Ever more visible, the various impacts from climate change are eroding both Thailand’s economic competitiveness and the livelihoods of its people: season by season, in heat waves that flatten productivity, floods that swallow farmland, and coastal erosion that is slowly reclaiming communities.
The World Bank now estimates that if Thailand does not invest adequately in climate adaptation, GDP could shrink by 7 to 14% by 2050.
Yet the numbers tell a starker story. The inaugural Climate Finance Tracker launched by Climate Finance Network Thailand (CFNT) in July 2025 found that between 2020 and 2024, Thailand invested roughly 148 billion baht in climate adaptation nationwide, just about 30 billion baht per year. Against an estimated need of 165 to 192 billion baht annually, that represents just 15 to 18% of what is required. Measured against annual actual climate losses — estimated at 0.9 to 1 trillion baht each year — it amounts to barely three cents on every dollar of damage.
Thailand invested roughly 148 billion baht in climate adaptation nationwide, just about 30 billion baht per year. Against an estimated need of 165 to 192 billion baht annually, that represents just 15 to 18% of what is required.
Bridging this financing gap is an urgent imperative: both to reduce the harshest impacts of climate change and sustain Thailand’s competitiveness in the era of global warming.
Against this backdrop, CFNT and Fair Finance Thailand (FFT) have released a joint whitepaper ahead of Thailand’s February 2026 general election, proposing 10 concrete climate finance policies the new government must adopt. The proposals are urgent, technically grounded, and politically inconvenient, which is precisely why they matter.
Thailand’s newly submitted Nationally Determined Contribution (NDC 3.0) includes, for the first time, a reference to “just transition” — the principle that the shift away from fossil fuels must not deepen inequality or abandon vulnerable workers and communities.
On paper, this is progress. In practice, the document remains frustratingly vague about how a just transition will be achieved, while explicitly centring the private sector and market mechanisms as the primary drivers.
This is a problem. Climate change is itself a product of market failure. Relying on market alignment to correct it — without clear public interest guardrails — risks allowing the loudest and best-resourced interest groups to shape a transition that serves them, not the workers in coal-dependent communities, not the smallholder farmers facing drought, not the coastal villages watching the sea rise.
The whitepaper’s first set of proposals addresses this head-on. It calls for the Climate Change Act — approved in principle by Cabinet in December 2025 — to define strict criteria for spending from the planned Climate Fund. We demand that priority be given to communities most exposed to climate impacts, to workers transitioning out of carbon-intensive industries, and to small and medium-sized enterprises locked out of existing financial mechanisms.
Crucially, the fund’s revenue base should itself reflect justice principles: a carbon wealth tax on high-carbon asset holdings, windfall profit levies on fossil fuel companies, and the elimination of fossil fuel subsidies that currently perversely incentivise continued coal and diesel dependence.
Captured Policy
Perhaps the most damning section of the whitepaper concerns cost-effectiveness. NDC 3.0 itself states clearly that early coal phaseout offers the lowest abatement cost of any energy technology in Thailand’s plan — just US$11 (360 baht) per tonne of carbon dioxide equivalent — while delivering up to 6 million tonnes of annual emissions reductions, nearly 10% of the energy sector’s overall target. This should make it the obvious priority.
Instead, as of early 2026, the Ministry of Energy and Electricity Generating Authority of Thailand (Egat) are reportedly to promote technologies that cost five to 10 times more per tonne of carbon reduced — including carbon capture and storage at nearly US$57 per tonne, and ammonia co-firing at US$125 per tonne.
The whitepaper is explicit: this is not rational climate policy. CFNT and FFT call on the new government to announce a clear commitment to phase out all coal-fired power plants by 2035
The whitepaper is explicit: this is not rational climate policy. CFNT and FFT call on the new government to announce a clear commitment to phase out all coal-fired power plants by 2035 — consistent with NDC 3.0’s own timeline — and to insist that public investment decisions follow cost-effectiveness logic, not lobbying pressure.
Financial institutions are not bystanders in this story — they are active participants. Long-term Power Purchase Agreements (PPA) between Egat and private fossil fuel producers, structured as “take-or-pay” contracts guaranteeing returns regardless of actual demand, have made fossil power generation an irresistible investment for banks: low default risk stemming from state-backed returns. The result is that Thai banks continue to direct capital towards assets that global science tells us must be retired, while communities face escalating climate costs.
The whitepaper calls on the Bank of Thailand to require all financial institutions to develop transition plans for their energy sector loan portfolios, aligned with international best practice “credible transition” frameworks such as the UNEP Finance Initiative’s 2025 guide for banks.
It also proposes that the Bank of Thailand reduce risk weights for renewable energy and energy efficiency lending from 100% to 50%. The technical adjustment that would allow banks to lend more cheaply in these sectors and create a genuine incentive to develop new financing products.
Alongside this, the Thailand taxonomy — the classification standard for environmentally friendly economic activities — must be strengthened, particularly its criteria for large hydropower projects, which currently fall short of the European Union’s “Do No Significant Harm” (DHSH) criteria for hydropower projects under the EU taxonomy.
Green Finance
One of the whitepaper’s most practically grounded proposals addresses household access to solar power. CFNT research has shown that low-income households face structural barriers to rooftop solar installation. Commercial banks typically categorise these loans as home loans that require property ownership as collateral, effectively excluding renters and the asset-poor. Yet solar energy is precisely the technology that could most directly reduce energy costs for the households that need relief most. So, it needs a conductive bank’s loan regulations.
The proposed solution — On-Bill Financing, through which electricity utilities such as government-owned Provincial Electricity Authority and Metropolitan Electricity Authority can cover upfront installation costs and recover them through monthly billing — has been successfully implemented in the United Kingdom and several US states. The solution removes the capital barrier, ties repayment to energy savings rather than income, and transfers automatically to new residents when a home changes hands. For a government genuinely committed to a just transition, piloting this model through state-owned utilities would be both achievable and transformative.
Thailand is not without a roadmap. NDC 3.0 exists. The draft Climate Change Act is expected to be tabled in the new parliament soon. Thailand taxonomy is operational. The Bank of Thailand has begun engaging the financial sector on sustainability. The engine is humming and ready to go.
So what is lacking? Indeed, what has been missing is the political will to follow the evidence rather than the lobbyists, to design climate finance that serves communities rather than concentrates in the hands of incumbents, and to treat just transition as a binding obligation rather than an aspirational footnote.
The incoming government will inherit a narrowing window. Climate losses are already measured in the trillions. The financing gap grows each year. The proposals put forth in CFNT and FFT’s joint whitepaper are hardly radical — they are the minimum coherent response to the scale of the challenge. The question is whether the next government will have the courage to act on what science, economics, and communities already know.
First Published on Bangkok Post
