Sustainability in Thailand: Economic Pressures and Global Imperatives

By
Chanon Limpasitipon
Tyme Sudtikitpisan

1. Thailand’s Sustainability Crossroads

Thailand’s pursuit of sustainability is a multifaceted challenge that requires a careful balance between economic development and environmental responsibility. The government has committed to achieving carbon neutrality by 2050 and net-zero emissions by 2065, but these targets necessitate significant financial and structural adjustments. Domestic enterprises, particularly small and medium-sized businesses, must contend with the increasing costs of environmental regulations, while global geopolitical shifts further complicate Thailand’s green transition.

According to Thailand Environment Institute, Thailand generates approximately 27 million tonnes of waste annually—Bangkok alone contributing 4.2 million metric tonnes—inefficiencies in waste management remain a critical issue. Only 20% of Thailand’s 2,500 dump sites meet global standards. Additionally, Thailand ranks sixth globally in plastic pollution, contributing an estimated 1.03 million tonnes of plastic waste to the oceans each year. Addressing these concerns is not merely an environmental necessity but a fundamental requirement for ensuring long-term economic sustainability.

Recognizing these challenges, Thailand has integrated the United Nations’ Sustainable Development Goals (SDGs) into its 20-Year National Strategy. The National Committee for Sustainable Development (CSD), chaired by the Prime Minister, oversees sustainability policies, emphasizing a whole-of-society approach that includes businesses, academia, and civil society. Additionally, implementing stronger regulatory enforcement and financial incentives will facilitate the transition towards a greener economy.

2.Rising Costs for Business: A Barrier or Opportunity?

Thailand has made substantial efforts in sustainability, yet businesses—especially SMEs—struggle with the financial implications of adopting ESG practices. Compliance with environmental regulations, the shift toward renewable energy, and the establishment of sustainable supply chains require large capital outlays. OECD (2024) stress the need of Thailand for substantial investments in green infrastructure, particularly in renewable energy production, to achieve sustainable high growth. Moreover, exploring opportunities for promoting responsible business conduct in sustainable infrastructure projects, ensuring environmental and social considerations are integrated. This inefficient investment may present a major obstacle, particularly given Thailand’s ninth-place ranking in global climate risk indices.

Many firms remain skeptical about ESG initiatives, perceiving them as additional costs rather than long-term investments. With energy subsidies still amounting to $2 billion annually, businesses receive mixed signals on whether to commit to renewables or continue relying on government-supported conventional energy. The ambiguity in regulatory incentives further exacerbates hesitation among firms regarding long-term sustainability investments.

On fiscal and financial policies, the Ministry of Finance supports sustainability by launching responsible financial instruments, such as the sustainability bond and other ESG bonds. Also, encouraging the State-Owned Enterprises (SOEs), the Specialized Financial Institutions (SFIs), and the private sector to participate in ESG investments. Carbon tax implementation is also embedded within the current excise tax.

To alleviate these concerns, Thailand has initiated policies such as the Framework on the Promotion of Sustainable Agriculture (2017–2021) by the Ministry of Agriculture and Cooperatives, which aims to expand sustainable farming by 500,000 Rai (approximately 80,000 hectares) per year. While this policy aligns with SDG 2 (Zero Hunger) by promoting environmentally friendly production and resilience against climate change, Thailand Development Research Institute (2023) warns that weak enforcement mechanisms could hinder its impact. Without improved oversight and structured incentives, these initiatives may not yield their intended benefits.

3.The Trump Factor: Geopolitical Risks to Sustainability

The return of Donald Trump to the U.S. presidency could introduce significant geopolitical and economic risks for Thailand’s sustainability agenda. His administration’s previous approach to trade—marked by protectionism, higher tariffs, and a strained relationship with China—could have direct consequences for Thailand’s export-dependent economy.

Thailand relies heavily on exports, which account for almost 60% of GDP. The U.S. is Thailand’s largest trading partners, particularly in industries such as electronics, automobiles, and seafood. If Trump reinstates or increases tariffs on Asian goods, Thai exports could face higher costs, reducing competitiveness in the global market. Additionally, protectionist policies could discourage foreign direct investment in Thailand, particularly in sectors promoting green technology and renewable energy.

Furthermore, China is Thailand’s primary source of renewable energy components, including solar panels, wind turbines, and battery storage technology. A continuation of the U.S.-China trade war under Trump could disrupt supply chains and increase costs for Thai firms seeking to transition to clean energy. Given that Thailand has committed to increasing renewable energy use up to 50% of total energy consumption by 2037, up from about 20% in the current plan, such disruptions could hinder progress toward these sustainability goals.

Another critical concern is global climate cooperation. Under the Biden administration, the U.S. has played an active role in funding and supporting international climate initiatives. However, a Trump presidency could result in the U.S. withdrawing from global agreements, such as the Paris Climate Accord, and scaling back climate financing for developing nations. This could significantly impact Thailand’s access to international funding mechanisms, such as the Green Climate Fund, which supports developing countries in implementing sustainability projects. In addition, “Drill Baby Drill” policy that encourage American oil company to increase domestic production, is likely to worsen climate change.

Lastly, currency fluctuations due to U.S. monetary policy could impact Thailand’s ability to secure financing for sustainability projects. A stronger U.S. dollar, driven by trade restrictions and policy shifts, could increase borrowing costs for Thai businesses investing in green infrastructure. As a result, economic uncertainty stemming from U.S. policies could slow Thailand’s transition toward a greener economy.

Thailand’s green transition is intricately tied to global economic and political dynamics. A shift in U.S. policy could alter Thailand’s access to export markets, disrupt its renewable energy supply chain, and reduce funding for sustainability initiatives. As such, Thai policymakers must develop contingency strategies to mitigate these potential risks, ensuring that sustainability goals remain achievable regardless of external geopolitical shifts.

4.Government’s Role: Policies, Incentives, and Structural Challenges

Thailand has introduced several sustainability policies aimed at fostering economic growth while reducing environmental degradation. Key policies include:

• BCG Economy Model (Bio-Circular-Green): This framework integrates sustainability into agriculture, manufacturing, and tourism, promoting circular economy practices that minimize waste and enhance resource efficiency.
• Renewable Energy Development Plan: The government aims to increase renewable energy use to 30% of total energy consumption by 2037, with a focus on solar, wind, and biomass energy. The Energy Regulatory Commission is also offering financial incentives for businesses to adopt clean energy solutions.
• Plastic Waste Reduction Initiative: Thailand banned single-use plastic bags at major retailers on 2020 and is now expanding regulations to further curb plastic waste. Companies are encouraged to adopt biodegradable alternatives and invest in recycling programs.
• Carbon Credit System: The Thailand Greenhouse Gas Management Organization (TGO) is working on a carbon trading market to encourage businesses to lower emissions and invest in sustainable technologies.
• SMART Grid Development: Aimed at enhancing energy efficiency, Thailand is developing a SMART Grid system to integrate renewable energy sources and improve electricity distribution.

Despite these initiatives, Thailand’s sustainability efforts face notable challenges:

• Insufficient Regulatory Enforcement: Policies such as carbon credits and renewable energy incentives lack effective enforcement mechanisms, leading to slow adoption among businesses.

To ensure sustainability policies align with economic objectives, Thailand must provide stronger regulatory oversight and expand tailored incentives for industries such as agriculture, manufacturing, and tourism, which constitute a substantial share of the country’s GDP.

5.The Imperative of Sustainability in Thailand

In Medium-Term (5 Years): While initial ESG compliance costs may rise, TDRI suggests that effective policy enforcement could result in tangible benefits, including a 10% reduction in corporate waste and increased renewable energy adoption. Moreover, emphasizing that robust regulatory mechanisms are essential for achieving these outcomes.

In Long-Term (10+ Years): The future of Thailand’s sustainability will depend on its ability to attract foreign investment and navigate geopolitical shifts. If properly implemented, ESG principles could double Thailand’s R&D expenditure (in ESG) by 2030 and lead to an 80% nationwide adoption of sustainable agricultural and waste management practices by 2040. However, without sustained commitment from policymakers, these goals could remain aspirational rather than achievable.

Ultimately, sustainability is not just an environmental issue for Thailand—it is an economic imperative. As global markets increasingly prioritize ESG compliance, Thailand’s ability to integrate sustainability into its economic framework will determine its competitiveness in the international arena. Delays in implementing robust policies or continued reliance on energy subsidies could jeopardize both economic stability and environmental resilience. To ensure a sustainable future, Thailand must transition from fragmented policy measures to a cohesive strategy that effectively integrates sustainability with long-term economic planning. The question is no longer whether sustainability is necessary, but rather how effectively Thailand can implement and enforce these initiatives before the cost of inaction becomes insurmountable.

References

Asian Development Bank. (2023). ADB’s support for climate change and green growth. https://www.adb.org/sectors/climate-change/overview

Bloomberg News. (2023). Thailand ramps up shift to renewables. Bangkok Post. https://www.bangkokpost.com/thailand/general/2563314/thailand-ramps-up-shift-to-renewables

Ernst & Young. (2025, April 29). Thailand set to implement carbon tax on oil and petroleum products. https://taxnews.ey.com/news/2025-0433-thailand-set-to-implement-carbon-tax-on-oil-and-petroleum-products

Food and Agriculture Organization of the United Nations. (2023). Sustainable agriculture in Thailand. https://www.fao.org/thailand/programmes-and-projects/sustainable-agriculture/en/

FRED, Federal Reserve Bank of St. Louis. (2021). GINI index for Thailand. https://fred.stlouisfed.org/graph/?g=cHPm

Germanwatch. (2021). Global climate risk index 2021. https://www.germanwatch.org/en/19777

International Energy Agency. (2023). Fossil fuel subsidies: Thailand. https://www.iea.org/topics/energy-subsidies

International Renewable Energy Agency. (2023). Renewable energy outlook: Thailand. https://www.irena.org/publications/2023/Jan/Renewable-Energy-Outlook-Thailand

Macrotrends. (2024). Thailand literacy rate 1980-2024. https://www.macrotrends.net/global-metrics/countries/THA/thailand/literacy-rate

Public Debt Management Office, Ministry of Finance. (2023). Sustainability bond annual report 2023. https://www.pdmo.go.th/pdmomedia/documents/2023/Dec/Sustainability%20Bond%20Annual%20Report%202023.pdf

Statista. (2023). Volume of solid waste Thailand 2012-2023. https://www.statista.com/statistics/1295324/thailand-solid-waste-volume/

The Government Public Relations Department. (2023, January 16). Statistics of plastic waste in Thailand that can be solved by all sectors. https://thailand.go.th/issue-focus-detail/001_04_028

Thailand. (2017, June). Thailand’s voluntary national review on the implementation of the 2030 agenda for sustainable development. https://sustainabledevelopment.un.org/content/documents/16147Thailand.pdf

Thailand Board of Investment. (2023). Thailand’s BCG economy model. https://www.boi.go.th/index.php?page=BCG

Thailand Development Research Institute. (2023). Thailand’s green economy challenge. https://tdri.or.th/en/2023/12/column-policy-focus-thailands-green-economy-challenge/

Thailand Environment Institute. (2023). Solid waste during COVID-19. https://www.tei.or.th/en/article_detail.php?bid=49

Transparency International. (2023). Corruption perceptions index. https://www.transparency.org/en/cpi/2023/index/nzl

UNFCCC. (2023). Thailand’s long-term low greenhouse gas emission development strategy. https://unfccc.int/documents/306512

United Nations. (2017). Thailand. Sustainable Development Goals. https://sustainabledevelopment.un.org/memberstates/thailand

United Nations Environment Programme. (2023). State of finance for nature 2023. https://www.unep.org/resources/state-finance-nature-2023

World Bank. (2023). Bridging the gap: Inequality and jobs in Thailand. https://www.worldbank.org/en/country/thailand/publication/bridging-the-gap-inequality-and-jobs-in-thailand

World Bank Data. (2023). Research and development expenditure (% of GDP) – Thailand. https://data.worldbank.org/indicator/GB.XPD.RSDV.GD.ZS?locations=TH

OECD. (2024). A growth-friendly and inclusive green transition strategy for Thailand. https://www.oecd.org/content/dam/oecd/en/publications/reports/2024/05/a-growth-friendly-and-inclusive-green-transition-strategy-for-thailand_639d7b46/35b34175-en.pdf

Oroschakoff, K. (2024). China is exporting more green tech to developing countries, with consequences for global climate policy. NZZ. https://www.nzz.ch/english/china-is-exporting-more-green-tech-to-developing-countries-with-consequences-for-global-climate-policy-ld.1870050

Tyme Sudtikitpisan ชานน ลิมป์ประสิทธิพร