What do the recent Middle East tensions have to do with your electricity bill in Thailand?
The answer… may be more than you think.
Thailand currently relies on natural gas for 58.19% of its electricity generation.1 Beyond domestic sources in the Gulf of Thailand and neighbouring Myanmar, the country also imports Liquefied Natural Gas (LNG) from abroad, including Qatar and the United States, accounting for over 35% of all natural gas used in power generation.
When conflict broke out between the United States and Iran in early March 2026, the Strait of Hormuz, the critical shipping corridor for oil and LNG from the Middle East to countries including Thailand, was effectively shut down. This escalation highlighted the structural challenges and growing exposure associated with Thailand’s continued reliance on fossil fuels, particularly across two key sectors: transportation, which relies heavily on oil-based fuels, and electricity generation, which depends significantly on imported LNG and oil. The situation led Thailand to activate the Oil Fund mechanism, a government tool designed to stabilise domestic fuel prices by drawing on accumulated reserves. This intervention helped maintain retail prices within a manageable range, limiting the direct transmission of global price increases to businesses and consumers.
In practice, even under relatively stable conditions, a number of factors can still affect both the supply and pricing of LNG. One example is the shipping route for LNG from the United States to Thailand, which passes through the Panama Canal. When water levels in the canal drop during drought conditions, ship movements can be restricted. Vessels may need to carry lighter loads to pass through safely, and operators can also face extra charges, such as a Fresh Water Surcharge, to account for the freshwater used during transit. Either way, whether due to smaller shipments or higher fees, these factors can increase procurement costs and in turn raise the overall cost of using LNG for electricity generation in Thailand. 2 3
Beyond price volatility, heavy reliance on fossil fuels risks gradually undermining a country’s long-term energy security. As a non-renewable resource, fossil fuels become increasingly costly to locate and extract over time. They also generate significant hidden costs over the long run: burning fossil fuels to produce energy releases greenhouse gases, the principal driver of global warming and climate variability. While these costs do not appear directly on electricity bills, they are ultimately borne by the public through government spending to address the impacts, as well as through pressures on environmental quality and living conditions.
In the interest of fair electricity prices and sustained quality of life for the population, the energy transition refers to more than simply increasing the share of clean energy in the mix. It involves restructuring the country’s energy system to support the production and consumption of clean energy at scale, while at the same time reducing dependence on fossil fuels and enabling sustained reductions in greenhouse gas emissions, a key driver of climate-related challenges.
This commitment to reducing greenhouse gas emissions through energy transition is, of course, not Thailand’s alone to carry.
It is a shared goal of the entire world, advanced through one of the most consequential international agreements of our time: the Paris Agreement.
Rising Climate Challenges: The Origins of the Paris Agreement
Without serious reductions in greenhouse gas emissions, global temperatures could rise beyond what the planet is able to sustain. That prospect became the foundation for a landmark act of global cooperation: the Paris Agreement, a legally binding international treaty under the United Nations Framework Convention on Climate Change (UNFCCC), adopted at the 21st Conference of the Parties (COP21) by more than 195 member parties 4 on 12 December 2015, and in force since 4 November 2016.
The Paris Agreement is a legally binding international treaty with a central objective: to keep the rise in global average temperature to well below 2°C above pre-industrial levels, while pursuing efforts to limit that increase to 1.5°C. 5 These thresholds carry significant weight, as holding warming within these boundaries is understood to substantially reduce the risks and impacts associated with climate change.
The Paris Agreement therefore stands as a pivotal milestone in international cooperation on climate change, operating through the mechanism of Nationally Determined Contributions (NDCs), whereby each country sets its own targets for reducing greenhouse gas emissions and adapting to climate impacts in accordance with its national circumstances. These plans are submitted to the UNFCCC and to the COP proceedings from 2022 onwards, and each country is required to review and strengthen its NDC commitments every five years.
Global Transitions and Thailand’s Direction
On the path toward emissions reduction and energy transition, Thailand’s NDCs 3.0 represents the country’s most recent climate commitment, presented at COP30 in Belém, Brazil in November 2025. The key targets are as follows: 6
- By 2035: Reduce net greenhouse gas emissions by approximately 47% 7 compared to net emission levels in the base year (2019)
- By 2050: Achieve Net Zero carbon neutrality, an acceleration of 15 years ahead of the previous NDC target of 2065
These targets reflect a whole-of-economy approach to emissions reduction, covering four major sectors: agriculture; industrial processes and product use (IPPU); waste management; and energy and transport,8 which is the single largest emitting sector. Base year data from 2019 indicates that Thailand’s energy and transport sector alone released 260.77 million tonnes of CO2 equivalent (MtCO2eq), accounting for 70% of total national emissions across all sectors. 9
This is precisely why energy transition is both urgent and essential. It involves enabling the country’s energy structure to rely more substantially on clean energy. Clean energy generates significantly lower greenhouse gas emissions than fossil fuels. This shift is a key mechanism for reducing emissions in a way that is sustainable and consistent with the commitments Thailand has made to the international community.
Most importantly, the energy transition also helps reduce dependence on imported fossil fuels. Recent developments in the Middle East, including disruptions affecting key energy transport routes such as the Strait of Hormuz, have shown how reliance on energy imports can be associated with public concern and energy security considerations. Increasing the share of domestically produced clean energy therefore offers one way to strengthen Thailand’s energy security.”
So What Does Thailand’s Energy Transition Actually Look Like in Practice?
At COP31, scheduled to take place in Türkiye in November 2026, the agenda is set to push member countries to move beyond climate planning and into implementation, ensuring that commitments under the Paris Agreement are translated into concrete action. The meeting will place particular emphasis on ensuring that each country’s NDC targets are aligned with global emissions reduction goals, and on translating those targets into outcomes that can be meaningfully measured. 10
For Thailand, this is an important moment to follow the work of relevant government agencies in developing a pathway toward net zero by 2050, as set out in NDCs 3.0, and to consider how this pathway can be made both coherent and practically achievable.
How Is Thailand Addressing Greenhouse Gas Emissions?
A practical energy transition involves more than increasing the share of clean energy in the electricity system. It requires managing three interconnected dimensions under the Paris Agreement framework:
Dimension 1: Reducing emissions (mitigation)
This involves introducing clean energy technologies into the energy mix to reduce dependence on fossil fuels. In the context of Thailand, the most widely discussed clean energy technology is solar energy, or solar photovoltaics (Solar Cell). Several issues remain under consideration, including the design of government support mechanisms for residential solar installations, the question of competitive fairness within the solar market, and the need for clearer policies on managing end-of-life solar panels, which could pose environmental risks if not properly handled.
In addition, hydrogen is another clean energy technology with potential to help meet Thailand’s energy demand. Hydrogen differs from fossil fuels in that its use for energy production does not produce greenhouse gas emissions, making it a key option for sectors where emissions are difficult to reduce, such as power generation, heavy industry, and long-distance transport. 11
At present, however, both technologies face important constraints. The facts, risks, and appropriate regulatory frameworks for each emerging technology therefore need to be carefully examined before wider adoption in the Thai context.
Dimension 2: Climate change adaptation and resilience
Alongside reducing greenhouse gas emissions, it is equally necessary to build capacity to manage the effects of climate change that are already becoming more visible, through natural disasters that are growing in both frequency and severity. Adaptation also extends to the energy system itself, ensuring that existing infrastructure can accommodate a progressively larger share of clean energy within the overall supply mix.
In this context, the resilience and flexibility of energy infrastructure, particularly the electricity grid, becomes an important consideration. This includes how grid systems can be developed to integrate higher shares of variable renewable energy while maintaining reliable electricity supply. System stability is also a key factor in ensuring continuity of supply and avoiding large-scale disruptions, such as recent blackout events in parts of Europe, including Spain, Portugal, and parts of France in April 2025.
International cooperation also presents opportunities worth pursuing to strengthen adaptive capacity, particularly through initiatives that promote regional energy security. One notable example is the ASEAN Power Grid, a regional cooperation project whose overarching goal is to develop a unified and sustainable energy market across the ASEAN region.
Dimension 3: Financing the Transition (Climate Finance)
Energy transition activities cannot move forward without adequate funding to support the full scope of work involved. Climate finance is therefore a key enabling factor for the transition.
This makes climate finance an essential dimension of the transition, including financing channels that can support a more inclusive and equitable shift toward clean energy, such as green loans and green bonds, as well as market-based mechanisms such as carbon markets, which can create incentives for both households and businesses to increase their adoption of clean energy.
These factors highlight both the rationale and the urgency of Thailand’s energy transition. While this transition represents a significant opportunity to elevate the country’s energy infrastructure, it also comes with challenges across multiple dimensions.
These include strengthening cross-sector collaboration to make goals practically achievable. This involves addressing structural constraints in the energy market and electricity grid that currently hinder the expansion of clean energy. It also includes the need for consistent and responsive supportive policies that build confidence among financiers and investors.
Another important aspect is preparation across all sectors for the changes ahead. This involves supporting industrial adaptation to new technologies, as well as ensuring that the workforce develops the skills needed to keep pace with the transition. It is also important to consider potential distributional impacts, particularly inequalities that may emerge between those who are able and those who are unable to access clean energy as the transition progresses.
Recognising these obstacles and planning around them will be a key factor in determining how effectively and sustainably Thailand’s transition can be implemented in practice.
So where does Thailand actually stand today, and how ready is it for the energy transition?
The next article in the Thailand Energy Transition Series will continue to follow Thailand’s energy transition journey, with a closer look at clean energy technologies, key constraints, and relevant policy developments.
This article is produced under the project Clean, Affordable and Secure Energy for Southeast Asia (CASE for Southeast Asia). In Thailand, CASE is implemented jointly by GIZ and its consortium partners, the Energy Research Institute (ERI) of Chulalongkorn University and the Thailand Development Research Institute (TDRI).
- (2 March 2026) สงครามตะวันออกกลางดัน “ค่าไฟไทย” เสี่ยงแพง เหตุพึ่งพา LNG จากกาตาร์สูงสุด. Just Pow. https://justpow.co/article-unfair-electricity-bill/ ↩︎
- Trade Policy and Strategy Office (TPSO). (July 2023). บทบาทคลองปานามาต่อการขนส่งสินค้าระหว่างประเทศและผลกระทบที่อาจเกิดขึ้นจากสถานการณ์ภัยแล้งของโลก. https://uploads.tpso.go.th/rwmaiflngaansueksaakhlngpaanaamaa_k.kh_._66.pdf ↩︎
- (19 February 2026). Krecke, T., PEIT Public Lecture: Natural Gas: Managing Energy Security in an LNG-Dependent Future – Navigating Global Market Volatility and Redefining the Role of LNG Within a Resilient Energy Portfolio. ↩︎
- (15 January 2026). Kasikorn Research Center. Trump officially withdraws the United States from environmental agreements and treaties; 66 organizations conflicting with U.S. interests. https://www.kasikornresearch.com/th/analysis/k-social-media/Pages/INFO385-TRUMP-ENVIRONMENTAL-FB-2026-01-15.aspx ↩︎
- https://unfccc.int/process-and-meetings/the-paris-agreement ↩︎
- (8 November 2025). สิรินาฏ ศิริสุนทร. COP30: ไทยเสนอแผนลดก๊าซเรือนกระจก 47% ในปี 2035. Policy Watch. https://policywatch.thaipbs.or.th/article/environment-145 ↩︎
- Reduce 135.2 MtCO₂eq from 287.2 MtCO₂eq (or equivalent to emitting only 152 MtCO₂eq in 2035). ↩︎
- The energy and transport sectors cover the following activities: energy industries, transport, manufacturing and construction industries, oil and natural gas, other energy use, and solid fuels. ↩︎
- (13 December 2024). กรรณิการ์ ธรรมพานิชวงค์ และกฤษฎ์เลิศ สัมพันธารักษ์. การเปลี่ยนแปลงสภาพภูมิอากาศกับเศรษฐกิจ: ตอนที่ 2 การลดการปล่อยก๊าซเรือนกระจก. Puey Ungphakorn Institute for Economic Research (PIER). https://www.pier.or.th/pierspectives/003/ ↩︎
- https://cop31.co.uk ↩︎
- (7 July 2025). THE STANDARD. ทำไม “ไฮโดรเจน” คืออนาคตพลังงานไทยที่จะมุ่งสู่ Net Zero ในปี 2065. https://thestandard.co/hydrogen-net-zero-2065/ ↩︎
