How gas plays its part in achieving Thailand's carbon neutrality goals

Bangkok, 18 June 2024 – GIZ, the Energy Research Institute of Chulalongkorn University (ERI), and Agora Energiewende, implementing partners in the project Clean, Affordable, and Secure Energy for Southeast Asia (CASE), co-hosted a public seminar titled “GasLens: roles of gas towards carbon neutrality in Thailand” alongside the Energy Policy and Planning Office (EPPO), CASE’s political partner, at the Centara Grand at CentralPlaza Ladprao.

Sasithon Jedsadathitikul, Director of Strategy and Planning Division, Energy Policy and Planning Office (EPPO), opened the event by stating that climate change is clearly impacting everyone through hotter weather, droughts, and rainfall patterns deviating from seasonal norms. Thailand is aware of these impacts, prompting the announcement of the country’s Carbon Neutrality target for 2050 and the pursuit of Net Zero greenhouse gas emissions by 2065 at COP26. EPPO itself has developed the National Energy Plan, recognising that the energy sector is the highest carbon emitter. Therefore, in addition to focusing on energy security and competitiveness, sustainability and environmental concerns are priorities to achieve carbon neutrality goals.
Sasithon noted that the Power Development Plan (PDP) 2024, currently open for public comments, indicates a reduction in fossil fuels like coal and natural gas while increasing the share of renewable and clean energy sources. The direction of the energy policy aligns with environmental objectives. Over the next 10-15 years, Thailand will undergo an energy transition phase before moving towards energy liberalisation, including becoming an LNG trading hub.
A new study, “Roles of Gas Towards Carbon Neutrality: Thailand Insights”, from the project Clean, Affordable and Secure Energy for Southeast Asia (CASE) explores Thailand’s natural gas sector, carbon neutrality drivers, and challenges for gas in a low-carbon future. Through industry expert interviews, the research examines trends in gas use, enabling mechanisms for transition, and the impact of renewables, electrification, hydrogen and carbon capture technologies. It also explores the risks, impacts, and opportunities arising from the energy transition.

Three main factors affecting the achievement of carbon neutrality goals
Dr. Siripha Junlakarn, representative from CASE and Dr. Supawan Saelim, Agora Energiewende, presented research findings showing that reducing the share of natural gas in Thailand’s power generation is crucial for the country to achieve carbon neutrality goals. In 2022, natural gas usage emitted around 74 million tonnes of carbon dioxide (CO2), with approximately 68% coming from power production.
Additionally, increasing the share of clean electricity or reducing natural gas usage in power generation would also enhance carbon reduction efforts in the transportation and industrial sectors as they shift towards electrification, such as through the adoption of electric vehicles (EVs). The results from multiple energy scenario models revealed that for Thailand to attain carbon neutrality, the proportion of natural gas used for power generation must decrease to less than 20% by 2050.

The researchers highlighted three critical factors affecting Thailand’s carbon neutrality pathway, as follows:
- Thailand’s increasing need to rely on importing more liquefied natural gas (LNG) for power generation due to dwindling domestic natural gas resources. This leads to greater risks in ensuring a reliable and affordable natural gas supply that is vulnerable to global factors. Having risk mitigation plans, such as studying the feasibility of new natural gas discoveries and diversified LNG import portfolios, therefore plays a crucial role in strategic planning to reduce the impacts of these risks.
- Building more facilities for natural gas and LNG imports might trap Thailand into using them for a long time (carbon lock-in). This makes it expensive to switch to cleaner and potentially cheaper energy sources later. There’s also a risk that these facilities become useless (stranded assets) if Thailand decides to use less natural gas in the future. On top of that, technologies to capture and store carbon from natural gas (CCS/CCUS) are uncertain and could make reaching climate goals more expensive if Thailand relies heavily on natural gas.
- Natural gas plays a vital role in ensuring grid reliability by providing flexible generation to support increased renewable power integration. Gas-fired power plants can ramp up during peak demand periods when solar and wind generation is insufficient. However, regulatory reforms, new market mechanisms and additional investment are needed to increase the flexibility of the gas supply chain and provide financial incentives.
“Global trends towards sustainability and achieving net-zero greenhouse gas emissions impact Thailand’s economic competitiveness, as Thailand relies on exports and services from abroad for more than 50% of its gross domestic product (GDP). Therefore, if Thailand cannot meet the increasing demand for clean energy from businesses, it may impact the competitiveness of Thai businesses and lead to relocation of manufacturing bases to other countries,” the research team stated.

Proactive energy planning essential to achieving carbon neutrality target.
The research team stated that there is an opportunity to enhance the flexibility and agility of Thailand’s energy planning to better keep pace with global technology and price trends. The current energy development planning process relies on past data and assumptions that may not fully reflect present situations, and it has to go through an approval process by working committees. Moreover, if plans related to carbon emission reduction need to be adjusted, the energy plan would also need to be revised accordingly. Currently, Thailand has a Power Development Plan (PDP) as a guideline until 2037, but this plan may pose risks and challenges in allowing Thailand to achieve carbon neutrality by 2050.
Moreover, the draft PDP 2024, which continues to rely heavily on gas, would require carbon capture and storage (CCS) technology to achieve carbon neutrality. However, CCS currently comes at a high cost. To make CCS viable, the government would need to implement carbon pricing mechanisms or provide subsidies to support the development of such projects. As for the use of new energy sources like hydrogen in the power generation sector, it may not be an efficient option in terms of technical impact and cost in the short and medium term. Instead, its application should be considered in other sectors where there are fewer alternatives for carbon reduction and where investment would be more cost-effective.

Finding new market for LNG as Thailand aims to reduce new natural gas usage
Dr. Ruengsak Thitiratsakul, Advisor to the Petroleum Institute of Thailand, stated that Thailand has great potential to become a Regional LNG Hub. The current infrastructure can accommodate 19 million tons of LNG imports per year, and there are plans to expand this capacity to 30 million tons per year by 2028. In the long run, if LNG demand decreases, he noted that the existing LNG infrastructure can be adjusted gradually. Thailand does not have to completely stop using natural gas or LNG immediately. There are still several options, such as Thailand becoming a hub for exporting LNG to smaller markets like the CLMV countries (Cambodia, Laos, Myanmar, and Vietnam).
“In ASEAN countries, each nation has different timelines for achieving carbon neutrality, so their natural gas demand will persist for at least 20 more years. As for the possibility of adapting the LNG infrastructure for future hydrogen energy, it seems feasible, such as importing LNG to produce hydrogen through methane pyrolysis. However, another concept is to utilise wet LNG, which would depend on the viability of procuring wet LNG through equity investments in overseas production sources,” Dr. Ruengsak noted.

Regarding the development of the hydrogen business in Thailand, Dr. Pramote Puengjinda, Senior Project Advisor for the International Hydrogen Ramp-up Programme (H2Uppp) from GIZ Thailand stated: “Thailand needs to follow a strategic approach based on the projected demand level. If initial hydrogen demand is low, Thailand may need to integrate hydrogen usage across multiple sectors along with other technologies to increase consumption to a viable level for establishing a hydrogen business. However, if there is high hydrogen demand from the beginning, Thailand must simultaneously work on three main areas: identifying and securing hydrogen production sources, preparing hydrogen infrastructure readiness, especially transportation and logistics systems, and developing a national roadmap for Thailand’s hydrogen technology development.”
About the project Clean, Affordable, and Secure Energy for Southeast Asia (CASE)
The project Clean, Affordable and Secure Energy for Southeast Asia (CASE) aims to support a narrative change in the SEA power sector towards an evidence-based energy transition in the pursuit of the Paris Agreement goals. CASE focuses on the four largest countries in the region: Indonesia, Vietnam, Thailand, and the Philippines.
These four countries represent nearly three-quarters of the total power generation in the region and account for about 72% of the region’s GDP and 82% of its population. Their energy development will largely impact the region’s ability to achieve its development and sustainability goals, as well as the Paris Agreement’s objectives.
CASE focuses on offering evidence-based solutions to the policymakers who are facing challenges and on building social support for the region. To do so, a joint fact-finding approach is applied to reduce areas of disagreement through expert analysis and discussion. The project also supports coordination in the SEA power sector by providing technical and policy support and facilitating discourse on energy visions.