World Bank expert sees THB700bn potential in Thai energy contracts

“Whenever you hear the words ‘financial innovation’, run immediately. Someone is hiding risk, and you could end up paying the price, just as in the 2008 financial crisis.”

That was the warning from Marc Forni, the World Bank’s lead urban resilience specialist, during the “From Ambition to Execution: Policy Architecture and Low-Carbon Cities in Action” discussion at Bangkok Business Summit 2026.

Forni said that although climate-finance figures as high as US$120 trillion had been announced at global forums such as the UN climate conferences, known as COP, major commercial banks often wanted to write cheques of at least US$100 million.

As a result, financing tended to concentrate on large projects, even though tackling climate change required numerous smaller initiatives spread across communities, public buildings and businesses.

He also questioned how much difference green bonds could make on their own. The interest-rate advantage over conventional bonds, known as the greenium, was currently only about five basis points, or 0.05 percentage points, he said.

That difference was too small to meaningfully change behaviour or resolve the underlying challenges, he argued.

Six obstacles holding back low-carbon projects

Forni said the hardest part of building a low-carbon society was coordination and putting workable systems in place. He identified six obstacles that had previously held back green projects in Thailand, including Bangkok.

The first was borrowing restrictions, which made it difficult for local authorities and ministries to raise funds for green investment.

The second was the inability to enter long-term contracts. Public agencies had previously been unable to sign service agreements committing expenditure over several years.

The third involved procurement. Conventional public-sector tendering procedures and scoring criteria were poorly suited to newer energy-service models.

The fourth was a shortage of standard contracts and tender documents approved by the Office of the Attorney-General.

The fifth was the high transaction cost of identifying small projects. Forni said artificial intelligence and satellite data could now help address this by screening rooftops and assessing information on the age of equipment in buildings.

The sixth concerned financing markets. Thailand’s relatively underdeveloped securitisation and factoring markets limited the ability of energy service companies, or ESCOs, to raise working capital and expand into further projects.

Bangkok prepares solar and energy-efficiency tenders

Forni said Bangkok was beginning to overcome the legal barriers that had prevented such investment.

The Bangkok Metropolitan Administration (BMA) was preparing to tender a 65-megawatt solar programme and energy-efficiency projects worth more than US$30 million, using long-term energy-management service contracts that had received approval from the Office of the Attorney-General.

Under the approach he outlined, participating public agencies would not need to borrow to fund the initial upgrades. The World Bank describes the wider model as one in which private energy service companies finance and deliver improvements, while public organisations pay for the services over time.

Forni said Bangkok’s experience could provide a template for other government bodies, including the Public Health Ministry and the Ministry of Higher Education, Science, Research and Innovation.

By adopting the same approach, these agencies could bring together smaller projects scattered across the country into an investment programme worth as much as US$1.3 billion, he said.

Small projects offer a US$20bn opportunity

The broader opportunity lay in what Forni described as “teeny-tiny things”: replacing chillers and boilers, installing rooftop solar and switching to electric vehicles in the industrial sector.

Combined, these projects represented more than US$20 billion, or over THB700 billion, in potential investment across Thailand, he said.

He illustrated the opportunity through Bang Pu Industrial Estate, which he said contained 475 factories.

If a large anchor company such as Nestlé invested US$7 million in upgrading its energy systems, while smaller businesses in its supply chain invested US$1 million to US$2 million each, the combined impact would be substantial.

Replicating that approach across factories in 63 industrial estates nationwide could deliver large-scale industrial decarbonisation relatively quickly, he argued.

Private companies could also use long-term service contracts to manage the balance-sheet pressures associated with investment, rather than funding all the equipment themselves.

Carbon credits as a source of practical financing

Forni also highlighted what he described as a move by Thailand’s Securities and Exchange Commission to oversee carbon credits as financial instruments, alongside an opportunity for Krungthai Bank (KTB) to test a broker-dealer role within a regulatory sandbox.

He said the arrangement could allow asset owners to receive cash upfront when they began investing in energy-saving projects.

Forni identified several potential markets for the resulting credits. These included Thai Airways under the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), sales to Switzerland and voluntary-market purchases by multinational companies such as Google, Nike and Unilever.

Credits used under CORSIA must meet the scheme’s eligibility requirements; not all carbon credits qualify.

He cited Thailand’s electric-bus transaction with Switzerland as an example of carbon finance producing actual payments under Article 6.2 of the Paris Agreement.

The central task, Forni argued, was not to invent increasingly elaborate financial products, but to organise practical projects into portfolios large enough to attract investors.

“It is not about chasing trillions of dollars. That is nonsense. What really matters are the small projects that can be brought together into large investment portfolios,” he said.

The approach presents Thailand with an opportunity to scale up the systems it has developed and demonstrate how a tangible transition towards sustainability can move from ambition to implementation.

Source: Krungthep Turakij