"If the BOI approves tax breaks for carbon credits, it will attract more firms to do CDM projects, which will be a significant part of coping with climate change," Thailand Greenhouse Gas Management Organisation executive director Sirithan Pairojboriboon said yesterday.
"We expect to complete the draft [proposal] within two months and get the conclusion this year," he said.
The Thailand Greenhouse Gas Management Organisation is a newly established autonomous governmental organisation with a specific purpose as an implementing agency on greenhouse gas issues.
The BOI has refused to add carbon-credit trading to its list of promoted activities because it considers carbon credits as a side benefit of the main investment project.
However, a Thailand Development Research Institute study has found that the BOI would be the easiest channel to promote the development of CDM projects.
However, BOI privileges will be granted only to certified projects, not to voluntary ones.
The greenhouse gas organisation has also initiated the setting up of a fund to purchase carbon credits from small operators and provide soft loans for CDM projects.
It is expected to submit its plan to the Committee on National Policy and win approval this year so it can start its activities next year.
"It will be similar to the Esco Fund, but will support all types of activities that generate carbon credits, not only energy-saving projects," Sirithan said.
Even though the price of carbon credits fell from ¤22 (Bt 1,063) per tonne last year to around ¤12 at present as a result of the global recession, the price is predicted to keep increasing in the long run.
Demand for carbon credits will not drop even though the Kyoto Protocol will end by 2012, Sirithan said. "The European Union is our large market, which has a certain target for greenhouse gas (GHG) reduction," he said.
Thailand plans to cooperate with neighbouring countries to hold a conference on carbon labels and carbon footprints next year in order to boost awareness of GHG mitigation.
Robert Donkers, minister counsellor of the environment delegation of the European Commission to India, Bhutan and Nepal, said the EU has committed to cutting GHG emissions by 20 per cent by 2020, rising to 60-80 per cent by 2050.
"Although Thailand has taken serious action about GHG reduction slower than some countries, it can learn from other countries' mistakes and has high potential to generate carbon credits for those who need them," he said.
At the Copenhagen Conference, to be held in Bangkok in December, the EU will discuss and offer funds to Thailand for CDM investment projects. The funds may be raised by auction among companies requiring carbon credits, he said.
So far, Thailand has 82 projects receiving letters of approval and two certified projects.
Of the total, 60 per cent came from biogas power plants, 20 per cent from biomass power plants and the remaining 20 per cent from other projects, including fuel switching and heat-waste utilisation.