Thursday, December 03, 2020

Is Thailand prepared for the carbon war?

Nov 13. 2020
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By The Nation Editorial

The result of the US presidential election was clear, and means that Joe Biden will be sworn in on January 20, 2021.

Most observers agree that a Biden presidency will ease tensions in the US-China trade war triggered by his predecessor Donald Trump, helping stabilise the global economy once again.

However, there are concerns that Biden appears to be working with European partners to counter China with what could turn into a technology war, spearheaded by America’s return to the Paris Climate Agreement. Biden has prioritised signing back up to the agreement, which Trump withdrew from in 2017.

During his campaign, Biden declared that the United States would hold a meeting of more than 190 world leaders at next year’s Paris climate change conference (COP21) to set more ambitious goals in reducing greenhouse gas emissions that cause global warming.

Among the outcomes of this meeting will be a US policy to label imports with information on their carbon footprint. The labels will give consumers details of imported products’ carbon content or greenhouse gases emissions throughout their service life. More significantly, carbon tariffs will be imposed on imports – pushing up the price of products with a larger carbon footprint.

Is Thailand ready to tackle this new climate policy?

On the bright side, we may benefit from the United States' return to COP21. The US will become an important ally in reducing global warming after Thailand signed an agreement to reduce its greenhouse gas emissions (GGE) by 20-25 per cent by the year 2030.

In 2017, Thailand recorded a GGE reduction of approximately 14 per cent, mainly from power plants and transportation.

Thailand’s renewable energy development plan targets 30-per-cent usage of clean energy by 2037, a goal that may lead to easier trade negotiations with the US.

Thai exporters are already preparing for carbon-footprint policies, and many are now working with international certification bodies to measure their emissions and certify their labelling for consumers.

Thailand is currently considered the most carbon-sensitive economy in Asean, with products registered with the Thailand Greenhouse Gas Management Organisation (TGO).

About 4,472 Thailand-made products have already been labelled by the TGO, most of them in the food and beverage sector, followed by construction, petroleum and jewellery.

However, there are tens of thousands of products that are not yet ready. If carbon taxes are imposed by the US and other countries, they will certainly affect both the price and the competitiveness of Thai exports.

Therefore, businesses who export their products to the United States must adapt quickly and prepare for the new US policy to reduce global warming. Although their manufacturing costs will increase, the benefits will soon become obvious. In the end, the whole world will have to play by the same rules. Thai businesses that can adapt quickly to the new carbon tariffs will get a head start on the competition.

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