Thailand is committed to driving national development amid global environmental challenges through establishing a legal foundation to systematically address the climate crisis. On December 2, 2025, the Cabinet approved in principle the Draft Climate Change Act, B.E. ..., also known as the Climate Change Law. This is the first law designed to drive the country towards a low-carbon economy to achieve the goal of net-zero greenhouse gas emissions by 2050 (Net Zero 2050) (4), as well as to strengthen the country's capacity to accommodate and adapt to climate-related natural disaster impacts in the long term.

This draft legislation comprises 14 chapters, 205 sections, and transitional provisions, focusing on managing climate change issues both in terms of causes—greenhouse gases—and consequences—adaptation to reduce loss and damage. It aims to strengthen Thailand's resilience and create an environment for managing problems that are becoming increasingly severe and frequent, while achieving the goal of transitioning to a low-carbon society and economy. The law is based on the principle of "Climate Justice," combined with social equity and improvement of people's quality of life. (1) (2) (4)

Thailand's greenhouse gas reduction targets under this law will be aligned with international commitments and established as obligations for government agencies to implement and integrate into their work plans for consistent budget allocation. (2) This will be done under a policy structure that includes the establishment of the National Climate Change Policy Committee, chaired by the Prime Minister, with committee members from relevant ministries, the private sector, and civil society, to integrate operations and formulate policies, criteria, and mechanisms for international cooperation. Furthermore, the Draft Act guarantees the rights of individuals and communities to access information and participate in expressing opinions in the policy-making and planning process to ensure transparency. (2)

The key element that will seriously encourage the business sector to adapt is the establishment of a Carbon Pricing Mechanism, which consists of three important mandatory mechanisms: (2)

1. Emission Trading System (ETS) – A mechanism that sets an emission cap to control the amount of greenhouse gas emissions by legal entities in each sector. They will be allocated emission rights through free allocation and/or auction. These rights are considered property that can be bought, sold, and transferred to create incentives for efficient greenhouse gas reduction and appropriate investment in clean technology. (2)

2. Thailand's Carbon Border Adjustment Mechanism (CBAM) – To prevent "carbon leakage" problems that may arise from businesses with high greenhouse gas emissions relocating their production bases to Thailand, and to maintain market competitiveness for domestic producers whose products incur additional costs from low greenhouse gas emissions compared to imported products with lower costs due to no greenhouse gas reduction expenses in production. This will also help support preparedness for international trade regulations. (2)

3. Carbon Tax – A mandatory carbon pricing mechanism requiring producers and importers of goods that emit greenhouse gases to pay tax according to production volume or imports. This helps businesses predict costs clearly and creates incentives to reduce emissions. The Excise Department and Customs Department will collect the tax. However, tax revenue must be remitted to the treasury according to Ministry of Finance laws and cannot be used in the climate fund. (2)

This draft law also establishes an important financial instrument: the Climate Fund, to support the country's transition to a low-carbon economy and build long-term resilience. This funding source will enhance the country's competitiveness by collecting revenue from the law's carbon pricing mechanisms, such as revenue from auctioning rights in the ETS system, CBAM mechanisms, and related fees, to support greenhouse gas reduction activities, climate adaptation, research and development, as well as addressing the impacts of loss and damage. (2)

Additionally, the draft law will serve as a framework for the country's carbon credit operations by establishing clear standards, values, and regulatory systems to ensure that carbon credit trading and use are transparent, verifiable, and protected from fraud in related transactions. (2) It will also develop a Taxonomy for classifying economic activities as a central standard for identifying climate and environmentally friendly activities in Thailand, to be used as a reference framework for climate finance and investment, enabling all sectors to have a common understanding and concretely drive implementation forward. (2)

Regarding the legal framework for adaptation and building the country's resilience to climate change impacts, importance has been placed on developing the National Adaptation Plan, which will create risk and impact assessment models in various dimensions such as water, agriculture, health, and food security, to prepare for implementation at the provincial and local levels according to different area conditions and actual needs. (2)

This Draft Act will be submitted for consideration by the Office of the Council of State soon, before being submitted to Parliament for urgent enforcement. (1) As a framework law, detailed consideration of subordinate legislation or implementing regulations will be prepared in parallel, such as ministerial regulations on greenhouse gas emission data reporting by legal entities, which must be implemented within 1 year from the date the Act comes into force, or the establishment of institutional structures under the law, such as establishing committees and preparing to establish the Climate Fund, which must begin immediately to achieve practical results as specified by law. It is hoped that it will be approved by Parliament by the end of 2026. (2)

However, an issue of particular interest to the private sector concerns greenhouse gas emission data reporting, which will be divided into 2 levels: 1) Planning and preparing the country's greenhouse gas inventory, and 2) Determining greenhouse gas emission rights for legal entities, which will be mandatory only as necessary to obtain CFO (Carbon Footprint Organization) data. This must be linked to management to prevent greenwashing, together with voluntary carbon credit purchasing currently available in the country. (3) The announcement to proceed with this important law is therefore a clear signal that Thailand is entering a new era of economic development that seriously considers the environment and climate, and is a strong foundation for building a resilient, sustainable, and fair society and economy for future generations. (2)

References:

(1) https://www.facebook.com/igreenstory/posts/1187363763542711?rdid=nB1oMrHhVZlr3pQC#

(2) Summary of Key Points of the Draft Climate Change Act, B.E. ..., Department of Climate Change and Environment

(3) https://www.igreenstory.co/climate-change-law/

(4) https://www.facebook.com/share/p/1G8GPz2iq8/

Source: Department of Climate Change and Environment