Climate change threatens Thailand's economy: action is needed now!

Climate change threatens Thailand's economy: action is needed now!

Thailand is facing serious climate challenges that are putting a severe strain on not only the environment but also the economy. The government is struggling to adapt to deteriorating conditions, causing enormous economic hardship. The World Bank Report predicts that the country's GDP could fall by 7-14% over the next 25 years if appropriate adjustment measures are not taken. This is not a new problem; For the last two to three years, Thailand's economic growth has been assessed by international financial institutions as below average, with an unfortunate forecast of just 2% for 2025.

A dramatic example of the impact of climate change is the devastating floods in 2011, which caused damage equivalent to 12.6% of GDP. It is feared that future floods could cause damage of up to 15% of GDP. These risks are leading the Thai government to prioritize short-term solutions rather than developing long-term approaches to combat air pollution.

Long-term goals and strategies

The aim is to achieve net-zero emissions by 2050, but progress towards this direction appears to be insufficient. In order to remain sustainable, a draft of a climate protection law has been drawn up and will be submitted to parliament for consideration. In this context, it is recommended to use long-term funds to promote renewable energies in order to achieve the set climate goals. Projects to generate energy from waste and biomass could be expanded significantly if the legal framework is right.

Interestingly, the Bio-Circular-Green (BCG) model was introduced in 2021 to promote a sustainable, low-carbon economy. However, many sectors, particularly agriculture and fishing, are extremely vulnerable to the effects of climate change, which could result in billions of dollars in lost production. Agriculture is forecast to lose between $2.9 billion and $5.4 billion, and the fishing industry could lose up to $26.2 billion in value.

To avoid the looming economic setbacks, Thailand needs a comprehensive climate adaptation and mitigation strategy, as well as strong public-private partnerships. Transitioning to renewable energy, improving energy efficiency and promoting electric vehicles are crucial to finally significantly reduce the carbon footprint and achieve climate neutrality by 2050.

Criticism and challenges

Despite good approaches, there is criticism of the new government coalition, which has been in office since September 2023. The approval of new gas-fired power plants and the state-owned company EGAT's efforts to continue modernizing and operating coal-fired power plants are in the firing line. The energy sector is characterized by rigid structures that make the transition to renewable energies difficult. EGAT operates the entire transmission network and many power plants, which creates monopoly-like structures and makes it difficult for companies and private individuals to generate their own electricity and feed it into the network.

However, there are bright spots: the RE100 Thailand Club, founded by over 500 organizations and companies, aims to supply 100% renewable energy in industry. Thailand has already established itself as a market leader for hybrid and fully electric vehicles in Southeast Asia, with the goal of one in two vehicles sold being zero-emission by 2030.

These developments demonstrate that despite the serious challenges facing Thailand, there is a willingness to transform and adapt. However, the course for a greener future must be set immediately. In order to achieve these ambitious climate goals, the country not only needs strategic policies, but also determined cooperation with international partners. The draft climate protection law, if revised and actually enacted, could represent a decisive step in the right direction.

For more information visit the articles on Thansettakij, World Bank and BDEW.