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

6. Recommendations and conclusions

Abstract

This chapter summarises the outcomes of the analyses of the financial instruments and enabling conditions developed in chapters 4 and 5. Based on these conclusions, it provides a set of policy recommendations to support the implementation of the three selected low-carbon options.

Prerequisite and cross-cutting considerations

Decarbonisation options

A wide range of options can be implemented to decarbonise petrochemicals and the plastic value chain. All decarbonisation routes present their own strengths and challenges. Consequently, not a single route is intended to support the decarbonisation of the petrochemical industry and the plastic value chain by its own, but rather a combination of options. Based on a comprehensive assessment and stakeholder consultations, three low-carbon options were selected for the Framework implementation: bioethanol to bio-ethylene (option No. 1), bio-based and biodegradable plastics (option No. 2) and CCS (option No. 3).

The three selected routes should not be considered as the only options to decarbonise Thailand’s petrochemicals and plastics. They are primarily meant to reflect a high level of relevance regarding the different dimensions assessed, as well as to the Framework’s objective of identifying routes which struggle to achieve viable business cases. Furthermore, they allow to cover a mix of biomass-based and conventional routes and to address both existing and new assets. While the biomass-based options support Thailand’s BCG Economy Model, the CCS route enables to deal with the existing petrochemical industry structure (steam crackers). In addition, the CCS route can offer a solution to decarbonise other industry sectors in proximity of steam crackers (i.e. CCS hub for industrial clusters).

Plastic GHG emissions reduction and pollution control are two interlinked issues. While addressing plastic pollution issues does not fall in the scope of the Framework implementation, Thailand’s policy choices for reducing plastic pollution may drive the choice and the design of some of the recommendations highlighted in this report. For instance, the scope of application of policies to stimulate demand for bioplastics or low-emission plastics (i.e. which type of plastics would be covered by these policies) developed in chapters 4 to 6 may be driven by plastic pollution policies considerations.

From the perspective of the Framework implementation, the three selected options are meant to reduce CO₂ emissions from fossil fuel-based plastic production, acknowledging that primary plastics would still represent an important share of Thailand’s total plastic production by 2050 (see Annex C). However, the promotion of any of these low-carbon options should be accompanied with end-of-life management mechanisms and policy support (collection, sorting, recycling, landfill, waste-to-energy, etc.) to manage plastic waste. Given the linkages between plastic pollution and GHG emissions issues highlighted above, decarbonisation efforts should be embedded within a broader strategy that addresses both challenges, including by acting on the demand side (e.g. promoting eco-design and longer product lifespans, enhancing recycling).

The conclusions specific to CCS can benefit to CCS development in general, well beyond the petrochemical sector. T&S business models, infrastructure or regulatory framework development are challenges pertaining to the CCS value chain in general and are not specific to a sector. Therefore, Thailand can consider these outcomes to support its CCS strategy implementation across other sectors (industry or power generation, as outlined in national energy and climate strategies).

Closing the competitiveness gap

Competitiveness is the challenge of utmost importance raised by stakeholders all along the Framework implementation. The costs of production of bio-based plastics were estimated to be at least three times higher than those of their fossil fuel counterparts and up to 20% higher for carbon capture. As the selected low-carbon options come with higher costs of production (compared to their conventional fossil-fuel based counterparts), closing the competitiveness gap is a pre-requisite to their adoption by the industry.

The financial instruments tested do not have the same potential to bridge the competitiveness gap. While all these instruments are valuable to improve the business case for the selected low-carbon options, their difference in terms of impact suggests that some of them should be prioritised for implementation. In addition, the most impactful instruments are specific to each low-carbon option.

By identifying the most impactful instruments, the economic assessments inform on the type of instruments to be prioritised, as well as on where public support can be efficiently used and can provide maximal impact to mobilise private capital. Overall, the results show that the instruments acting on OPEX tend to be more impactful to reduce the gap than the instruments acting on CAPEX. Focusing on investment only is not sufficient to address the major concern of competitiveness raised by stakeholders.

A combination of instruments is needed to address the competitiveness gap. In most cases, the competitiveness gap could not be closed by using a single instrument, or doing so would require a fundamental shift in how the instrument is currently applied (e.g. level of carbon price).

Enabling conditions

Beyond financial instruments, building the enabling conditions is equally important. In some cases, even a combination of instruments may not fully close the gap. Therefore, policy measures and regulatory frameworks must also be developed to incentivise investments and support the deployment of these low‑carbon options.

It is important to note that the recommendations do 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 and CCS. While other considerations may be also important from a value chain perspective (e.g. agriculture for biomass production and effects on social and community aspects, low-carbon transformation of power systems…), they fall outside the scope of the Framework.

In terms of institutional co-ordination, a dedicated lead agency should be designated to co‑ordinate among ministries, national agencies and the private sector to achieve effective implementation (given the variety of institutions and stakeholders involved, as outlined in Table 6.1 and Table 6.2). This will enhance policy coherence, continuity and accountability in driving decarbonisation.

Application of the recommendations

The recommendations arising from chapters 3, 4 and 5 are summarised in Table 6.1 (bioplastics, options No. 1 and 2) and Table 6.2 summarises the recommendations to support the development of CCS (option No. 3), each one of these recommendations is further developed below. They should be considered as recommendations targeting the development and implementation of the selected low-carbon options.

These recommendations span several categories, ranging from cross-cutting approaches to more targeted measures:

• Foundational actions, including strategic direction, governance structure and regulatory frameworks.

• Infrastructure and value chain development.

• Targeted financial support: Stimulating investment in the selected low-carbon options (i.e. supply side).

• Targeted market activation: Encouraging demand through the creation of lead markets.

It is important to highlight that most of the recommendations to support options No. 1 and 2 (bioplastics) are of a different nature from those applying to option No. 3 (CCS). This distinction stems from the contrasting maturity levels of the two sectors in Thailand (bioplastics versus CCS). While options No. 1 and 2 can leverage a well-established domestic bioethanol and bioplastic industry, the CCS ecosystem is still in its infancy. Therefore, option No. 3 requires foundational efforts – for instance in terms of regulatory framework or infrastructure development – alongside financial solutions. In contrast, options No. 1 and 2 can build on existing regulations that could be amended to support its deployment.

Recommendations to support the development of bioplastics (options No. 1 and 2)

Table 6.1 summarises the recommendations to support the development of bioplastics (options No. 1 and 2), each one of these recommendations is further developed below.

Table 6.1. Summary of the recommendations for bioplastics (options No. 1 and 2)

Category	Recommendation	Option to which the recommendation applies	Relevant lead institution(s)	Timeframe
Strategic signalling	Develop a roadmap that address both plastic pollution and plastic GHG emissions along the value chain.	Options No. 1 & 2	MNRE, Pollution Control Department Ministry of Industry	Very short-term (< 1 year)
	Provide a long-term vision for bioplastic production, informed by a biomass supply strategy.		Ministry of Industry, OIE MNRE, Ministry of Agriculture and Cooperatives	Short-term (<3 years)
Stimulating finance and investment (supply side)	Apply a zero-tax for bioethanol use in the bioplastic industry.	Option No. 1	MOF, Excise Department	Very short-term (< 1 year)
	Allow a custom duty exemption for imported bioethanol used in the bioplastic industry.		MOF, Customs Department	Very short-term (< 1 year)
	Extend the subsidies for domestically produced bioethanol under the Oil Fuel Fund Act. to the use of bioethanol for industrial applications.		MOF, Excise Department	Very short-term (< 1 year)
	Introduce a plastic pollution fee / tax on plastic.	Option No. 2.	MNRE, MOF	Mid-term (3-5 years)
	Accelerate the implementation of the ETS under the Climate Change Act.	Identified for option No. 2, but the recommendation could equally be applied to option No. 1	DCCE	Short-term (<3 years)
	Leverage the strength of domestic capital markets to provide concessional finance.   Leverage existing international funds and programs for which bioplastics projects are eligible.	Identified for option No. 2 but the recommendation could equally be applied to option No. 1.	Domestic banks, BOT   DCCE, Strategy and International Cooperation Division, in collaboration with IFIs.	Short-term (<3 years) to mid-term (3-5 years)
	Encourage the implementation of the Taxonomy to foster investments in bioplastics.	Options No. 1 & 2	BOT, MOF, SEC, Stock Exchange of Thailand	Short-term (<3 years)
Regulatory framework	Lift regulatory barriers on alcohol production and sales to allow bioethanol use for the bioplastic industry	Option No. 1	MOF, Excise Department	Very short-term (< 1 year)
Stimulating lead markets (demand side	Pursue and expand the “Green Tax Expense” (deduction on taxable incomes) to sustain bioplastic domestic demand.	Options No. 1 & 2	Ministry of Industry, OIE MOF, Revenue Department	Short-term (<3 years)
	Enforce existing policies and regulations for GPP.		MNRE, Pollution Control Department and the ONEP TEI	Short-term (<3 years)
	Legally enforce the existing bans on SUPs.		MNRE, Pollution Control Department	Short-term (<3 years)
	Introduce mandates for bio-based content.		MNRE, Pollution Control Department TISI	Long-term (>5 years)
	Streamline the implementation of existing bioplastic labelling schemes.		TISI TGO for emission accounting methodology	Short-term (<3 years)
Infrastructure/value chain	Develop industrial composting facilities and support public awareness.	Option No. 2	Ministry of Interior and the Department of Local Administration MNRE, Pollution Control Department	Mid-term (3-5 years) to long-term (>5 years)

Source: Authors, based on the outcomes of chapter 4.

Recommendations applicable to both option No. 1 and 2

Develop a roadmap that addresses both plastic pollution and plastic GHG emissions

Policies driving the decarbonisation of petrochemicals and the plastic value chain need to be aligned with policies aiming to curb plastic pollution. Given the linkages between strategies to reduce plastic pollution and efforts to decarbonise petrochemicals and the plastic value chain, Thailand could develop a roadmap (or complement an existing one) that encompasses these two objectives. This will strengthen policy coherence between these two objectives (decarbonisation and plastic pollution reduction) and will enable to clarify the decarbonisation pathways that are aligned with Thailand’s plastic pollution reduction objectives and policies (e.g. demand side policies, promoting eco-design, enhancing recycling, awareness campaigns...). By explicitly considering these synergies, the roadmap would help i) clarify which types of plastics can support both objectives, ii) prioritise decarbonisation options that also contribute to reducing plastic pollution, iii) identify potential synergies and trade-offs when developing policies for reducing GHG emissions and for reducing plastic pollution.

Provide a long-term vision for bioplastic production, informed by a biomass supply strategy

Providing a strategic direction, such as a long-term target, would help stimulating investments in bioplastics industrial projects. Such target could be defined by a quantity or share of bioplastics to be produced at the national level (production quotas, binding targets), for specific bioplastic materials or specific applications (bags, packaging, utensils, containers). This strategic signalling would demonstrate government commitment to support bioplastics, incentivising private investments in such projects. Crucially, this would help plan for how to reach the objective for Thailand to become a regional ASEAN hub for bioplastics production as the leading country. This long-term vision could be informed by the roadmap previously recommended, to ensure compliance with plastic pollution reduction objectives. In addition, any target would need to be supported by a broader biomass feedstock supply strategy to ensure that i) the expansion of bio-based industries does not lead to adverse environmental and social impacts (such as competition with food production or land use pressures) and ensure community engagement, ii) that biomass feedstock supply remains sufficient despite growing demand from sectors beyond bioplastics (e.g. bioethanol for SAF) and resulting competing interests for biomass use (e.g. biomass use for energy, food, biofuels).

Accelerate the implementation of the ETS under the Climate Change Act

To incentivise low-carbon solutions towards fossil fuel-based plastics, implementing the ETS and explicitly including the petrochemical sector among its covered manufacturing industries is crucial. In practice, Thailand could consider utilising the existing 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 a MRV system.

Learning from international experiences, the introduction of a minimum carbon price in the mandatory market (i.e. carbon floor price) could be considered to ensure that the domestic carbon price does not fall below a certain level.

Leverage the strength of domestic capital markets as well as international financial assistance to provide concessional finance

Thailand can build on capital markets that are among ASEAN's deepest and most liquid. Domestic commercial banks have developed financing and de-risking instruments for sustainable projects, including concessional loans. These loans are eligible for projects related to the low-carbon transition, such as solar rooftop, energy efficiency, renewable energy, waste management. The domestic sustainable finance ecosystem could be leveraged to more systematically cover projects beyond clean energy or circular economy, including bioplastics.

In addition, Thailand could leverage existing international funds and programs for which bioplastics projects are eligible. These include programs and funds that target for instance sustainable manufacturing, circular plastics and compostable alternatives (from the GEF, IFC, ADB).

Encourage the implementation of the Taxonomy to foster investments in bioplastics

The Thailand Taxonomy offers banks and financial institutions the opportunity to consider manufacturing sectors as eligible for specific green financial products. Implementing the Thailand Taxonomy has the potential to stimulate investments in both bio-ethylene (option No. 1) and bio-based and biodegradable plastics (option No. 2) manufacturing, as both activities are covered.

However, for option No. 1 to be fully covered by the Taxonomy, it would be needed to explicitly mention the case of “bioethanol as a feedstock”, both for the “green” and “amber” criteria of the “Hard to abate activities – Manufacturing of basic chemicals – HVC” category.

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

Stimulate demand for bioplastics by expanding and enforcing existing policies

The economic assessments showed that supply-side instruments (like CAPEX grant, concessional loan, tax incentives, carbon price) alone may not be sufficient to meaningfully narrow the competitiveness gap. Demand-side measures are therefore essential to drive the adoption of bioplastics. Thailand can build on several existing regulations and policies to stimulate demand for bioplastics as follow:

Pursue and expand the “Green Tax Expense” (deduction on taxable incomes): CIT deduction concession was provided for the purchases of biodegradable plastic products but have ended in 2024 without new incentives announced. This incentive allowed corporate expenses incurred from purchasing biodegradable plastic products to be recorded for 125% of the actual costs. Pursuing these incentives would be needed to 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 be also considered. 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 would need to include a mechanism that helps to guarantee proper waste management of the product (recovery, recycling and EPR) to ensure consistency with policies to tackle plastic pollution.

Enforce existing regulations for GPP: Regulations for GPP would need to be further enforced as current implementation remains limited. So far, there has been 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. Moreover, the current GPP scheme supports the adoption of bio-based biodegradable plastics (option No. 2) through the Thai Green Label but does not explicitly support bio‑based non-biodegradable plastics such as bio-polyethylene (option No. 1). GPP could also consider bio-based non‑biodegradable plastics (option No. 1) to better promote bioplastics of all types, provided alignment with plastic pollution reduction policies.

Legally enforce the existing bans on SUPs: SUP bans could support demand for bioplastics, provided bioplastics are recognised as sustainable alternatives that are exempted from the bans. The Roadmap on Plastic Waste Management (2018–2030) aims to phase-out the use of targeted SUPs, complemented by the Action Plan on Plastic Waste Management (Phase II) (2023-2027). However, implementation of these plans remains limited, with only one SUP type banned by law so far (microbeads in cosmetic products). These plans would need to be further legally enforced and clearly state if bio-based and/or biodegradable plastics are officially recognised as alternatives. The scope of application of these bans could be informed by the roadmap previously recommended.

Introduce mandates for bio-based content: To complement the existing policies previously mentioned, bio-based content mandates could be considered to accelerate the market adoption of bioplastics. A mandate could be implemented at a national scale or for certain organisations or company types, accompanied by robust traceability and verification systems to ensure the integrity of bio-based content.

Streamline the implementation of existing bioplastic labelling schemes

Labelling schemes are essential to support the implementation of demand-side measures (such as for the Green Tax Expense, GPP or bio-based content mandates) to certify the compliance of bioplastic products with the required criteria. Furthermore, the implementation of labelling schemes helps raise consumer awareness to identify and deliberately choose bio-based plastic products.

Thailand has already introduced labelling schemes that apply to bioplastics, but 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. The implementation of bioplastic labelling schemes would need to be streamlined, while ensuring that they align with international standards to support export of bioplastic products. The labelling scheme would need to address the dimensions covered by the policies previously mentioned to stimulate demand for bioplastics. These include bio-based content, biodegradability and GHG emissions, depending on the types of plastics that would be eligible under these policies.

In addition, a single methodology for calculating the GHG emissions of bio-based (option No. 1) and bio-based biodegradable (option No. 2) is currently lacking and would need to be developed, 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.

Recommendations specific to option No. 1 (bioethanol to bio-ethylene)

Apply a zero-tax rate for bioethanol use in the bioplastic industry.

Mechanisms that directly affect the price of bioethanol have a significant impact on the competitiveness gap. Bio-ethylene competitiveness is hindered by the current excise tax on domestically produced ethanol of THB 6 /L, which is applied under the Ministerial Regulation Prescribing the Excise Tax Tariff (No. 2), B.E. 2560 and its relevant notifications.

To support the development of option No. 1, the Excise Department would need to amend 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 bioethanol 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. To prevent the misuse of bioethanol for alcoholic beverages production, a requirement could be established for industry to declare that the produced bioethanol is intended to be used only for industrial purposes, specifically for the production of bioplastics.

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).

Allow a custom duty exemption for imported bioethanol used in the bioplastic industry

Import duties on ethanol further widen the competitiveness gap for bio-ethylene. Imported bioethanol is subject to a custom duty of THB 80 /L under the Customs Tariff Decree (No.7) B.E. 2564. The BOI offers customs duty exemptions for activities listed under the BOI Announcement No.9/2565, which covers raw materials for bio-polyethylene producers, but only for the purpose of exports and for the duration of 1 year at minimum. Bio-polyethylene companies would need to get approval from BOI every subsequent year to maintain the exemption.

The Customs Department (Ministry of Finance) would 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 recommendation is aligned with the Resolution of the BCG Model Development Committee to promote ethanol utilisation for bioplastic production.

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. Moreover, any exemption should not compromise the sustainability standards for imported bioethanol. Therefore, implementing standards or labelling scheme to ensure the sustainability of imported ethanol would be essential.

Extend the subsidies under the Oil Fuel Fund Act to the use of bioethanol for industrial applications

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. However, subsidies for biofuels are set to end in 2026, with no indication of extension.

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.

Lift regulatory barriers on alcohol production and sales to allow bioethanol use for the bioplastic industry

The Ministerial Regulation on the Licensing of Alcohol Production, B.E. 2565 and its relevant notifications hinder the bioethanol market development in Thailand, as well as the use of bioethanol in industrial applications.

The related laws and regulations would need to be amended to allow domestically produced bioethanol to be sold and used for the bioplastics industry. This recommendation is aligned with the Resolution of the BCG Model Development Committee and the resulting MOF strategy to promote ethanol utilisation for bioplastic production. The revised laws and regulations could in addition require companies to provide proof that the bioethanol produced is only intended to be used for industrial purposes (i.e. for bio‑polyethylene production).

Recommendations specific to option No. 2 (bio-based and biodegradable plastics)

Introduce a plastic pollution fee / tax on plastic

The economic assessments showed that a plastic pollution fee (or tax) applied to conventional plastics would be a key instrument to reduce the competitiveness gap for option No. 2. This is however relevant only if bio-based and biodegradable plastics are exempted from the fee.

As plastic a pollution fee (or tax) is not designed to address GHG emissions, but plastic waste management, this instrument could pose a challenge on option No. 1 due to the non-biodegradability 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 and whose scope of application need to be clarified by the roadmap previously recommended.

Develop industrial composting facilities and support public awareness

Proper end-of-life management of bio-based biodegradable plastics is important 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.

There is a need to establish more industrial composting facilities. In addition, it is also crucial to support 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.

Recommendations to support the development of CCS (option No. 3)

Table 6.2 summarises the recommendations to support the development of CCS (option No. 3), each one of these recommendations is further developed below.

Table 6.2. Summary of the recommendations for CCS (option No. 3)

Category	Recommendation	Relevant lead institution(s)	Timeframe
Governance	Appoint a single lead government agency for CCS planning and co‑ordination.	Government of Thailand	Very short-term (< 1 year)
Regulatory framework	Develop a comprehensive legal and regulatory framework.	Lead CCS agency (to be appointed), in co‑ordination with DCCE, DMF, MNRE, MOF	Short-term (<3 years)   Specific case of the on-going flagship projects (Arthit and Eastern CCS Hub): Very short-term (< 1 year) for unlocking regulatory barriers through targeted regulations.
Stimulating finance and investment (supply side)	Accelerate the implementation of the ETS and explicitly include the petrochemical sector among the covered sectors.	DCCE	Short-term (<3 years)
	Strengthen the existing VCM.	DCCE, TGO	Short-term (<3 years)
	Develop targeted and time-bound support through CCfDs for early CCS development	MOF	Short-term (<3 years)
	Leverage the strength of domestic capital markets to provide concessional finance for CCS projects.   Leverage international assistance for which CCS projects are eligible.	Domestic Banks, BOT     DCCE, Strategy and International Cooperation Division, in collaboration with IFIs.	Short-term (<3 years) to mid-term (3-5 years)
	Encourage the implementation of the Taxonomy to foster investments in CCS projects.	BOT, MOF, SEC, Stock Exchange of Thailand	Short-term (<3 years)
Infrastructure/value chain	Facilitate exploration activities for a comprehensive CO2 geological storage assessment.	Ministry of Energy, DMF, in collaboration with PTTEP.	Short-term (<3 years)   Specific case of the Eastern CCS Hub flagship project: Very short-term (< 1 year) for granting the authorisation for conducting exploration campaigns.
Infrastructure/value chain	Consider a RAB model to support the development of the CO2 T&S infrastructure.	Ministry of Energy	Mid-term (3-5 years) to long-term (>5 years)
Stimulating lead markets (demand side)	Stimulate demand for low-emission plastics, building on instruments developed for bioplastics.	MNRE	Mid-term (3-5 years) to long-term (>5 years)

Source: Authors, based on the outcomes of chapter 5.

Appoint a single lead government agency for CCS planning and co‑ordination.

CCS governance in Thailand would need to be strengthened and streamlined. Multiple government entities are currently engaged in developing CCS strategies and policies. Expanding CCS efforts – including the development of a legal and regulatory framework or of the Eastern CCS hub – will require broader inter‑ministerial involvement. Effective cross-ministry co‑ordination will be essential to ensure that regulations across the CCS value chain are complementary and coherent.

In addition, without a bottom-up approach, there is a risk of a lack of a comprehensive and long-term vision for CCS planning and implementation. 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 co‑ordinating and implementing climate policy, and the Ministry of Energy, 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.

Develop a comprehensive CCS legal and regulatory framework

There is a critical need to develop a comprehensive legal and regulatory framework covering the full CCS value chain, whose priority actions could be defined as follow:

• Conduct a regulatory gaps assessment: Assess Thailand existing regulatory framework for CCS activities and identify gaps based on international best practices, approaches and standards. The “ASEAN CCS Deployment Framework and Roadmap" provides a guide to identify the different dimensions to be covered when developing a CCS legal and regulatory framework. It has been develop based on international best practices to fit to the ASEAN policy context and thus can serve as a relevant basis for conducting such assessments.

• Based on the outcomes of the regulatory gaps assessment, leverage existing regulations to cover CCS related activities: Petroleum related regulations (e.g. The Petroleum Act, B.E. 2514 (1971)), as well as oil and gas pipeline regulation, would need to be amended to expand their coverage to CCS activities. Likewise, permitting approaches within existing frameworks could be considered as a basis for storage site exploration and development and for CO₂ pipelines. Existing frameworks could be also used to assess environmental review requirements and incorporate specific assessment needs for CCS projects.

• Based on the outcomes of the regulatory gaps assessment, develop a CCS dedicated regulatory framework to complement petroleum related regulations: While the Petroleum Act and related regulations provide a ground for early CCS activities, these would need to be complemented by a CCS dedicated regulatory framework which goes beyond the lens of petroleum activities. This would notably cover critical regulatory gaps identified so far on CO₂ classification, liabilities as well as on environmental impact assessments. It is equally important to consider land-use planning and community engagement to ensure public acceptance for CO₂ storage sites. International guidelines and experience from other countries could be leveraged to develop a dedicated CCS regulatory framework (IEA, 2022[1]; IEA, 2022[2]).

To avoid delaying flagship projects while the legal and regulatory framework is being developed, a project site-specific regulatory framework could be established (i.e. ad-hoc regulations to tackle tailored project regulatory gaps). This is particularly acute for the Arthit CCS project which has reached the final investment decision.

Accelerate the implementation of the ETS under the Climate Change Act

The economic assessment showed that carbon price alone has the potential to close the gap. Its deployment would thus need to be prioritised, compared to other instruments. To foster CCS projects, implementing the ETS and explicitly including the petrochemical sector among its covered manufacturing industries is key. In practice, Thailand could consider utilising the existing 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. The existing TGO’s CCS methodology could be leveraged for easing the emission accounting process. To ensure transparency and measurable progress in emission reductions, this would need to be supported by a MRV system.

Learning from international experiences, the introduction of a minimum carbon price in the mandatory market (i.e. carbon floor price) could be considered to ensure that the domestic carbon price does not fall below a certain level.

Strengthen Thailand’s Voluntary Carbon Market

The economic assessment showed that carbon incentives have the potential to close the gap. Therefore, giving a value to the CO₂ emissions avoided is a key driver to significantly reduce the competitiveness gap and would need to be prioritised to support the development of CCS. Thailand’s VCM can be leveraged to value CO₂ emissions avoided through CCS. CCS is listed as eligible under the T-VER registration criteria, with a dedicated methodology already developed.

However, Thailand’s VCM would need to be further strengthened to address several structural challenges hampering its growth. Expiration dates for carbon credits would need to be enforced to prevent the stockpiling of credits. Furthermore, the trading of domestic carbon credits in the international market through existing mechanisms (such as Article 6.2 of the Paris Agreement, including the JCM with the Government of Japan) should be promoted. 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.

Develop targeted and time-bound support such as CCfDs for early CCS development

As carbon markets mature, carbon incentives that monetise the CO₂ emissions avoided are essential to bridge the competitiveness gap. This could take the form of CCfDs, acting as an OPEX support. As developed in some countries, CCfDs help ensure that there is a stable, predictable carbon price going forward. Under this scheme, CCS projects are guaranteed to be paid the difference between the offered price and a reference price for CO₂ emissions – usually the ETS price. The size of the support could be determined based on a carbon floor price and would decline over time as the carbon price rises.

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.

Leverage the strength of domestic capital markets to provide concessional finance

Domestic commercial banks have developed financing and de-risking instruments for sustainable projects, including concessional loans. These loans are eligible for projects related to the low-carbon transition, such as energy efficiency, renewable energy, waste management. The domestic sustainable finance ecosystem could be leveraged to more systematically cover projects beyond clean energy or circular economy, including CCS.

In that context, it is equally important to develop 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.

Encourage the implementation of the Taxonomy to foster investments in CCS projects

The Thailand Taxonomy offers banks and financial institutions the opportunity to consider manufacturing sectors as eligible for specific green financial products. Implementing the Thailand Taxonomy has the potential to stimulate investments in CCS for petrochemicals, as olefin production with CO₂ capture and CO₂ transport and storage activities are covered.

For CO₂ transport and storage activities, alignment between the Taxonomy criteria and safety criteria included in the CCS legal and regulatory framework (once defined) would need to be ensured.

Consider a RAB model to support the development of the CO₂ T&S infrastructure

A business model dedicated to the CO₂ T&S infrastructure needs to be developed. 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.

A RAB model could support the development of T&S CO₂ infrastructure in Thailand. 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. The tariff could be structured to cover the operator’s investment and operating costs and to provide a return on capital. This model would provide predictable revenues for T&S operator. International experiences show that early stage of T&S infrastructure development requires government support, including to develop such model (e.g. in the UK).

Facilitate exploration activities for a comprehensive CO₂ geological storage assessment.

Thailand’s CO₂. geological storage resource potential requires further assessment, as estimates are scattered available data is limited. Exploration activities need to be conducted to ensure a comprehensive CO₂ storage evaluation (both in terms of storage capacity and suitability of sites). 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 geological data for the Northern part of the Gulf of Thailand.

Such exploration activities need to be facilitated by the legal and regulatory framework mentioned earlier, to 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 is essential. As a very 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.

Stimulate demand for low-emission plastics, building on policy instruments developed for bioplastics.

The economic assessments have shown that a green premium on low-emission olefins can improve the business case for CCS. Stimulating demand for low-emission plastics could in turn stimulate demand for low-emission olefins, including through the deployment of option No. 3.

Crucially, stimulating demand for low-emission plastics would need to be considered in view of broader plastic pollution considerations. It is thus crucial to clarify first if the expansion of existing demand-side incentives beyond bio-based and biodegradable plastics would be aligned with the broader strategy to tackle plastic pollution. If so, low-emission plastics could be considered as eligible for benefitting from these instruments. The eligibility requirements pertaining to these instruments would thus need to 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.

Leverage international co-operation and assistance for CCS projects.

Thailand could tap into international financial and technical assistance that focus on industry decarbonisation to support CCS projects. Relevant funds, programs or platforms include those developed by the IFC (specifically for hard-to-abate industries in EMDEs), the CIF, or the CCUS initiative from the CEM. The collaboration between Thailand and the Government of Japan on CO₂ storage capacity assessment in specific basins is worth noting, contributing to address the challenge of CO₂ storage assessment raised previously.

Conclusions and next steps

The outcomes of the Framework implementation aim to support Thailand’s in achieving its emission reduction objectives and in advancing the implementation of the BCG Economy Model, thereby harnessing associated socio-economic benefits. These outcomes further support broader industrial strategies to position Thailand as a regional hub for bioplastics and for CCS, and for which the country aims to create new, value-added economic sectors and generate highly skilled jobs employment, as well as boost exports of domestic bio products. To achieve these goals, Thailand can build on well‑established petrochemical, bioethanol and bioplastics industries. However, in a context where competitiveness is a critical concern, a combination of financial instruments and enabling conditions will be essential to stimulate investments in low-carbon solutions.

By focusing on selected low-carbon options, the Framework has outlined tailored financial and policy solutions for implementation. Building on evidence-based analyses, the outcomes highlighted the most impactful financial instruments to support the selected low-carbon options. These conclusions can guide policymakers on the type of instruments to be prioritised, as well as on where public support can be efficiently used and provide maximal impact to stimulate investments. In addition, these findings can directly benefit to on-going or planned industrial projects implementing the low-carbon solutions addressed through the Framework implementation.

These outcomes will support the NCID in implementing the recommendations and co‑ordinating national agencies’ actions. In addition, the findings and recommendations can inform several key strategies, policy and regulatory initiatives currently under development, such as the upcoming National Economic and Social Development Plan, the Climate Change Act and the Taxonomy. This presents a valuable opportunity to advance the decarbonisation of the petrochemical sector and the plastics value chain by ensuring these frameworks explicitly address these sectors. Moreover, the outcomes offer actionable policy guidance by identifying specific existing laws, regulations, or policies that may require amendments to effectively support the implementation of selected low-carbon solutions.

Crucially, the outcomes highlight the imperative to link the decarbonisation policy agenda of the petrochemical sector and plastic value chain to the plastic pollution reduction agenda. In this way, the outcomes of the Framework provide insights for aligning both agendas and developing a comprehensive approach to plastic related emissions and pollution issues.

Finally, as the project transitions to application, several potential next steps can support the integration of its findings into national and international processes. The findings and recommendations outlined above can lead to the development of targeted future work (e.g. roadmap to address both plastic GHG emissions and plastic pollution), of policy briefs and illustrative use cases to support evidence-based policymaking. Additional support may also be provided to facilitate policy design and implementation. In addition, there is scope to apply the approach and lessons learned to other industry sub-sectors, thereby broadening the impact of the work and reinforcing cross-sectoral alignment with national climate and industrial goals. Efforts will be made to share the project’s key results both within the country and internationally, to ensure broad awareness and uptake of its insights. This includes dissemination activities, capacity building, collaboration with complementary initiatives and stakeholder engagement to explore follow-up opportunities. The outcomes can also feed regional dissemination and peer-learning activities with other Southeast Asian countries, including through the SIPA project. These efforts aim to deepen collaboration between the OECD and governments in support of industrial decarbonisation.

References

[2] IEA (2022), CCUS Legal and Regulatory Database, https://www.iea.org/data-and-statistics/data-tools/ccus-legal-and-regulatory-database.

[1] IEA (2022), Legal and Regulatory Frameworks for CCUS, https://iea.blob.core.windows.net/assets/bda8c2b2-2b9c-4010-ab56-b941dc8d0635/LegalandRegulatoryFrameworksforCCUS-AnIEACCUSHandbook.pdf.