Key Challenges in Thailand’s Carbon Credit Market
The use of carbon credits in offsetting emissions from hard-to-abate activities is an important tool in global efforts to achieve net zero.
Thailand’s carbon credit market is under the spotlight. While businesses continue to implement efforts to reduce their greenhouse gas emissions, there remain certain sectors that are difficult to abate. Carbon credits are therefore important measures for businesses to achieve their carbon neutrality and net zero targets.
Amidst the growth of Thailand’s voluntary carbon credit market, investors will still encounter market risks around carbon credit trading, including demand, supply, price, and trading channel risks.
Demand risks focus on uncertainties in the carbon credit market. Given the voluntary nature of carbon credits, they are not the first choice for prospective buyers, whose priority is more focused on implementing carbon reduction initiatives.
Supply risks derive from the fact that Thailand’s carbon credit market is more suited to large-scale, rather than small-scale, investors. There is uncertainty around the regularity of carbon credit trading volumes, and as the market is still developing, carbon trading is based on agreements between buyers and sellers.
Price risks: As Thailand’s carbon credit market is still in development, there are currently no clear regulations or a system to maintain the stability of carbon credit supply and demand. Because of this, there are risks concerning price volatility and price drops.
Individuals interested in carbon credit trading should carefully examine the information available on the different methods of carbon credit investments, as well as new, progressive technologies that are playing a greater role in reducing greenhouse gas emissions. They should also identify other alternatives to achieve their greenhouse gas reduction and net zero targets in a sustainable way.
