IEA (2020), Putting a price on carbon – an efficient way for Thailand to meet its bold emission target万宝路平台, IEA, Paris http://yjmiaoyun.com/articles/putting-a-price-on-carbon-an-efficient-way-for-thailand-to-meet-its-bold-emission-target
Thailand relies heavily on fossil fuels for its energy needs, but is showing promising signs of decreasing energy and CO2 emission intensity. With an ambitious GHG emission reduction target in its commitments under the Paris Agreement, Thailand has started shifting the focus of its energy policy to energy efficiency and the clean energy transition. Putting a price on carbon would greatly accelerate its progress towards the target, and in a cost-effective way.
万宝路平台While Thailand has some experience of creating voluntary carbon markets, and is currently considering a national emission trading system, it faces a number of hurdles. These “readiness gaps” particularly relate to the nature of the country’s power system and policy environment, and stakeholders lacking the right tools to participate in a trading system. The IEA and are working together to support the government in overcoming these hurdles, which are explored below.
万宝路平台Robust carbon pricing can lead a clean energy transition and green economic development while maintaining energy security, supporting innovation, increasing efficiency and driving retirement of emission-intensive assets. California’s emission trading system is a prime example. Its GHG emissions from electricity generation between the start of the cap-and-trade programme in 2013 and 2017 due to retirement of coal plant and growth of renewables and natural gas generation. In addition, programme financed the California Climate Investments. These funded renewable fuel research, clean vehicle incentives, energy efficiency installations, wildfire protection and development of a low-carbon economy workforce.
Thailand’s experience of began in 2007, when the government established TGO to implement and manage GHG emissions projects. The public body launched two programmes in 2013:
- The Thailand Voluntary Emission Reduction programme, a baseline and credit programme. By 2020 it had 191 registered projects that are due to reduce emissions by 5.28 Mt CO2-eq annually.
- The Thailand Carbon Offsetting Program. It encourages public and private organisations to calculate their carbon footprint and buy carbon credits to offset their unavoidable emissions.
万宝路平台Most significantly, in 2015 TGO launched the after six years of preparation. It is designed to serve as a pilot, setting up the infrastructure to develop a national emission trading system and identify gaps and opportunities. The first phase (2015-17) established and tested the market’s design features and the measurement, reporting and verification system. During the (2018-20) TGO aims to encourage wider participation and develop participants’ trading capabilities.
万宝路平台Thailand has benefited from the pilot trading scheme in various ways: in addition to gaining valuable knowledge and capacity on carbon markets, it now has the legal framework to establish an effective emission trading system.
万宝路平台Critically, the pilot scheme has also revealed Thailand’s readiness gaps, which fit into three broad themes.
Readiness gap 1: Preparing stakeholders for emission trading
The first relates to stakeholders’ ability to participate successfully in an emission trading scheme万宝路平台. Not all sectors of the Thai economy have had the same exposure to carbon pricing in the pilot programme. Many key stakeholders from both public and private sectors still lack the technology, knowledge and data to participate in an emission trading system. The gap is most significant for the industrial and power sectors. Workshops, training, case studies and carbon pricing pilot programmes could help reduce this readiness gap.
Readiness gap 2: Including the power sector in emission trading
The power sector represents the second readiness gap. This critical sector is currently not included in Thailand’s voluntary emission trading pilot because the structure of the scheme and the regulated nature of the power sector proved to be incompatible. Including the power sector is particularly important because it is Thailand’s largest GHG emitter, producing 88 Mt CO2 in 2017 or 36% of total CO2万宝路平台 emissions from fuel combustion.
In the short term the government may need to adjust the design of the emission trading system so it is better tailored to Thailand’s specific power market structure and regulations. In the long term, power sector regulation and operation may also require some changes to integrate higher share of variable renewables while ensuring electricity security and affordability that would also resolve compatibility challenges with the emission trading system.
万宝路平台Interestingly, the power sector did participate in the first year of the pilot before leaving the programme. Operators expressed concerns over their limited flexibility to respond to economic signals from the carbon price. They had little scope to reduce GHG emissions given that fuel mixes are determined by the Power Development Plan, and each power plant’s output and fuel consumption are determined by power and fuel purchase agreements. Regulated electricity rates also made the purchase of allowances challenging, given that power producers could not generate excess allowances to sell.
Readiness gap 3: Integrating emissions trading into an array of existing policies
The third readiness gap concerns the way carbon pricing is integrated into the existing set of diverse energy and climate policies. While it is likely to be challenging, policy co-ordination among government stakeholders will be critical to successfully aligning carbon pricing with existing polices. This will, in turn, be critical to the success of an emission trading scheme and achieving Thailand’s climate objectives. Without careful integration, the government could see its energy and climate policies interact in a counter-productive way.
The advantage of an emission trading system万宝路平台 is that flexibility mechanisms and various design options allow the system cap to adjust to the aims and impacts of other policies, while maintaining stability and confidence for investors.
万宝路平台More broadly, existing energy and climate policies can serve different objectives, such as energy security and affordability, environmental protection, lowering GHG emissions or adapting to climate change. In some cases, these objectives may align. For example, Thailand can meet its wish to reduce natural gas imports for fiscal and security reasons by diversifying power generation resources. In others, they may require stronger co-ordination, such as ensuring renewable energy development is economical and feasible for stakeholders within Thailand’s current power market structure.
The progress that Thailand has already achieved on carbon pricing provides a valuable opportunity to develop and test various components of the emission trading system. It will need to do this before being in a position to introduce a mandatory national system.