Thailand and its new climate governance

Thailand has taken a historic leap by approving the principles of its first Climate Change Act on December 2, 2025. This law represents the country’s most ambitious climate governance reform to date. For the first time, Thailand will have a single, unified legal framework for climate action, covering emissions management, carbon markets, adaptation, taxation, and national reporting obligations.

The Act establishes four national-level governance bodies, including the National Climate Change Policy Committee and a new Greenhouse Gas Management Organisation, which will oversee emissions data, carbon credit mechanisms, and national reporting. These bodies will coordinate Thailand’s climate strategy and its commitments under the UNFCCC, supporting long-term goals of carbon neutrality and Net Zero.

Critically, the Act creates Thailand’s first state-recognized Climate Fund, designed to channel revenue from carbon taxes, carbon credit trading, and related fees into clean-energy infrastructure, community-based adaptation programs, and emissions-reduction projects.

Carbon pricing, ETS, and CBAM Bring Thailand in line with Global markets 

A central feature of the Act is the introduction of carbon pricing, combining two major tools: a carbon tax for high-emission sectors and a foundation for a national Emissions Trading System (ETS). The ETS will allow companies to buy, sell, and trade emissions allowances, supported by a national registry and transparent allocation rules.

In addition, the law prepares Thailand for integration with global trade shifts by enabling a Cross-Border Carbon Adjustment Mechanism (CBAM). This means imported goods could face carbon charges based on the emissions embedded in their production—a move that aligns Thailand with the EU’s emerging CBAM standards and future carbon-border frameworks in Asia.

Carbon credits will also be formally recognized as legal assets, boosting investor confidence and enabling financial institutions to incorporate carbon instruments into portfolios under clear regulatory protection.

Adaptation, taxonomy, and enforcement point to a Low-Carbon Future

The Climate Change Act doesn’t stop at mitigation.

To guide sustainable investment, the law mandates a national sustainability taxonomy, harmonizing Thailand with international standards used by the EU, ASEAN, and global financial markets.

Enforcement is robust: inaccurate or incomplete emissions reporting triggers fines of 30,000 (1000 USD) - 300,000 (10,000 USD) baht, with additional daily penalties for ongoing violations.

As secondary legislation is drafted, high-emission industries are urged to prepare for rising carbon costs, tighter reporting rules, and a financial landscape where emissions now carry clear monetary consequences.

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