Role of Discount Rate and Social Cost of Carbon for Carbon Capture Utilization and Storage Technologies in Thailand’s Low Emissions Pathways

Piti Pita, Pornphimol Winyuchakrit, Bundit Limmeechokchai

Abstract


In order to meet Thailand's carbon neutrality target by 2050 (CN2050), it has been proposed that state-of-the-art—but costly—CCUS and BECCS technologies be integrated into the country's electricity generation framework. Climate projects are advised to utilize low discount rates and incorporate the social cost of carbon (SCC). This study employed the AIM/Enduse model, a framework developed by Japan's National Institute for Environmental Studies (NIES), to evaluate suitable discount rates and estimate SCC as the carbon pricing for electricity generation employing CCUS and BECCS technologies. Findings indicate that with a fixed discount rate of 3 percent, SCC begins at 63 USD/tCO2 for achieving the CN2050 target. Conversely, under a declining discount rate scenario - where a 6 percent rate is applied prior to 2037 and then reduced to 3 percent post-2037 - the SCC starts at 21 USD/tCO2 before 2037 and increases to 63 USD/tCO2 thereafter. Therefore, it is crucial to apply suitable discount rates and SCC to encourage adoption of costly negative emissions technologies and achieve objectives of the CN2050 targets.

Keywords


AIM model; BECCS; CCUS; Social cost of carbon; Thailand carbon neutrality 2050 (CN 2050)

Full Text:

PDF

References


UNFCCC. (2022). Key aspects of the Paris Agreement. Retrieved 2024, from United Nations Climate Change: https://unfccc.int/mostrequested/key-aspects-of-the-paris-agreement

UNFCCC. (2019). The Paris Agreement. Retrieved 2024, from United Nations Climate Change: https://unfccc.int/process-and-meetings/the-paris-agreement

ONEP. (2022). Thailand's Long-term Low Greenhouse Gas Emission Development Strategy (Revised Version). Bangkok: Office of Natural Resources and Environmental Policy and Planning, Ministry of Natural Resources and Environment. Retrieved from https://unfccc.int/sites/default/files/resource/Thailand%20LTLEDS%20%28Revised%20Version%29_08Nov2022.pdf

IPCC Working Group III. (2007). AR4 Climate Change 2007: Mitigation of Climate Change. Cambridge, U.K.: Cambridge University Press.

IPCC. (2023). Summary for Policymakers. In: Climate Change 2023: Synthesis Report. Contribution of Working Groups I, II and III to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change [Core Writing Team, H. Lee, and J. Romero (eds.)]. Geneva, Switzerland: IPCC. doi:10.59327/IPCC/AR6-9789291691647.001

IEA. (2021). Net Zero by 2050. Paris: IEA. Retrieved from https://www.iea.org/reports/netzero-by-2050

Hanaoka T., Masui T., Matuoka Y., Hibino G., Fujuwara K., Motoki Y., and Oshiro K., 2015, AIM Enduse Model Manual, Tsukuba, Japan: National Institute for Environmental Studies (NIES).

AIM Project Team. (2024). Data ⁄ Tools. Retrieved from The Asia-Pacific Integrated Model: https://www-iam.nies.go.jp/aim/data_tools/index.html

Shrestha R.M., Malla S., and Liyanage M.H., 2007. Scenario-based analyses of energy system development and its environmental implications in Pita P., Chunark P., and Limmeechokchai B., 2017. CO2 reduction perspective in Thailand’s transport sector towards 2030. Energy Procedia. Volume 138, October 2017, Pages 635-640.

IEA. (2018). World Energy Outlook 2018. Paris: IEA.

IEA. (2015). Projected Costs of Generating Electricity 2015. Paris: IEA. Retrieved from https://doi.org/10.1787/9789264008274-en.

IEA. (2020). Projected Costs of Generating Electricity 2020. Paris: IEA. Retrieved from https://www.iea.org/reports/projected-costs-of-generating-electricity-2020.

Rubin S.E., John E.D., and Howard J.H., 2015. The cost of CO2 capture and storage. International Journal of Greenhouse Gas Control, 378-400.

IRENA. (2015). Renewable Power Generation Costs in 2014. The International Renewable Energy Agency.

IRENA. (2020). Renewable Power Generation Costs in 2019. Abu Dhabi: International Renewable Energy Agency.

BIES D.F. (2020). Analysing the potential of bioenergy with carbon capture in the UK to 2050 Summary for policymakers. London: Department of Business, Energy and Industrial Strategy. Retrieved from https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/911817/electricity-generation-costreport2020.pdf

EPPO. (2019). Thailand's Power Development Plan 2018 - 2037. Bangkok: EPPO. Retrieved from https://www.eppo.go.th/images/POLICY/PDF/PDP2018.pdf.

IPCC. (2024). 2006 IPCC Guidelines for National Greenhouse Gas Inventories Volume 2 Energy. IPCC. Retrieved from https://www.ipcc-nggip.iges.or.jp/public/2006gl/vol2.html.

Oshiro K., Masui T. and Kainuma M., 2017. Quantitative Analysis of Japan’s 2030 Target Based on AIM/CGE and AIM/Enduse. In Post-2020 Climate Action (pp. 143-156).

Goulder L.H. and R.C. Williams III. 2012. The Choice of Discount Rate for Climate Change Policy Evaluation. NBER Working Paper Series. Retrieved from http://www.nber.org/papers/w18301.

Freeman M.C. and B Groom. 2016. How certain are we about the certainty-equivalent long-term social discount rate? Journal of Environmental Economics and Management 79: 152-168.

TGO. (2021). The study on application of different discount rates to evaluate the GHG mitigation measures potential (Phase II). Thailand.

Interagency Working Group on Social Cost of Greenhouse Gases IWG. (2010). Retrieved from https://obamawhitehouse.archives.gov/sites/default/files/omb/inforeg/for-agencies/Social-Cost-of-Carbon-for-RIA.pdf.

International Monetary Fund. (2019). Fiscal Monitor: How to mitigate climate change. Washington.

Interagency Working Group on Social Cost of Greenhouse Gases IWG. (2016). Retrieved from https://www.epa.gov/sites/production/files/2016-12/documents/sc_co2_tsd_august_2016.pdf.

Interagency Working Group on Social Cost of Greenhouse Gases IWG. (2021). Retrieved from https://www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf.

Department of Geography and Environment and Centre for Environmental Policy DEFRA. (2007). London School of Economics and Political Science. Retrieved from https://personal.lse.ac.uk/dietzs/Review%20of%20DEFRA%20guidance%20on%20shadow%20price%20of%20carbon%20and%20social%20cost%20of%20carbon.pdf.

Stanton E.A. and F. Ackerman. (2008). Out of the Shadows: What’s Behind DEFRA’s New Approach to the Price of Carbon? Stockholm, Sweden: Stockholm Environment Institute.

World Bank Group. (2025). State and Trends of Carbon Pricing Dashboard. Retrieved from https://carbonpricingdashboard.worldbank.org/compliance/price.

Black S., Minnett D., Parry I., Roaf J., and Zhunussova K. (2022). A Framework for Comparing Climate Mitigation Policies Across Countries. IMF.