How Thailand’s Downstream Sector is Leading ASEAN’s Energy Transition 

Thailand’s downstream oil and petrochemical industries face a critical crossroad: to decarbonise and meet the country’s ambitious goals of carbon neutrality by 2050 and net-zero emissions by 2065. This transition is complex, driven by both domestic policy and international market pressures. 

In this article, Dr. Ruengsak Thitiratsakul, Advisor of Petroleum and Energy Institute of Thailand shares his insights on Thailand’s energy transition and decarbonisation. 

Navigating Global and Domestic Pressures 

The push for decarbonisation is a matter of both economic survival and environmental responsibility. Internationally, new carbon-related trade measures like the EU’s Carbon Border Adjustment Mechanism (CBAM) pose a significant risk to Thailand’s export-oriented industries. Without demonstrable decarbonisation efforts, Thai producers risk direct cost penalties, limited market access, and reputational damage from carbon-conscious customers, especially in high-value markets like the EU and Japan. These global measures are not just environmental tools but act as trade barriers—exporters with high-carbon intensity operations could be deprioritised by global buyers. 

Domestically, the government is considering a carbon tax and has made decarbonisation a strategic priority. A proposed carbon price of THB 200 per ton of CO₂ is under discussion, which would raise operational costs and sharpen the focus on emissions management. This urgency is compounded by the high costs of adopting new technologies and the limited access to proven low-carbon solutions, which create uncertainty about their financial return. 

A Comprehensive Policy Framework 

To address these challenges, Thailand is building a comprehensive policy foundation. The revised Energy Efficiency Plan aims to reduce national energy intensity by 30% by 2037, with large factories already undergoing regular energy audits. Complementing this, the Thailand 4.0 strategy provides tax incentives and technical consulting to encourage the adoption of automation and low-carbon technologies.  

Beyond these foundational plans, new policies are gaining traction. Thailand is developing a national carbon pricing framework that will eventually establish a domestic emissions trading system. While still in draft stage, Thai companies are already participating in voluntary carbon markets, and the government is exploring links with international platforms. A green finance taxonomy is also guiding investment toward sustainable projects, which is part of a growing green finance ecosystem. The Bank of Thailand and the Securities and Exchange Commission are leading this effort, which is helping firms access green bonds, sustainability-linked loans, and ESG-aligned funding. 

Pioneering Technology and Circular Economy 

Thailand is a leader in ASEAN’s energy transition, showcasing a proactive stance on technology and sustainability. The country has implemented advanced Euro 5 fuel standards for gasoline and diesel and has some of the most progressive biofuel blending mandates in the region, which help reduce fossil fuel reliance while supporting the agricultural economy.  

The Bio-Circular-Green (BCG) Economy Model is central to Thailand’s strategy. This model promotes circular resource use and low-carbon innovation. Aligned with this, the downstream sector is moving beyond traditional fossil fuels to embrace alternative feedstocks like agricultural biomass and recycled plastics. This includes a shift toward integrated refinery-to-chemicals (R2C) models to produce higher-value petrochemicals as fuel demand plateaus. Thai companies are also investing in bioplastics, recycling, and green chemistry, reflecting a strong commitment to the circular economy. 

Significant progress is also being made in advanced technologies. Thailand has a green hydrogen roadmap and is developing its first large-scale carbon capture and storage (CCS) project at the offshore Arthit gas field, led by PTTEP. Feasibility studies are complete, and operations are expected by 2026–27, potentially storing 700,000–1,000,000 tonnes of CO₂ per year.  Meanwhile, SCG Cement has begun piloting carbon capture and utilisation (CCU) projects, adding another dimension to Thailand’s decarbonisation pathway. This project could set a precedent for a CCS hub, serving broader industrial clusters. Simultaneously, digital technologies like AI and real-time monitoring are being used to improve operational efficiency and environmental accountability. Emerging tools such as IoT sensors, predictive maintenance, and even blockchain traceability are reshaping how downstream assets are managed. 

A Regional Leader 

By aligning government policy, private sector investment, and a focus on innovation, Thailand’s integrated approach positions it as a forward-leaning economy in the region. The country has a significant opportunity to lead regional collaboration by sharing its expertise in energy efficiency and ESG reporting, helping to harmonise standards and accelerate technology adoption across ASEAN. Opportunities also lie in ASEAN-level collaboration on green hydrogen, sustainable aviation fuel, and shared CCS infrastructure, which could lower costs and accelerate uptake across the region. While challenges like infrastructure gaps and uneven standards remain, the overall direction is clear: Thailand is proactively ensuring its downstream sector can thrive in a low-carbon global economy.