Thailand

Implementation period: 2024-2025 Funding amount: US$200,000 Window: Just-in-Time

Thailand is advancing market-based climate action through the development of a Climate Change Act, which will provide the legal basis for implementing a carbon tax, a mandatory Emissions Trading System (ETS), and a cross-border carbon pricing mechanism (Thai CBAM). The Act, expected to enter into force in 2026, will establish the institutional responsibilities and regulatory framework for the country’s carbon pricing architecture, supporting Thailand’s broader strategy to align its fiscal policies with its climate commitments.

As part of a phased approach, in March 2025, Thailand began by restructuring excise taxes on petroleum products to reflect carbon content, applying a price of THB 200/tCO₂e. This interim measure is designed as a bridge toward a formal carbon tax, which will be broadened and strengthened under the Climate Change Act. A pilot ETS is planned for launch in the late 2020s, followed by full implementation of the ETS and introduction of the Thai CBAM in the early 2030s.

Objectives & Activities  

Between September 2024 and May 2025, PMI provided Just-in-Time (JIT) support to help Thailand prepare for the introduction of carbon pricing instruments (CPIs) through a combination of analytical work, technical design, and institutional capacity building. Activities have included:

• Impact assessment of carbon pricing instruments: A comprehensive modeling exercise assessed the macroeconomic, fiscal, environmental, and social effects of introducing a carbon tax and ETS in Thailand, identifying implications for GDP, household consumption, sectoral competitiveness, and emissions reduction pathways
• Design options for carbon pricing instrument (CPI) implementation: Building on the impact assessment, the design study outlined choices for emissions reporting, management of overlaps between a carbon tax and ETS, the role of offsets, and measures to address carbon leakage and competitiveness, drawing lessons from international case studies

These activities delivered Thailand’s first integrated CPI assessment and design framework and directly informed Thailand’s draft Climate Change Act.

Additional Resources: 

• NDC Action Plan on Mitigation 2010-2030
• Thailand’s National Climate Policies