Carbon credit is the next Bitcoin?

Carbon credits are a trading system that helps reduce greenhouse gas emissions, where those who can reduce or absorb greenhouse gas emissions (such as carbon-absorbing forestry projects) receive carbon credits, which can be sold to companies or countries that are unable to meet their own emission reduction targets.

In simple terms, if a company emits too much carbon, it must buy credits from carbon-absorbing projects to reduce its environmental impact, which helps to achieve its emission reduction targets systematically.

This system is used as a tool to encourage businesses and countries to invest in activities that reduce greenhouse gas emissions or absorb carbon, both at the public and private levels, in order to be environmentally responsible and mitigate the impacts of climate change.

In a progressive perspective, the carbon credit system could be a tool for creating change for sustainability in the future. However, it remains to be seen whether it will become just “buying time” for businesses that are unable to truly reduce their emissions!

What is a carbon credit?

A carbon credit is a unit used to exchange the right to emit greenhouse gases. One carbon credit is equivalent to the reduction or absorption of one ton of CO2 or other greenhouse gases. Those who reduce emissions can sell this credit to those who emit more than their limits.

Benefits of Carbon Credits

• Helps reduce greenhouse gas emissions: Carbon credit systems encourage companies to reduce their carbon emissions to avoid having to buy credits, and those who successfully complete carbon reduction projects can sell those credits to those who cannot. This helps reduce overall greenhouse gas emissions.
• Stimulate investment in clean energy and environmental projects: Carbon credit trading allows projects related to clean energy or carbon sequestration (e.g. reforestation, renewable energy generation) to be financed, leading to the development of more environmentally friendly technologies.
• Incentives for Business: Carbon credit systems provide incentives for businesses to develop and use technologies that reduce greenhouse gas emissions because reducing emissions means they don’t have to buy additional carbon credits.
• Help achieve climate change goals: This system supports achieving emission reduction targets under international agreements, such as the Paris Agreement, which set global greenhouse gas emissions targets.
• Creating new business opportunities: Businesses that conduct activities that reduce emissions can generate revenue by selling carbon credits, such as reforestation projects or developing renewable energy technologies, which can lead to growth in new sustainable industries.
• Building international and corporate partnerships: Carbon credit trading gives countries or organizations that are unable to reduce their own emissions an option to meet their greenhouse gas reduction targets by supporting carbon reduction projects in other countries.

The use of carbon credits is an important tool for transforming economic and social systems that prioritize environmental conservation, although it will take time to create sustainability and widespread change.

Carbon credits are limited and have intrinsic value.

Carbon credits are actually created by reducing or absorbing greenhouse gases that occur in the economy. They cannot be “printed” without actually reducing emissions.

Just like Bitcoin, which requires computational power to “mine” carbon credits, there are also real costs involved in production, such as planting forests, installing solar cells, or changing factory systems.

Carbon credits can be traded on the market

Carbon credits have trading platforms such as FTIX in Thailand or CBL, AirCarbon, CTX abroad.
There is speculation, just like Bitcoin, especially in countries with strict ESG policies.

Carbon credits are linked to the future of the world

If Bitcoin is seen as the “future of money,” carbon credits are seen as the “future of the green economy,” as all countries must reduce their carbon emissions under international agreements such as the Paris Agreement.

The other side of carbon credit

Carbon Credit is not a free asset like Bitcoin

• Carbon credit prices are controlled by standards, certifications and government policies, not fully driven by the free market. There is a real cost to production.
• Project developers need real, measurable, and auditable investment, not just creating “digital coins” to sell. Lack of liquidity and low trading volume
• The Thai carbon credit market has traded only 3.2 million tons of CO₂e in several years and is also plagued by structural barriers such as high fees, low access and difficult auditing.

Carbon credit trading in Thailand

Economic opportunities that have yet to reach their full potential. Thailand has begun to make serious moves on “carbon credits” or economic mechanisms to drive greenhouse gas reduction. However, in practice, despite having a certain level of infrastructure, the Thai carbon credit market has not grown as it should.

Carbon credit certification system and trading platform

Carbon credit operations in Thailand are under the supervision of the “Greenhouse Gas Management Organization (TGO)” through the T-VER (Thailand Voluntary Emission Reduction Program) project.

It is a voluntary system for organizations and agencies that want to reduce or avoid greenhouse gas emissions such as CO₂, CH₄, and N₂O.

Those who can apply for carbon credit certification must carry out projects that fall into 7 main categories.

Those eligible for carbon credit certification include renewable energy, transportation systems, waste management, energy efficiency, land use, factories, and carbon capture and utilization technologies.

Carbon Credit Project Development Process

Before entering the T-VER system, project developers must start by assessing the “carbon footprint” to identify high-emission points in the organization’s activities or systems. Then design measures to systematically reduce emissions. The registration process with the “Greenhouse Gas Management Organization (TGO)”

The project documents must be prepared, reviewed by an independent assessor, and awaited approval from the agency before receiving carbon credits and being able to enter the trading system.

Carbon credit costs and limitations you should be aware of

Although the process is clear, cost remains a significant obstacle, with project registration and carbon credit certification fees of 5,000 baht per application.

External auditor fees can range from 40,000 to 65,000 baht per project, not including the actual investment costs of the project itself, such as solar power systems or equipment upgrades in the factory.

Forestry projects are also limited by a minimum area of ​​10 rai and land title deeds, making them difficult for communities or small entrepreneurs to access.

Carbon Credit Trading Trends and Future Opportunities What are they like?

From the beginning to April 2024 (Updated data: 28 May 2024) Thailand has accumulated carbon credit trading volume of 3.26 million tons of CO₂e, with a total value of 292 million baht, or an average of approximately 2.8 USD per ton.

The project with the highest trading volume was the biomass type (41% of the market), even though the price was at the lowest level of 1.1 USD per ton.

On the contrary, reforestation projects have the highest average price of 17 USD per ton in 2024, reflecting the global market trend of placing high value on projects that are highly sustainable and environmentally tangible.

However, the amount of carbon credits traded still only accounts for 0.77% of the country’s total greenhouse gas emissions, which is very low compared to the goal of becoming a “carbon-free country” by 2065.

Thailand has announced significant targets to reduce greenhouse gas emissions, aiming to achieve carbon neutrality by 2050 and net zero emissions by 2065.

Thailand has also raised its short-term greenhouse gas emission reduction target to 30% by 2030 compared to business-as-usual emissions, and could increase the target to 40% with international support.

The Thai carbon credit market still has a lot of growth potential, especially for entrepreneurs with ESG goals or organizations that want to offset their carbon footprint. However, to push this market to truly expand, it is necessary to reduce systemic constraints, such as reducing certification costs, increasing financial support for small-scale entrepreneurs, and improving local understanding.

If the government and private sectors can successfully address these obstacles, the Thai carbon credit market will become an important mechanism to drive a low-carbon economy and help Thailand effectively achieve its environmental goals in the near future.

Although the carbon credit market in Thailand is still in its infancy and has limitations in terms of cost, process, and accessibility for small entrepreneurs, it is undeniable that “carbon credits” are becoming an important tool to drive a low-carbon economy and may be a new business opportunity worth watching, especially as the world moves towards the Net Zero goal seriously.

If the government can accelerate the reduction of restrictions, support quality projects, and design a more flexible and transparent market mechanism, the Thai carbon credit market has the potential to grow and play an important role on the world stage, no less than other alternative assets.

The future of carbon credits in Thailand may not be as clear as the term “Next Bitcoin“, but it is clear enough to start studying, understanding, and seeing the value before the value goes much further.

Carbon credit summary

Carbon Credit is a system that helps reduce greenhouse gas emissions. Those who can reduce or absorb emissions (such as by planting trees or developing clean energy technologies) will receive carbon credits, which can be sold to companies or countries that are unable to meet their emissions reduction targets.

The enormous benefits of Carbon Credits help promote the transition to a sustainable economy by focusing on reducing the impacts of climate change and creating sustainable development at a global level.

Reference : Jessie Variety

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