Thailand urged to accelerate energy transition as US-Iran sign MoU

Thailand needs to accelerate its transition from internal combustion engine (ICE) vehicles to electric vehicles (EVs) and expand the use of renewable energy to strengthen long-term energy security, according to Dr. Areeporn Asawinpongphan, a researcher at the Thailand Development Research Institute (TDRI).

While the United States and Iran have signed a 60-day memorandum of understanding aimed at reopening the Strait of Hormuz, Dr. Areeporn warned that geopolitical risks remain unpredictable and could continue to threaten global energy markets.

"The government should support sectors that can be more electrified, especially the transportation sector that can shift from ICE vehicles to electric vehicles, which would help lower oil consumption," she said.

She also urged policymakers to reduce Thailand's dependence on imported liquefied natural gas (LNG) from the Middle East and accelerate investment in domestic renewable energy sources, particularly solar power.

Despite efforts to accelerate the green transition, Thailand's energy mix remains dominated by fossil fuels. According to Thailand's National Statistical Office and the Ministry of Energy, Crude oil represented around 38% of the country's primary energy supply, followed by natural gas at 27%, while renewable sources account for roughly 17% in 2024.

Speaking during an interview on The Next Move, Dr. Areeporn said the US-Iran agreement is positive for Thailand in the short term, as it reduces the risk of disruptions to global oil and gas supplies and helps stabilize energy prices.

"As a net energy importer, Thailand benefits from lower geopolitical tensions because it eases pressure on transportation costs, electricity prices and the overall cost of living," she said.

However, she cautioned that the agreement should not lead to complacency.

"No one can guarantee that geopolitical tensions will not return. Over the past several years, conflicts have become more frequent and more severe, and every major disruption affects Thailand because of our heavy reliance on imported energy,” she noted.

The recent tensions between Washington and Tehran should serve as a wake-up call for Thailand to develop a more resilient and diversified energy strategy, as She described the current period of relative stability as a "honeymoon period" that should be used to prepare for future uncertainties.

"This is the time to work on what we can do better to strengthen our energy security before the next disruption occurs," Areeporn added..

For immediate action, the researcher recommended diversifying Thailand's energy procurement sources beyond the Middle East, which currently accounts for approximately 70-80% of the country's crude oil imports.

She also called for stronger energy-efficiency measures across industry, businesses and households, arguing that reducing energy consumption would improve economic productivity while lowering vulnerability to external shocks.

Looking further ahead, the TDRI researcher noted that Thailand must focus on reducing its dependence on imported fossil fuels through electrification and renewable energy development.

As Thailand cannot produce enough oil to meet domestic demand, she said the government should prioritise electrifying the transportation sector and establishing a larger strategic petroleum reserve to protect the economy during supply disruptions.

To fully utilise these resources, the government should invest in modernising the national power grid and expanding energy-storage technologies to improve the reliability of renewable power generation.

"The impact is not only supply shortages. Price stability is equally important.”

“Whether tensions are major or minor, they will continue to affect Thailand unless we adopt more effective policies to strengthen long-term energy security,” she opined.

Diplomatic efforts to advance the MoU the US and Iran are set to continue in Switzerland on Sunday, although conflicting statements from both sides underscore the challenges of securing a lasting agreement and ensuring the full reopening of the Strait of Hormuz.

Iran claimed that restrictions on the strategic waterway remain in place amid ongoing tensions following Israeli strikes in Lebanon. In contrast, the United States military also claimed that it has secured control of the strait and that commercial shipping traffic remains open.

US Vice President JD Vance is expected to represent Washington at the talks, while an Iranian delegation has already arrived in Switzerland. Pakistan's Prime Minister is also set to participate as a mediator.