Key Highlights
• Thailand has a unique opportunity to benefit from the global shift towards clean energy and sustainable practices.
• Thailand can become a major supplier and exporter of goods for the decarbonized future by embracing electrification and innovation.
• Thailand needs to proactively embrace sustainability to safeguard itself from climate risks and become a frontrunner in the path toward Net Zero transition.
Thailand demonstrates a unique opportunity to capitalize on the global shift towards clean energy and sustainable practices, according to Mr. Vishal Agarwal, Senior Partner and Leader, Energy & Environment Sustainability Asia, McKinsey & Company. Mr. Agarwal spoke at a recent event, SCBX Reimagining Climate event series hosted at SCBX Next Tech , emphasizing the need for immediate action and potential rewards of the Net Zero transition.
The world is currently not on track to meet the 1.5°C climate target, necessitating a significant acceleration of efforts. This transition presents the biggest threat, and the biggest business opportunity of our generation, with annual investments in renewable energy and related technologies expected to reach $9.2 trillion globally.
The challenge, Agarwal explained, lies in addressing the “quadrilemma” – ensuring lower emissions, affordability, energy security, and national competitiveness simultaneously. He pointed out that significant progress is needed across various sectors, with energy emissions accounting for nearly half of global greenhouse gasses.
However, there’s reason for optimism. Leading companies are taking a two-pronged approach by playing offense by running ‘AND’ playbooks to tackle climate change. This means they can pursue both environmental goals and economic growth simultaneously by focusing on sustainability and creating value through business building.
Thailand’s vulnerability to climate change, including flooding and drought risks, underscores the need for proactive measures. Agarwal estimated that ~$2-3.5 billion per year or 0.4–0.7% of the Gross Domestic Product (GDP) in investment is required for mitigation and adaptation strategies.
The global shift away from carbon-intensive production presents another exciting opportunity. The European Union’s Carbon Border Adjustment Mechanism (CBAM) further
incentivizes clean production. By embracing electrification and innovation, Thailand can become a major supplier and exporter of goods for the decarbonized future.
The country so far has only captured a small portion (10%) of the trade shifting away from China, and clean energy is a key factor for staying competitive.
The cleaner production practices can potentially create a green premium for Thai goods and will drive demand for Thai components and systems in power, industry, buildings, and transportation. Thailand, a major food exporter, can capitalize on the green premium by adopting sustainable agricultural practices like soil carbon management and alternative protein production.
Additionally, Thailand boasts significant renewable energy potential, including solar, hydro, and carbon capture capabilities. The transportation sector is poised for a major transformation with the ambitious “30/30 policy” targeting 30% electric vehicle production by 2030. Agriculture, another crucial sector for Thailand, can leverage soil management, smart farming, and alternative proteins to achieve sustainable growth.
Mr. Agarwal emphasized the need for Thai corporations and leaders to seize the initiative and play an active role in shaping the country’s green future. The time for action is now, with significant investments required for transition and adaptation strategies. By proactively embracing sustainability, Thailand can not only safeguard itself from climate risks but also become a frontrunner in the path toward Net Zero transition.
