Effect of marginal abatement cost and social cost of carbon on optimum degree of greenhouse gas mitigation in Thailand energy sector

Abstract

Over the past decade, the issues and effects of climate change have been gaining increased recognition. People have become increasingly more aware of the problem, recognizing its intensifying repercussions, and action has been taken to reduce the individual, social, national, and international impacts. Despite Thailand’s small contribution to global greenhouse gas emissions, the effects of climate change are felt around the world and have long-term implications. It is therefore essential to address the consequences of climate change and mitigate its impacts. To this end, a climate change policy has been developed and relevant plans and policies updated in order to reach the goal of carbon neutrality and net zero greenhouse gas emissions, which is regarded as the primary objective of climate change action today. This thesis explores the appropriate level of greenhouse gas mitigation in Thailand when accounting for the associated marginal abatement cost and social cost of carbon. It assesses the effects of energy efficiency and renewable energy technologies on greenhouse gas mitigation within the industrial and power sectors, and offers policy recommendations in line with the national policies and plans for the years 2020 to 2050. The findings from this study can be used to determine the most suitable policies and measures in terms of both the technological potential for greenhouse gas mitigation and the economic aspects that are essential for the formulation of plans, policies, roadmaps, and action plans. These will serve as guidelines to effectively aid in the realization of the country’s greenhouse gas mitigation goals in the short, medium and long term. The findings showed that when greenhouse gas mitigation policies are applied in Thailand, the cost of greenhouse gas mitigation per unit and the social cost of carbon can be divided into two cases: (i) the effect of greenhouse gas mitigation potential was above expectations or adequate to reach the greenhouse gas mitigation target, and (ii) the effect of greenhouse gas mitigation potential was below expectations or inadequate to achieve the greenhouse gas mitigation target. An interesting point was in Case 2, in which it was imperative to utilize all the technologies outlined in the marginal abatement cost curve and consider other mechanisms in various capacities, including utilization of the social cost of carbon, to inform decision-making in order to meet the desired target. The social cost of carbon should be taken into account when making decisions. Various implementations, such as emissions trading systems and carbon taxes, might be imposed to drive operational investments in greenhouse gas abatement technologies. In certain instances, it was necessary to implement additional technologies or measures when social carbon mechanisms were employed to invest in technologies with the potential to reduce greenhouse gas emissions, in order to reach the desired goals. As an example, flexible power generation and the utilization of high-cost technologies with strong potential to reduce greenhouse gases should be a priority, such as carbon capture and storage technologies or hydrogen technology for industry and power sector. Furthermore, policies and plans at multiple levels related to climate change should be adjusted and prepared for the post-2030 targeting.