Macroeconomic impacts and co-benefits of deep-decarbonization in Thailand

Abstract

The updated Nationally Determined Contributions (NDC) in 2022 of Thailand includes an aggressive GHG emission reduction target of 40% in 2030 from its baseline emissions. However, the macroeconomic impacts and co-benefits associated with reducing GHG emissions are not addressed. This study analyzes the macroeconomic implications and co-benefits of GHG emission reduction in Thailand to achieve the NDC and net zero emission (NZE) targets by 2050 using the AIM/Hub-Thailand model. This paper provides co-benefits for Thailand on ambitious long-term GHG emission reduction targets. Considering the co-benefit analysis in the policy documents will provide holistic insights on the positive impacts of GHG mitigation. Results show that Thailand would have to bear a GDP loss of 7.7% in 2050 compared to the BAU level if the net zero emissions need to be achieved. Fuel switching from fossil fuel to electricity in the demand side and improvement of technologies in the power sector also reduces air pollutant emissions. The increasing dependence on domestic energy supply in the NZE scenario will make the country less vulnerable to the fluctuating prices in the international energy market. In terms of trade-offs, the land use for sustainable biomass in both the NDC and NZE scenarios will be larger than in the BAU scenario. Results show better land use for biomass production and higher yields in agricultural production. Moreover, the achievement of NZE pathway will require effective usage of land area and better use of energy resources, thereby making the country more energy secure.