On July 30, 2026, Thailand's carbon allowance market witnessed a historic moment as the carbon emission rights price broke through $48 per ton for the first time, setting the highest record since the launch of Thailand's carbon market in 2022. This surge, far exceeding market expectations, rose 12% from the same period last month, directly triggering a linked increase in green power procurement costs. The Federation of Thai Industries (FTI) convened an emergency seminar that day to assess the impact on the manufacturing sector.
Analysis of Drivers Behind Carbon Price Surge
The current increase in carbon allowance prices is mainly due to three factors: first, the Thai government officially implemented the "2026-2030 Total Carbon Emission Control Plan" in mid-July, reducing the total allowances for power, cement, petrochemical, and other industries by 15% compared to the previous phase, tightening market supply; second, the full implementation of the EU Carbon Border Adjustment Mechanism (CBAM) has driven Thai exporters to rush to purchase local allowances to obtain carbon offset certificates; third, PTT Group's renewable energy subsidiary, PTT Green Energy, announced it would suspend selling its carbon allowance reserves to accumulate for its own carbon neutrality goal.
Data from the Thailand carbon market trading platform shows that the average daily trading volume in the last week of July reached 1.2 million tons, an increase of 40% from the June average. Among them, power industry buyers accounted for 45%, manufacturing 32%, and the remainder was speculative demand from financial institutions. The price rose steadily from $42/ton at the beginning of the month, hitting a high of $48.75/ton on July 30 before falling slightly to close at $48.02/ton.
Green Power Price Conduction Effect Emerges
The cost of carbon allowances is directly reflected in green power trading prices. The 24-hour weighted average green power price released by the Thailand Power Exchange (EGAT) closed at 3.28 THB/kWh on July 30, up 6.7% from the previous week, the highest level in nearly a year. Among them, solar green power quotes rose from 2.95 THB/kWh to 3.15 THB/kWh, and wind green power from 3.10 THB/kWh to 3.35 THB/kWh.
Industry analysts point out that green power prices show a positive correlation with carbon prices: when power generation companies sell green power, they can simultaneously transfer the corresponding Renewable Energy Certificates (REC) and carbon emission reductions. As carbon prices rise, the environmental premium included in green power increases accordingly. Somchai Charnvirakul, President of the Thailand Renewable Energy Association, stated: "For every $1/ton increase in carbon price, the green power price rises by an average of 0.02-0.03 THB/kWh. The current carbon price increase has already raised the return on investment for green power projects by about 1.5 percentage points."
ASEAN Wholesale Electricity Market Linked Reaction
The rise in green power costs triggered by Thailand's carbon price surge quickly transmitted to the ASEAN wholesale electricity market. According to data from the ASEAN Centre for Energy (ACE) on July 30, Thailand's wholesale electricity spot price (including green power) rose to 4.12 THB/kWh, higher than Malaysia's 3.85 THB and Vietnam's 3.60 THB. However, the Electricity Generating Authority of Thailand (EGAT) emphasized that after deducting the carbon allowance pass-through cost, Thailand's base electricity cost remains on par with its neighbors.
Notably, the green power trading volume of the Laos-Thailand-Malaysia Power Integration Project (LTM-PIP) increased by 28% month-on-month on July 30, as Thai buyers turned to purchase Lao hydropower to avoid high domestic carbon prices. Lao hydropower green power quotes are only 2.80 THB/kWh, and even including carbon reduction certification, the total premium is still lower than Thai domestic products.
PTT Group Strategic Adjustment and Investment Insights
As carbon prices break new highs, PTT Public Company Limited (PTT) announced adjustments to its carbon asset management strategy. Its subsidiary PTTEP has hedged 30% of its 2026 carbon allowances, locking in prices at $46/ton, while accelerating the CCUS (Carbon Capture, Utilization and Storage) transformation of its natural gas-to-hydrogen project. PTT Group's Chief Financial Officer stated in an investor conference call on July 30: "The high carbon price environment is changing the investment model for energy projects. We have raised our internal carbon shadow price from $35/ton to $50/ton, which will make green hydrogen and energy storage projects more competitive in internal rate of return assessments."
For investors, the current linkage between carbon prices and green power prices provides a new perspective for portfolio allocation. On one hand, funds holding carbon allowance assets benefit from price increases; on the other hand, profit margins for green power operators expand. The SET Green Power Sector Index on the Stock Exchange of Thailand rose 2.3% on July 30, with PTT Green Energy's stock price hitting a six-month high, closing at 48.50 THB, up 3.6%.
Future Outlook: High Carbon Prices May Become the New Normal
Looking ahead to the second half of the year, Thailand's carbon allowance prices are expected to remain in the $45-50/ton range. The Thailand Greenhouse Gas Management Organization (TGO) will conduct the year's second quota auction on August 15, with the market expecting a starting price of $43/ton. Meanwhile, the Thai government is considering implementing a "carbon price pass-through subsidy" for green power to alleviate the burden on export-oriented manufacturing industries. Asia-Pacific energy research institutions indicate that Thailand's carbon price trend will become a bellwether for the Southeast Asian carbon market, with the Philippines and Indonesia studying adjustments to their carbon pricing mechanisms based on Thailand's model.
For investors focusing on oil, gas, and green power real-time prices, it is recommended to closely track the results of the Thailand carbon allowance auction to be released on August 3, as well as PTT Group's quarterly report disclosures on green power earnings. Against the backdrop of accelerating energy transition, the interactive pricing of carbon allowances and green power is becoming a new core variable in the energy market.
