• Thailand’s Climate Change Act will become the country’s principal climate legislation, establishing mandatory carbon pricing through the Thailand Emissions Trading Scheme (TH ETS) and a carbon tax to accelerate greenhouse gas (GHG) reductions towards the 2050 Net Zero target. The Act is expected to be enacted around the third quarter of 2027, with mandatory carbon pricing likely to be implemented during 2029-2030.
• Energy-intensive and high-emitting industries will be affected first. Under TH ETS, covered businesses will receive GHG emission allowances, while companies exceeding their allocated quotas will be required to purchase additional allowances through the market or government auctions, increasing production costs – particularly in construction materials, petrochemicals and chemicals, and energy and utilities. At the same time, domestic carbon pricing will help reduce compliance costs under overseas measures such as the EU Carbon Border Adjustment Mechanism (CBAM).
• Although implementation remains several years away, businesses should begin reducing GHG emissions now. Companies need to proactively manage transition risks arising from existing cross-border measures, particularly the EU CBAM, which is already in force and more stringent than Thailand’s proposed framework. Without sufficient access to financing, technology, and expertise – especially among SMEs – higher carbon costs could be passed on to consumers, affecting living costs and competitiveness. Carbon pricing should therefore be accompanied by investment support, decarbonization incentives, and targeted relief for low-income households.
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