The climate transition is top of mind for several Asian countries looking to ensure continuous supply  while encouraging renewable energy. Thailand, Singapore and Indonesia have all made changes recently to either support the transition or  the effective supply of existing energy sources.  

Thailand

Thailand has approved a draft ministerial regulation to integrate a carbon pricing mechanism on oil and oil products under the Excise Tax Act. This is part of ongoing efforts by the Thai Government to achieve net zero greenhouse gas emissions by 2065 and carbon neutrality by 2050. The draft regulation calculates carbon tax rates based on the product’s emission factor, with a carbon price of THB 200 per ton of carbon dioxide equivalent embedded within existing excise tax rates. The  overall excise tax payable remains unchanged so the initiative does not increase the tax burden on business or consumers. Products impacted by the draft regulation include gasoline, diesel, jet fuel and liquefied petroleum gas. While the initial carbon price is set, it may increase with the approval of Cabinet following appropriate consultation. The long term intention is for Thailand to implement a comprehensive carbon tax system under its draft Climate Change Bill. 

Singapore

Singapore has announced that its 2035 emissions target is to reduce emission to between 45 to 50 million tonnes of carbon dioxide equivalent. This target has now been submitted to the United Nations Framework Convention on Climate Change in accordance with the Paris Agreement. This target also aligns to Singapore’s goal of achieving net-zero emissions by 2050. The key sectors impacted include energy, industrial processes and product use, agriculture, land use and forestry. 

To achieve its target, Singapore continues to be progressive in its use of technology and approach to the energy transition. In 2024, it set an emissions mandate for new fossil fuel generation units to be 30% hydrogen ready by volume at a minimum and they must have the ability to be 100% hydrogen ready in the future. Singapore has also dramatically increased its deployment of domestic solar power and continues to operate its effective carbon tax regime with about 80% of total emissions covered by the carbon tax and fuel excise duties on transport fuels and 70% of emissions covered by the carbon tax alone. In addition, Singapore has also begun importing clean electricity from neighbouring countries, which is expected to meet about one third of the country’s electricity needs by 2035. 

Indonesia

Effective January 6, a new regulation revises Regulation No. 37 of 2016 on Provisions on Offers of 10% Participating Interests in Oil and Gas Working Areas. The amendments improve the effectiveness of the original regulations that allow for 10% participating interests in co-operation contracts in the upstream oil and gas business to be offered to region-owned enterprises. 

The definition of a region-owned entity (an Anak Perusahaan BUMD) is revised and their eligibility to receive an offer of Participating Interests clarified to where they are wholly owned by a region and where the BUMD’s ownership is not divided into shares. In addition, the distribution of the regional shareholding participation must align with the proportion of reservoir coverage in the region and take into account social and economic factors. A BUMD subsidiary that is 100% owned by the BUMD recipient of the Participating Interests may also manage the Participating Interests in another oil and gas block.