The EU’s carbon border adjustment mechanism takes effect today

If emissions exceed the specified standards, companies can purchase carbon credits to compensate.CBAM initially applies to seven types of products, including steel and aluminium.

Thai exporters should be aware of the standards because there is a possibility the EU might expand the range of products.

CBAM has made the carbon credit market buzz with activity. Those interested in this market, such as tree planters, solar energy producers, or even biomass energy producers, must understand how carbon credits work.

Essentially, individuals or entities can earn passive income by meeting the EU criteria related to carbon emissions reduction. For example, planting trees can earn carbon credits. One hectare of trees can absorb one tonne of carbon emissions per year. The price of these credits fluctuates based on market demand and the type of carbon credit. Currently, “forest” credits average 2,000 baht per tonne of carbon emissions equivalent per year.

Investing in tree planting, or creating forests, not only contributes to the environment but also generates income.

However, individuals must comprehend the revenue sources before making investments. One rai (0.39 acre) of trees can isolate one tonne of carbon emissions annually.

Anothai Sangthong, director of the Information Technology and Corporate Communication Office at the Thailand Greenhouse Gas Management Organisation, outlined the conditions for planting trees to obtain carbon credits. Entrepreneurs must adhere to various conditions, such as the Thailand Voluntary Emission Reduction Program's (T-VER) standards. T-VER certification requires a minimum land area of 10 rai (3.95 acres).

Additionally, the potential for carbon isolation varies among different tree species. Only perennial trees with long lifespans and growth rings are eligible for carbon credits. Trees that decay relatively quickly, like certain types of palm trees and bamboo, are not suitable for these initiatives.

“Blue carbon", which is derived from seagrass, is another effective greenhouse gas sink that can be a source of carbon credits. The oceans and coasts provide a natural way of reducing the impact of greenhouse gases on our atmosphere by absorbing carbon.