Thailand’s Deputy Finance Minister Paopoom Rojanasakul announced that the country will implement a carbon tax by 2025, as part of its efforts to address climate change and promote sustainable practices, on 26 September 2024.

The carbon tax will be included in a comprehensive legislative package under the Thailand Climate Change Act.

“For countries that are still heavily reliant on fossil fuels – 85% of Thailand’s energy mix is oil, natural gas, or coal – introducing a carbon tax is a ‘no brainer’,” said Dr. Vinod Thomas, a former director general of the Asian Development Bank.

Earlier, in June, the Thai government announced it would impose a tax of THB 200 (USD 5.60) per tonne of carbon dioxide (CO2) on oil products, including gasoline and diesel.

“At those rates, you don’t see any effect, really. People would rather pay that and not cut carbon. And just to be clear, the objective is not to raise money. Your objective is to cut emissions. But one cannot ignore the importance of even a USD 5 tax, because it’s a signalling,” Dr. Thomas said.

Thailand will be the second ASEAN country after Singapore to implement a carbon tax, underscoring its commitment to environmental protection and sustainable development.

The carbon tax will be incorporated into the existing oil tax structure, ensuring a revenue-neutral transition. The Excise Department reiterated that the carbon tax will serve as a catalyst for reducing carbon emissions and promoting environmentally responsible practices.

To support this, the government has implemented measures to encourage the growth of electric vehicles (EVs), with EV sales experiencing a significant 685% increase in 2024.

The department is also exploring the differentiation of battery tax rates, with plans to reduce the tax rate for recycling, seeking to incentivise businesses to adopt eco-friendly practices and contribute to a circular economy.