Othello International has developed the Thai-language edition of Building Thailand’s Carbon Pricing Architecture: Comparative Insights from the EU and International Experience on ETS, Carbon Tax, and CBAM — the landmark legal and policy assessment of Thailand’s draft Climate Change Act, produced by DLA Piper International under the Thailand–UK PACT programme in collaboration with Thailand’s Department of Climate Change and Environment (DCCE). For the first time, Thai regulators, SET-listed companies, exporters and civil society can engage with a comprehensive comparative analysis of the country’s emerging carbon-pricing system in their own language, with the legal precision and technical nuance fully intact.
The timing could hardly be more consequential. Thailand is preparing to put a price on carbon for the first time in its history through a single, ambitious piece of legislation that will reshape how industry measures, reports and pays for greenhouse-gas emissions. This article sets out what the report covers, what the draft Climate Change Act proposes, what it means for Thai business, and why an authoritative Thai-language edition is central to getting implementation right.
A landmark report on Thailand’s carbon-pricing future
Produced in 2026 under the Thailand–UK PACT (Partnering for Accelerated Climate Transitions) programme — a flagship initiative funded by the UK’s Foreign, Commonwealth & Development Office (FCDO) and Department for Energy Security and Net Zero (DESNZ) — the report offers a detailed legal assessment of Thailand’s draft Climate Change Act and draws comparative insights from the EU, the UK and other jurisdictions across emissions trading, carbon taxation, voluntary carbon markets and border carbon adjustments.
Its central message is measured but striking: designed and implemented well, Thailand’s hybrid carbon-pricing architecture “has the potential to position Thailand as a regional leader” and to support a credible pathway toward a low-carbon economy. The report is equally clear, however, that the draft introduces real challenges — policy coherence, administrative complexity, overlapping obligations and the risk of arbitrage between instruments — that need to be resolved before the system goes live. DLA Piper International, whose team was recognised in the Sustainable Finance Advisory Team category at The Legal 500 UK ESG Awards 2026, grounded the analysis in more than a decade of EU and UK regulatory experience.
Inside Thailand’s draft Climate Change Act
The draft Climate Change Act — approved by Cabinet in December 2025 and now moving through the legislative process, with enforcement anticipated from 2027 — establishes a hybrid model that combines market-based mechanisms with fiscal measures. Four instruments sit at its core, and understanding how they interact is essential for any Thai business that will fall within scope.
A national Emissions Trading System (ETS)
At the centre of the architecture is a cap-and-trade emissions trading system that will require covered installations to hold allowances against their verified emissions. The report treats the EU ETS — now in its fourth phase and the world’s most developed carbon market — as the reference model, illustrating how a scheme can evolve from a pilot with limited data and extensive free allocation into a mature market with robust monitoring, reporting and verification (MRV), increasing auctioning and clear compliance structures. For Thailand, the draft provides the high-level legal basis, with operational detail to follow in secondary legislation. Emissions-data collection is expected across 2027–2028, with a pilot ETS potentially launching around 2029.
A carbon tax
The draft Act sets a maximum carbon-tax rate of THB 120 per tonne of CO2-equivalent, collected from industrial emitters and importers. This should not be confused with the separate excise-linked carbon tax of THB 200 per tonne that the Thai Cabinet approved in early 2025 within the existing oil excise structure — a distinct measure that was absorbed into fuel excise and did not raise pump prices. Keeping the two instruments distinct matters: one is the ceiling under the draft Climate Change Act, the other an already-operating excise-based levy.
A Carbon Border Adjustment Mechanism (CBAM)
The draft Act also anticipates a domestic Carbon Border Adjustment Mechanism modelled on the EU’s, designed to place imported goods on the same carbon-cost footing as domestic production and to guard against carbon leakage as Thailand’s own carbon price rises. The report reviews the EU CBAM compliance framework in detail and outlines initial considerations for a future Thai CBAM.
A regulated carbon-credit market
Finally, the Act recognises carbon credits and establishes a Climate Fund, with provisions on the sources and broad uses of revenue. The report cautions that the current provisions on deductions and offsetting rights need careful design — a point examined further below — and that the interaction between the ETS, the carbon tax and the voluntary carbon market must be clearly delineated to prevent double-counting and inconsistent price signals.
What CBAM already means for Thai exporters
For exporters, the stakes are not theoretical. The EU’s CBAM entered its definitive phase on 1 January 2026. While the first purchase of CBAM certificates does not begin until 2027 — covering 2026 emissions, with the first surrender deadline on 30 September 2027 — the compliance clock is already running, and importers of Thai goods will pass carbon costs down their supply chains.
Kasikorn Research Center estimates that CBAM could affect roughly THB 28 billion of Thailand’s exports to the EU — about 3.8% of the total — with steel and aluminium the most exposed sectors, and more limited impact on cement and fertiliser given smaller export volumes. Exposed manufacturers now need accurate, verifiable emissions data at product level, and the ability to communicate it in both English and Thai to regulators, EU importers and verifiers. Clear, authoritative Thai-language guidance on how carbon pricing works is no longer a nicety; it is a competitiveness issue.
“Carbon pricing will touch every major Thai exporter and listed company. Getting the language right — legally precise and technically fluent — is part of getting the policy right.”
— Kenyohn T. Clark, CEO & Founder, Othello International
Lessons from the EU and UK
One of the report’s most valuable contributions is translating a decade of European regulatory experience into practical guidance for Thailand. Several lessons stand out.
Start narrow but deep, then expand. The EU began with a limited set of large CO2 emitters before broadening scope. A “narrow but deep” launch — selected sectors, strong MRV — helps regulators test emissions-reporting platforms, verification capacity and registry operations under real conditions before extending coverage to smaller or more complex installations.
Sequence free allocation and auctioning. EU experience shows that early free allocation helped secure industry buy-in, but that a transition to benchmarking and auctioning is essential to preserve decarbonisation incentives. Signalling a clear glide-path in advance shapes investment expectations and future carbon-cost planning.
Build market-stability tools early. The EU’s experience with surplus and price collapse in early phases led to structural reforms such as auction backloading and the Market Stability Reserve. Thailand’s draft provides for a registry and trading platform but does not yet specify stability mechanisms; monitoring supply–demand balances from the outset is prudent.
Treat small emitters proportionately. Simplified MRV or de-minimis thresholds for smaller facilities — as with the EU’s opt-out for small installations — focus verification resources on the largest sources of emissions while reducing compliance burdens on SMEs.
Recycle revenue transparently. Earmarking carbon revenue for climate and industrial-transition measures can be decisive for stakeholder support. Signalling early that revenues will be reinvested in decarbonisation, MRV infrastructure and SME support helps address the “chicken and egg” concerns Thai industry has raised about upfront capital.
Engage stakeholders continuously. Prior to the EU ETS, extensive consultation — including the publication of a Green Paper — was instrumental in building understanding and refining design. The report suggests a comparable “Thai ETS Green Paper” followed by sector-specific consultations to manage expectations and build legitimacy.
Avoiding double exposure and arbitrage
Because the draft establishes several instruments — ETS, carbon tax, CBAM and voluntary offsets — without yet fully clarifying their respective scope, the report warns of a real risk of double exposure, arbitrage behaviour or inconsistent price signals. Providing advance certainty on which sectors fall under the ETS, which remain under the carbon tax, and how the offset mechanism interacts with both would reduce compliance uncertainty and support long-term investment planning. International experience suggests this certainty should be provided well ahead of first compliance obligations, even where carbon prices are introduced gradually: early publication of sectoral coverage and interaction rules lets firms begin internal data collection, MRV development and investment planning, reducing resistance at the point of implementation.
The report also highlights aviation as a pragmatic pilot for an early phase of a Thai ETS — a sector with a relatively limited number of regulated entities, well-established emissions data through fuel and flight records, and compliance that can be supported through simplified MRV tools. Examples like this show how early ETS coverage can build the monitoring, registry and enforcement capacity a mature system needs before it is extended to more complex or politically sensitive sectors.
The report’s key warning: offsets, linkage and CBAM recognition
Perhaps the most important finding for policymakers is that the draft Act’s current provisions on deductions and offsetting rights risk constraining Thailand’s ability to pursue future linkage with the EU and UK ETS, and could limit prospects for EU CBAM recognition — the very outcome that would reduce costs for Thai exporters. In other words, design choices made now will determine whether Thailand’s system is treated as equivalent by trading partners later.
The report also urges stronger just-transition and human-rights safeguards, clearer multilevel participation (including provincial representation in climate governance), an independent grievance and redress mechanism, and a phased penalty regime that starts modestly and escalates as MRV capacity matures. These are not peripheral concerns: they shape public trust, and public trust is what keeps a carbon-pricing system politically durable.
Why a Thai-language edition matters
Policy this consequential cannot live only in English. As implementation begins, it is Thailand’s own regulators, SET-listed companies, exporters facing EU CBAM, and civil society who must read, debate and act on these recommendations — in Thai, with every legal and technical distinction preserved. A comparative legal report on ETS, carbon tax and CBAM sits at the intersection of law, tax, engineering and climate science; rendering it faithfully into Thai demands certified legal-translation rigour and genuine carbon-market fluency at the same time.
That intersection is exactly what Othello International does. The firm worked closely with the DLA Piper project team — including Shirley Magniez-Pouget, Claudia Barbarano and Kirstin Scott — throughout the process, applying the disciplined terminology management, subject-matter expertise and quality assurance that a document of this weight requires. Othello is ISO 17100 certified, the international standard for translation-service quality, and specialises in the technical and regulatory content that Thailand’s low-carbon transition increasingly demands.
What Thai companies should do now
Whatever the final shape of the Climate Change Act, the direction of travel is clear, and forward-looking companies are already preparing. Three priorities stand out.
Build emissions-measurement capacity. Reliable Scope 1, 2 and 3 data is the foundation of every carbon-pricing and disclosure obligation, from the domestic ETS to EU CBAM. Companies that invest early in a robust greenhouse-gas inventory will face lower long-term compliance costs.
Prepare for mandatory sustainability disclosure. Under a proposed SEC roadmap aligned with the ISSB standards, SET50 companies are expected to report under IFRS S1/S2 from 2027 (covering FY2026), with SET100 and other listed companies phased in over subsequent years. Aligning carbon data with IFRS S1/S2 and existing frameworks now avoids a scramble later; our teams support companies with sustainability report translation and bilingual disclosure across these frameworks.
Get the language right in both directions. Regulators, EU counterparties and internal stakeholders will need accurate bilingual documentation — from CBAM data submissions to board papers and annual reports. Authoritative Thai-language materials are essential to informed debate and effective implementation.
About Othello International
Othello International is a Bangkok-based bilingual technical translation and ESG advisory firm serving SET-listed corporates, state enterprises, leading law firms, and the UN system in Thailand. The firm is ISO 17100 certified and specialises in sustainability reporting, carbon and climate disclosure, and legal and technical translation. As Thailand builds its carbon-pricing architecture, Othello helps organisations engage with the frameworks that will define the next decade of Thai business — accurately, and in both languages.
The report is available in both English and Thai editions via DLA Piper’s newsroom.
