Thailand's opportunities in green revolution

Thailand Board of Investment (BOI)

Sustainability is crucial in the new global landscape, and many countries, including Thailand, have recognized its importance. Thailand is committed to a transformative journey, embracing sustainable transitions in response to global challenges. This dedication is demonstrated through its remarkable rankings in the SDG index, where it is ranked 43rd globally and 3rd in the Asia region.

In response to climate challenges, Thailand has set ambitious targets to reduce greenhouse gas emissions, aiming for carbon neutrality by 2050 and achieving net-zero emissions by 2065. Given that Thailand’s energy sector accounts for almost 70% of these emissions, it is a primary focus of the government's initiatives. A national energy plan has been implemented to provide a comprehensive framework for this endeavor. As a result, 'clean energy' is now viewed not only as a mission but also as an opportunity for all who wish to participate in driving the sustainable transition.

RISING TRENDS IN THAILAND’S RENEWABLE ENERGY

In recent years, Thailand has experienced a positive trend in renewable energy usage. In 2023, approximately 20% of its energy was generated from renewable sources, while the capacity for electricity generation from renewables accounted for 22% of the total installed capacity in the country. These figures highlight the significant share of renewable energy in use, indicating that there is still room for expansion to achieve a higher proportion across various sectors.

Under the Alternative Energy Development Plan (AEDP) 2018, Thailand aims to achieve a 30% share of renewable and alternative energy in its final energy consumption by 2037. As of July 2023, renewable energy consumption constituted 16% of the country’s final energy consumption, marking around 5% increase from the previous year. This upward trend in renewable energy usage underscores a growing demand and market for clean energy sources, establishing them as a key element of Thailand’s future energy strategy.

To meet both energy and climate targets, there is a pressing need to enhance the capacity for electricity generation from renewable sources such as solar energy, biomass, wind, biogas, municipal solid waste, industrial waste, and hydropower. Additionally, the government is exploring the potential of nuclear power and green hydrogen as alternative sources of renewable energy.

THE GOVERNMENT’S SUPPORTING POLICY

To promote the use of clean and renewable energy in Thailand, the Energy Regulatory Commission (ERC) has implemented the Utility Green Tariff program. This program aims to ensure that business owners have access to green electricity, accompanied by a Renewable Energy Certificate (REC). Under this initiative, business owners—particularly those required to align their operations with international environmental standards such as the Carbon Border Adjustment Mechanism (CBAM)—will enter into power purchase agreements with electricity distributors. These agreements enable them to procure services related to green energy and make payments at a designated utility green tariff rate.

Under the five-year investment plans from the Thailand Board of Investment (BOI), the Bio-Circular-Green (BCG) industry, which includes renewable energy, is one of the targeted sectors for attracting investors. The BOI provides investment incentives and support measures for these industries, benefiting not only manufacturers but also users.

For users, investors must meet at least one of two specific criteria to qualify for incentives: (1) enhancing energy conservation, utilizing alternative energy, and reducing environmental impact, or (2) adhering to international sustainability standards such as Good Agriculture Practices (GAP), Forest Stewardship Council (FSC), Program for the Endorsement of Forest Certification Scheme (PEFCs), and ISO 22000. Eligible projects, whether existing or new, will benefit from a CIT exemption on revenue generated from their qualifying activities.

For manufacturers, the BOI grants enticing incentives for investments in various activities related to renewable energy. Investments in alternative energy sources, such as fuel or pharmaceutical-grade alcohol derived from agricultural products, including agricultural scrap or waste, are eligible for up to 8-year CIT exemption with a cap. Similarly, the production of electricity or electricity and steam from renewable sources such as solar energy, wind energy, biomass, or biogas also qualifies for the 8-year CIT exemption.

Furthermore, new measures to alleviate PM 2.5 pollution are designed to support and enhance the capabilities of local organizations and farmer groups in improving environmental management. Eligible activities for these groups include constructing Fireline construction, weir to delay moisture, forest fire suppression tools and equipment, and training and prevention of forest fire management. Entrepreneurs who meet these criteria will receive a 3-year Corporate Income Tax (CIT) exemption, aiding local organisations and farmer groups in sustainably reducing PM 2.5 dust issues.

Contact details:

The Office of the Board of Investment +66 2 553 8111 head@boi.go.th www.boi.go.th