 years, with the option for five one-year extensions and include provisions to mitigate cross-chain risks.

In the Netherlands, the Stimulation of sustainable energy production and climate transition (SDE++) subsidy scheme provides subsidies for qualifying clean energy technologies. For CCS projects, the subsidy is granted to the CCS over a 15-year period and is designed to cover the cost difference between production with and without CCS, based on the EU ETS carbon price. Under the SDE++ the project operator is not required to pay the government back should the EU ETS price go above the operator’s production. Germany is also launching a CCfD scheme for industrial decarbonisation projects covering CCS, while France has indicated plans to award CCfD as part of a forthcoming CCUS strategy. Finally, the EU is actively considering allocating a portion of its Innovation Fund for large-scale decarbonisation projects through CCfDs in addition to the existing programme of direct grants.

Thailand could consider developing targeted and time-bound support through CCfDs to support early CCS development. Support to CCS activities could benefit from revenue recycling mechanisms under the Climate Change Fund, as established by the Climate Change Act. This means that a portion of the revenue generated under ETS could provide a funding stream for such carbon incentives.

Green premium

While a green premium can be an impactful instrument, there is currently limited market demand in Thailand for low-emission products and a low willingness to pay for a premium. For option No. 3, addressing this challenge requires a focus on stimulating demand for low-emission plastics. Similarly to bioplastics, a range of tools such as labelling schemes, GPP are examined in greater detail as enabling conditions below.

Concessional loans

Concessional finance has not been identified as priority instruments, thus not developed further in this chapter. However, the conclusions developed on concessional loans for bioplastics in chapter 4 equally apply for CCS projects, hence highlighted hereafter. As of 2024, there has not been any specific financial products provided from Thai domestic commercial banks to support CCS projects. As for bioplastics, the domestic green finance ecosystem could be leveraged to more systematically cover projects beyond clean energy or circular economy, including CCS.

The Thailand Taxonomy offers banks and financial institutions the opportunity to consider CCS projects as eligible for specific green financial products. In that context, stakeholders emphasized the importance of developing capacity building and awareness raising activities for industry and financial institutions. These efforts would support a clearer understanding of how to implement such financial instruments within the context of Thailand Taxonomy, improve the ability to assess investment feasibility and returns, and enhance access to financial support from both public and private sources.

Regarding international financial assistance to support CCS projects, there is no multilateral fund or program dedicated to CCS as of 2025 (Global CCS Institute, 2025[12]). The World Bank CCS Trust Fund was established in 2009 and has allocated over USD 55 million to CCUS programmes in a dozen of countries and regions but has closed in 2024. Likewise, the ADB’s CCS fund was established in 2009 to support storage resource assessments; CCS piloting and demonstration in Southeast Asia and China has closed. Thailand could however tap into funds and programs that focus on the decarbonisation of hard‑to‑abate industries more broadly to support CCS projects, such as the programmes developed by the IFC of the CIF (OECD, 2024[13]). A dedicated international platform on CCUS that could be outlined is the “CCUS initiative” from the CEM (CEM, n.d.[14]). Its objective is to facilitate diffusion of knowledge on technologies, regulations and lead to strategic partnerships to accelerate investment in CCUS. The platform serves to bring government, industry and the financial and investment sectors together, including engaging with MDBs, commercial banks.

Enabling conditions for option No. 3

Thailand Taxonomy

Thailand taxonomy has the potential to help aligning and guiding capital flows towards CCS activities. Details on the Thailand Taxonomy are presented in chapter 4 and Annex K provides the detailed analysis of how option No. 3 is covered in the Taxonomy.

Option No. 3 would be covered by the “Hard to abate activities – Manufacturing of basic chemicals – HVC” and/or “CCS/CCUS related activities” categories, depending on whether the activity relates to CO₂ capture, transport or storage. CO₂ capture for olefins production from steam crackers (ethane or naphtha based) could be considered as a “green activity” provided that the emission intensity of ethylene production (scope 1 and scope 2) meets the threshold set by the Taxonomy. In addition, because of the use of natural gas products or naphtha, this would be only eligible for “existing unabated GHG facilities prior to 2040”. Under the definition of “unabated industrial facilities” of the Taxonomy,1 any existing industrial facility using natural gas or naphtha could be considered as eligible beyond 2040 only if “significant mitigation measures” – including CCS - would have been implemented.

If the carbon intensity threshold is not met, the activity could still be considered as “amber activity”, should some requirements be fulfilled on CO₂ capture rate and leakage, on implementation date for implemented retrofitting activities (investment before 2040), as well as on the development of a transition plan by the company that owns the facility.

For CO₂ transport and storage activities, these are specifically classified under “CCS/CCUS related activities”. They can be labelled as “green” or “amber” based on requirements pertaining to CO₂ leakage (for transport activities) and to the international standard ISO 27914:2017 for ensuring permanent CO₂ sequestration (for storage activities) (ISO, 2017[15]). As the legal and regulatory framework for CCS activities will need to be developed (see the corresponding enabling condition below), alignment between the Taxonomy criteria and the safety criteria pertaining to the CCS related legal and regulatory framework would need to be ensured.

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

T&S infrastructure and related business model

Successful deployment of CCS requires a whole value chain approach covering capture, transport and storage of CO₂. These different parts of the value chain are interdependent: emitters need to be assured that transport and storage infrastructure is available on the one hand, developers of CO₂ management services need to be assured that there is sufficient demand for transporting and storing CO₂ on the other hand. Physical infrastructure such as pipelines for CO₂ transport or geological storage sites are by nature long-lived, capital-intensive assets that require long-term planning. Alongside the need for physical infrastructure, there is a need for business models that encourage investments in such infrastructure and ensure the economic viability of CCS activities along the value chain. The structuration of the CCS value chain translates to different business models (Table 5.1).

In Thailand, the CCS value chain and its underpinning business model need to be built. Given the CCS hub model envisioned in Thailand, a partial chain model - where CO₂ capture activities from multiple emitters would be separated from T&S activities - would be relevant to consider. Advantages of a CCS hub model lies in the economy of scale for shared infrastructure, enhanced commercial viability of T&S by aggregating (securing) demand for CO₂ to be stored, or reduced cross-chain risks.

Box 5.1. Business models for CCS value chain

Different types of business models can be used to structure the CCS value chain. These include full‑chain and partial-chain models, where project ownership can either be public, private or a public‑private partnership (PPP) for both types of models. The full chain model refers to a vertical integration model, whereby a single entity develops and operates the CCS project all along the value chain. This model can be suitable for a first-of-a kind project and mitigates coordination risks across the value chain. However, it does not allow project risks to be shared between the various stakeholders, the entity alone bearing the whole development and execution risks. Examples of CCS full chain models include Saudi Arabia (Uthmaniyah project, public ownership), Canada (Quest project based on PPP), Norway (Snohvit, based on PPP), the United States (Illinois Industrial CCs project, private ownership).

In a partial chain model where capture is separated from T&S activities, the emitter is responsible for operating the capture step and sells the captured CO₂ and/or relies on a third party for CO₂ transport and storage. This could be implemented through business models based on “CO₂ transport and/or storage as-a service”, where a company or a consortium takes responsibility for managing CO₂ captured from multiple emitters, overseeing its transport and secure geological storage. Breaking the value chain further, the emitter could even consider “capture-as-a-service”, by contracting with a specialised capture company, which would supply the capture related equipment and operate the capture unit.

The primary advantage of partial chain model lies in the risk allocation across the CCS value chain, allowing each segment to be managed by different stakeholders. This model facilitates functional specialisation, where different segments of the value chain (e.g. capture versus transport and storage) are handled by actors best equipped to manage technical and commercial risks. However, this model introduces significant coordination and market risks. Both emitters and T&S operators are interdependent and without synchronised investment decisions, progress may stall. The absence of pre-existing infrastructure can deter emitters from committing to capture technologies, while T&S developers may hesitate to invest without long-term CO₂ offtake agreement from emitters.

Importantly, the adoption of partial chain models does not imply a diminished role for government. On the contrary, public-sector involvement is critical for aligning incentives across the value chain, facilitating coordination across stakeholders, ensuring long-term liability frameworks for CO₂ storage and establishing the regulatory clarity required to define roles, responsibilities and risk ownership across the CCS value chain. The partial chain approach typically refers to the underlying model of CCS hubs. Examples of CCs partial chain model include Norway (Longship and Northern Lights projects, based on PPP), the UK (based on PPP) and the United States (US Gulf Coast Sequestration Hub, private ownership).

Source: Authors based on (IEA, 2023[16]; The Oxford Institute for Energy Studies, 2024[17]; The CCUS Hub, 2023[18])

A Regulated Asset Base (RAB) model could support the development of T&S infrastructure in Thailand. Governments have historically employed the RAB model to enable investment in capital-intensive infrastructure sectors - such as electricity transmission and distribution or natural gas value chain - where market forces alone have proven insufficient to mobilise the scale of private capital required. Under this model, a private entity is permitted to own and operate infrastructure assets and recover its investment through user charges over time. The tariff is structured to cover the operator’s investment and operating costs and provides a return on capital. The RAB framework can introduce regulatory oversight, typically in the form of price or revenue caps and prescribed rates of return. By offering regulatory certainty and revenue stability, the RAB model has the potential to crowd in private finance for essential infrastructure, while maintaining public interest oversight.

This type of business model could be developed for the Eastern CCS Hub in Thailand, where the T&S operator would be paid a fee by the emitters. Learning from international practices, this model is developed for CCS activities in several countries. In the ASEAN region, Malaysia and Indonesia consider such a mechanism for CO₂ storage activities in their related regulation (respectively Sarawak state 2022 Land Code Rules on Carbon Storage and PR No. 14/2024 on Implementation of Carbon Capture and Storage Activities) (ASEAN Centre for Energy, 2024[19]). The UK has developed a comprehensive T&S Regulatory Investment (TRI) model for CCS activities (Department for Energy Security & Net Zero [U.K.], 2023[20]). Under this TRI model, an economic regulatory regime is set-up and combines a user-pays revenue structure with government support and requires open access to the network. A dedicated T&S company is established and tasked with the construction, financing, operation, maintenance and decommissioning of the T&S infrastructure. The regulator, (the Office of Gas and Electricity Markets, OFGEM), grants a licence to the T&S company, authorising it to charge users (i.e. emitters) a regulated fee in return for delivering and managing the network. These T&S charges are determined so that the company can recover its operating costs and earn a return regulated by the government.

Early stage of T&S infrastructure development requires government support (Table 5.2). For T&S operations, government support could be either directed to emitters to cover their T&S fee (e.g. in the UK) or directed to the T&S operator. When directed to the operator, symmetric payments could be considered. In such a scheme, government could provide support when the agreed revenue derived from the RAB model is below the actual T&S fees paid by emitters. Conversely, the T&S company could repay its financial surplus to the government when revenues exceed an agreed revenue cap from emitters (Global CCS Institute, 2025[12])

Table 5.2. Examples of government support for CCS projects development - including for T&S infrastructure - in selected countries

Country	Examples of government support for CCS projects development
Canada	Investment Tax Credit (ITC), which includes: 50% tax credit for investment in carbon capture equipment 37.5% tax credit for investment in CO2 transportation, storage and use.
Netherlands	EUR 6.7 billion announcement to be allocated to CCS projects Operating subsidies for emitters based on a contract for difference on the ETS carbon price for carbon reduction projects, including CCUS.
Norway	Longship project: T&S infrastructure developed by a consortium of companies (Northern Lights). USD 1.8 billion sate aids covering 80% of Northern Lights cost.
UK	CCS infrastructure fund, which includes GBR 1 billion to fund four clusters by 2030. The government has allocated GBP 20 billion to CCUS funding, the majority of which is expected to cover the “CCUS business models. This includes Industrial Carbon Contract for emitters, which provides capital co-funding and revenue support based on a payment for difference between a strike price and a reference price. T&S: RAB model includes subsidy to emitters for T&S fee.
US	45Q tax credits: USD 85/tCO2 Infrastructure Investment and Jobs Act, which includes USD 12.1 billion, divided between demonstration projects, pilot projects, front-end engineering and design studies, shared transport infrastructure, storage site development, permitting, grants to states and direct air capture.

Source: Authors, based on (The CCUS Hub, 2023[18]; Global CCS Institute, 2025[12])

Demand side measures

Mechanisms stimulating demand for low-emission plastics can stimulate demand for low-emission olefins. The instruments and policies analysed for bioplastics in chapter 4 (labelling scheme, GPP, deductions on taxable income) could be equally considered to stimulate demand for “low‑emissions plastics” more broadly. This, in turn, would stimulate demand for low-emission olefins, including through the deployment of option No. 3. To do so, eligibility criteria for benefitting from these mechanisms would need to be based on GHG emissions regardless of the type of feedstock used (bio-based or not).

However, stimulating demand for low-emission plastics should be considered in view of broader plastic pollution considerations. There is a need to clarify first if the expansion beyond bio-based and biodegradable plastics is aligned with the broader strategy to tackle plastic pollution. If so, the eligibility requirements pertaining to these instruments should also include a mechanism that helps to guarantee proper waste management of the non-bio-based and non-biodegradable plastic product (recovery, recycling and EPR). Furthermore, this would require developing definitions for low-emissions olefins and plastics with emission intensity criteria, which could be informed by the Taxonomy green criteria.

CCS legal and regulatory framework

By providing legal foundations, regulatory frameworks play a critical role in enabling the deployment of CCS activities. These frameworks are essential for ensuring the responsible management of CO₂ storage sites, the safety of CCS operations, as well as safeguarding public health and the environment. They also help define the roles and responsibilities of CCUS stakeholders - such as government authorities or operators - while offering clarity to project developers. Currently, more than 20 jurisdictions (subnational, national or regional) have established CCS related legal and regulatory frameworks, including in the ASEAN region (e.g. Malaysia, Indonesia) (IEA, 2022[21]; ASEAN Centre for Energy, 2024[19]).

A comprehensive legal and regulatory framework for CCS should address the entire value chain through multiple dimensions. Such dimensions include environmental and safety considerations, ownership or liabilities. In addition, it is important to consider land-use planning and community engagement to ensure public acceptance for CO₂ storage sites. Annex L details how a comprehensive legal and regulatory framework could be framed under different categories, based on existing frameworks.

The lack of a comprehensive legal and regulatory framework for CCS in Thailand has been raised by stakeholders as one of the most pressing challenges to support CCS projects. Therefore, an in‑depth analysis of the Thailand’s existing regulations is conducted below to identify where the gaps lie, to feed tailored recommendations.

Thailand’s Petroleum Act

Thailand can build on its existing petroleum related legal and regulatory framework to support early CCS activities, such as The Petroleum Act, B.E. 2514 (1971) (Ministry of Energy, 1971[22]). This act governs activities related to the exploration, production, transportation and sales of petroleum in Thailand. It regulates the granting of petroleum concessions and exploration licenses, establishes rules for royalties, taxes and government revenues from petroleum activities. It also sets guidelines for protecting the environment and ensuring operational safety in petroleum exploration and production. The Petroleum Income Tax is a direct tax, levied annually on net profit of a petroleum taxpayer, who is carrying out the business of petroleum exploration and production. The rules and regulations for Petroleum Income Tax are covered under The Petroleum Income Tax Act (No.9), B.E. 2562 (The Revenue Department, n.d.[23]). The Arthit CCS pilot project, based on existing petroleum infrastructure, falls under these two acts.

Currently, the Petroleum Act is being revised to include a new regulation enabling CCS development in the upstream industries. The draft amendment aims to introduce the concept of “carbon business” as a regulated activity in a similar way to petroleum concessions. It defines “carbon business” as “an exploration for a carbon storage site or a storage of carbon in a carbon storage site”. It stipulates that a carbon business license should be obtained from the Minister of Energy to be allowed to conduct such activities. A carbon business license would notably state terms and conditions on:

• Revenue and expenses under the carbon business.

• Allowed quantity and maximum pressure in the carbon storage site.

• Monitoring plan and its related updates.

• Reporting obligations and remedial measures in the event of carbon leakage.

• Technical conditions for carbon storage site closure and post-closure plan.

• Post-closure obligations.

In addition, the draft amendment requires operators to monitor the carbon storage site to detect any potential issues (e.g. leakage). The carbon business operator would be still required to conduct monitoring activities after the closure of the site, until the decommissioning of the facilities for carbon storage purposes is complete. Then the liability of the carbon business operator would be transferred to the DMF.

The Petroleum Income Tax Act would need to be amended to consistently reflect amendments proposed for the Petroleum Act when it comes to the revenues and expenses. As carbon business activities do not involve the commercial sale of state-owned natural resources, the form of compensation paid to the state would differ from the collection of royalties, production shares, or petroleum income taxes under the Petroleum Income Tax Act.

While the draft amendment of the Petroleum Act provides a significant progress on addressing the lack of CCS legal and regulatory framework, some key dimensions still need to be developed. These include the classification of carbon dioxide (i.e. whether it should be treated as “waste”, “resource”, or other categories) or the modalities of the liabilities in case of carbon leakage. Furthermore, the carbon businesses may be subject to the Environmental Impact Assessment (EIA) or Environmental Health Impact Assessment (EHIA), to be further prescribed by the notification of the Ministry of Natural Resources and the Environment.

Non-petroleum related regulations

The Petroleum Act only applies to petroleum related activities. Therefore, there is a need to complement this act by a CCS specific body of regulations which would go beyond the lens of petroleum activities. This is especially crucial to support the development of a CCS hub in the EEC zone (as the latter is not tied to petroleum activities). For some of the dimensions defined in Annex L, existing regulations that are not related to petroleum activities can be leveraged to cover CCS considerations. These include safety considerations, permitting or environmental compliance (Table 5.3), noting however that technical, safety and environmental standards for CCS specific projects will need to be established or clarified. International guidelines and experience from other countries could be leveraged to develop a dedicated CCS regulatory framework (IEA, 2022[21]; IEA, 2022[24]).

Table 5.3. Examples of non-petroleum related regulations of relevance for developing CCS activities in Thailand

Law/Regulation	Scope of application	Relevance for CCS activities
The Factory Act, B.E. 2535 (1992) (Department of Industrial Works, 1992[25])	Regulates the establishment, expansion and operation of factories to ensure environmental and workplace safety. It mandates emission controls, safety inspections and permits for industrial facilities.	Permitting/Monitoring/ Safety
The Building Control Act, B.E. 2522 (1979) (The Association of Siamese Architects under Royal Patronage, 1979[26])	Governs construction standards, permits and zoning to ensure structural safety and land-use compliance.	Permitting/Safety
Industrial Estate Authority of Thailand Act, B.E. 2522 (1979) (Government of Thailand, 1979[27])	Establishes the Industrial Estate Authority of Thailand (IEAT) to develop and manage industrial zones. It mandates infrastructure support, streamlined permitting and incentives for industries operating within estates.	Permitting
Ministerial Regulation on Natural Gas Pipeline Transportation System, B.E. 2556 (2013) (Department of Energy Business, 2013[28])	Governs the construction, operation and maintenance of natural gas pipelines. It mandates safety, technical and environmental compliance for pipeline transportation.	CO2 transport
Marine and Coastal Resources Management Act, B.E. 2558 (2015) (Department of Marine and Coastal Resources, 2015[29])	Protects marine and coastal ecosystems by regulating activities that may harm these environments. It mandates permits and impact assessments for projects in marine zones.	CO2 offshore storage
Enhancement and Conservation of National Environmental Quality Act, B.E. 2535 (1992) (Pollution Control Department, 1992[30])	Establishes key principles for pollution control. It includes provisions for setting pollution control standards, specifying types of pollution sources that must be regulated, managing the release of pollutants into the environment and conducting inspections by state officials to ensure compliance. It also mandates Environmental Impact Assessments (EIAs) for projects likely to affect the environment and establishes penalties for pollution.	Environmental compliance (full value chain)

Box 5.2. Development of Indonesia and Malaysia’s CCS legal and regulatory frameworks

In the ASEAN region, Malaysia and Indonesia have made significant progress in establishing a CCS regulatory framework. Both countries have initiated CCS regulatory frameworks by expanding existing petroleum regulations to cover CCS activities. These have been complemented with CCS dedicated regulations which target some of the dimensions highlighted in Annex L. While these regulatory frameworks are still in-progress and require further developments, the Malaysian and Indonesian examples illustrate the dual approach (existing and new regulations, petroleum-based and non‑petroleum) needed to build a comprehensive CCS framework.

In 2023, Indonesia’s Ministry of Energy and Mineral Resources (MEMR) formally established regulations for implementing CCUS in upstream oil and gas activities through the MEMR Regulation 2/2023. This regulation sets out the technical and legal requirements needed to ensure the safe operations of CO₂ storage, as well as business operations aspects. Building on this, Indonesia introduced a broader regulatory framework for CCS with Presidential Regulation No. 14 of 2024. This regulation includes the 2022 Land Code (Carbon Storage) Rules, which govern the use of offshore and onshore land for carbon storage development. It also addresses the facilitation of cross-border CO₂ transportation. MEMR followed up with Regulation MEMR 16/2024, which governs the organisation of carbon storage within designated Carbon Storage Permit Areas (Wilayah Izin Penyimpanan Karbon, or WIPK). Its main areas of coverage include the determination and tendering of WIPKs; the granting of relevant permits; the management of CCS related assets; the carbon storage business activities, fees and royalties; and the closure of carbon storage activities.

On 25 March 2025, Malaysia’s upper house of parliament passed the CCUS Bill 2025. This legislation establishes a foundational regulatory framework to support the deployment of CCUS activities. Key features of the Bill include:

• Licensing requirements: The CCUS Bill requires licenses for a range of activities, including for owning or operating carbon capture installations, transporting CO₂, importing CO₂ captured outside of Malaysia, CO₂ utilisation, conducting onshore or offshore assessments and for operating onshore or offshore CO₂ storage sites.

• Operational Obligations: Operators must meet specific CO₂ acceptance criteria designed to align with international best practices. These criteria ensure that CO₂ (along with any associated waste or monitoring substances) does not present a significant risk to human health or the environment. Legal responsibility is placed on the operator, rather than the storage site owner. Additional obligations cover the submission of relevant compliance data related to storage licenses, the development of monitoring plans for both the storage complex and surrounding areas and reporting and addressing any CO₂ leakage, including implementing corrective measures.

• Closure and Post-Closure Responsibilities: Storage sites can only be officially closed once they meet all prescribed conditions. Following closure, the operator remains accountable for monitoring, implementing corrective actions and conducting remediation during a defined transition period.

• Injection Levy: Operators are required to pay an injection levy, which will fund the government’s long-term monitoring efforts post-closure of each CO₂ storage site.

Source: Authors based on (Clinch and Stroll, 2025[31]; Draps and Ibnuaji, 2025[32]).

CO₂ geological storage resources assessment

Exploration activities are needed to support further CO₂ geological storage resources assessment. At the end of the CCS value chain, geological storage consists in injecting CO₂ captured into deep underground rock formations. There are three main geological types of CO₂ storage sites: saline aquifers, depleted oil and gas reservoirs and coal beds. In saline aquifers, CO₂ is injected into rock formations saturated with brines that contain high concentration of dissolved salts and sealed by a caprock. Their main advantage is their large storage potential and widespread availability.

As a prerequisite for geological storage, sites need to be identified (i.e. site location) and characterised (i.e. storage capacity and suitability). There are significant similarities between CO₂ storage assessments and traditional oil and gas resource evaluations. For instance, wellbore and seismic tools are employed to monitor, measure and verify the movement of the injected CO₂, like practices used for hydrocarbon production. To acquire the necessary technical information for a comprehensive subsurface assessment, exploration activities such as seismic surveys, exploratory drilling and well logging are essential. The technical data collection methods for CO₂ storage are of the same nature of those used in petroleum exploration. Therefore, countries with an established oil and gas industry such as Thailand can benefit from existing subsurface datasets.

Estimates for CO₂ storage potential in Thailand are scattered and available data is limited (OGCI, 2024[33]; Li et al., 2022[34]; ADB, 2013[35]; Zhang, Bokka and Lau, 2022[36]; Sutabutr, 2024[37]). Thailand’s theoretical capacity of saline aquifers is estimated at 8.9 Gt CO₂, based of assessment of 10 basins (ADB, 2013[35]). Other studies estimate the effective storage capacity at the field scale to be between [6–13] Gt CO₂ in the Malay Basin and [2–5] Gt CO₂ in the Pattani Basin, with basin-scale capacities ranging from [16–35] Gt CO₂ and [12–23] Gt CO₂, respectively. First assessments of oil fields indicated an effective capacity of 0.1 Gt CO₂, while gas fields were estimated at 1.3 Gt CO₂ (ASEAN Centre for Energy, 2024[19]).

Exploration activities need to be conducted to ensure a comprehensive CO₂ storage evaluation. As expressed through stakeholder consultations, this is particularly critical to support the development of the Eastern CCS Hub and to address the challenge of limited available data for the Northern part of the Gulf of Thailand. Such exploration activities should be facilitated by the legal and regulatory framework (“Ensuring safe and secure storage”, Annex L), which should cover the process to identify CO₂ storage resources (including regional screening, site screening, site selection, initial characterisation). Furthermore, since much of this data is proprietary, effective collaboration and the sharing of information among government and industry stakeholders will be essential. As a short-term priority, the DMF would need to grant the authorisation to conduct exploration activities for the Eastern CCS Hub, by amending the regulation for petroleum exploration activities to cover CCS.

CCS governance

Various Ministries and government agencies are engaged in developing CCS strategies and policies (Table 5.4). Expanding CCS efforts, including the creation of a comprehensive legal and regulatory framework or CCS hub, will require broader inter-Ministerial involvement. For instance, a comprehensive CCS legal and regulatory framework will require amendments and development of pieces of regulations pertaining to Ministries of Energy, Industry, Environment, or Finance.

Effective cross-Ministry coordination is essential to ensure that regulations across the CCS value chain are complementary and coherent. There is a risk of fragmented or inconsistent CCS regulations without a coordinated, bottom-up approach. Therefore, appointing a single lead government agency as the focal point for CCS planning and co-ordination would help ensure policy consistency and effective implementation. Potential focal points could include the DCCE, due to its central role in designing and implementing climate policy coordination. In addition, the DCCE currently hosts the NCCC’s sub‑committee on CCS. The Ministry of Energy would be another relevant focal point, given the importance of CCS technology in the energy transition and its current efforts to develop a regulatory framework for CCS. However, this would require further dialogue and consensus among stakeholders and would ultimately be subject to the governance of the Thai government.

An example of central CCS coordination can be found in the UK, where the Department for Energy Security and Net Zero (DESNZ) is responsible for overseeing CCS activities. The DESNZ is responsible for developing and implementing CCS policy and strategy, overseeing the deployment of CCS clusters, granting licenses for CO₂ transport and storage, coordinating funding and regulatory frameworks to support CCS infrastructure. Additionally, the energy regulator (OFGEM) plays a regulatory role in supervising the transport and storage networks for CO₂. To ensure collaboration with CCS stakeholders, the CCUS Council provides a forum for DESNZ to engage with representatives from the CCUS sector (Government [UK], n.d.[38]). The purpose of the CCUS Council is to review progress and provide oversight on the implementation of the CCUS programme and approach to cluster deployment. In Thailand, the link with CCUS stakeholders could be ensured through the existing sub-committee on CCS under the NCCC.

Table 5.4. Government entities involved in CCS development

Government entity	Responsible Ministry	General mandate	Role in CCS development
DCCE	MNRE	To coordinate climate policy and planning	Hosts the Sub-Committee on CCS under the NCCC
DMF	Ministry of Energy	To manage the country’s petroleum and mineral fuel resources	Legal and regulatory framework
NANOTEC	NSDTA, MHESRI	To advance nanotechnology for national development	Development of the CCUS Technology Roadmap
NCCC	Chaired by the Prime Minister	To oversee national climate strategy, to ensure alignment and coordination across ministries and sectors involved in climate action	Sub-Committee on CCS under the NCCC
TGO	MNRE	Supports carbon credit systems and GHG accounting	Emission accounting frameworks for CCUS

References

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[2] World Bank (2023), State and Trends of Carbon Pricing 2023, https://openknowledge.worldbank.org/entities/publication/58f2a409-9bb7-4ee6-899d-be47835c838f.

[36] Zhang, K., H. Bokka and H. Lau (2022), “Decarbonizing the energy and industry sectors in Thailand by carbon capture and storage”, Journal of Petroleum Science and Engineering, Vol. 209, https://doi.org/10.1016/j.petrol.2021.109979.

Note

← 1.  Unabated industrial facilities are referred in the Taxonomy as “industrial facilities that continue to emit greenhouse gases without any significant mitigation measures, such as carbon capture, utilisation, and storage or other emissions reduction technologies”.