Assessing the potential of small and medium-sized enterprises in Thailand’s manufacturing sector to engage in carbon market mechanisms

Abstract

This study evaluates the potential of Thailand’s Small and Medium-Sized Enterprises (SMEs) in the manufacturing sector to participate in carbon market mechanisms. SMEs play a significant role in energy consumption and greenhouse gas (GHG) emissions. This study applies the Thailand Voluntary Emission Reduction Program (T-VER) using two approaches: Improving energy efficiency in buildings (EEB) and renewable energy or fossil-fuel replacement (REF). Using data from Thailand’s Department of Alternative Energy Development and Efficiency (DEDE), the study analyzes energy consumption patterns, technology usage, and the potential for carbon credit generation. The results identify three high-potential sectors, including Food and Beverage, Fabricated Metal Products, and Non-metallic Products, with a combined carbon credit potential of 4.38 MtCO2eq. These credits represent a total market value of approximately 850 million baht per year, with 76.72% arising from electrical efficiency improvements and 23.28% from renewable energy integration. The findings highlight the need for targeted policy support, innovative financing instruments, capacity-building programs, and collaborative partnerships to help SMEs adopt low-carbon technologies and engage in Thailand’s voluntary carbon market. Strengthening SME participation could significantly enhance national progress toward net-zero emissions and the Bio-Circular-Green (BCG) economic strategy.

Keywords

• Carbon credit
• Carbon market
• Decarbonization
• Manufacturing sector
• Small and medium-sized enterprises

Supporting Institution

This work was partially supported by Chiang Mai University (CMU), Thailand, CMU Proactive Researcher.

Thanks

This research was also supported by the United Nations Environment Programme (UNEP) and Chiang Mai University. The authors also gratefully acknowledge the Department of Alternative Energy Development and Efficiency (DEDE), Ministry of Energy, for providing valuable data.

References

1. [1] Achariyaviriya, W, Suttakul, P, Fongsamootr, T, Mona, Y, Phuphisith, S, Tippayawong, KY. The social cost of carbon of different automotive powertrains: A comparative case study of Thailand. Energy Reports 2023; 9: 1144-1151. DOI: 10.1016/j.egyr.2023.03.035
2. [2] Achariyaviriya, W, Suttakul, P, Phuphisith, S, Mona, Y, Wanison, R, Phermkorn, P. Potential reductions of CO2 emissions from the transition to electric vehicles: Thailand’s scenarios towards 2030. Energy Reports 2023; 9: 124-130. DOI: 10.1016/j.egyr.2023.08.073
3. [3] Birchall, SJ, Murphy, M, Milne, M. An investigation into the early stages of New Zealand's voluntary carbon market. Carbon Management 2018; 9(1): 71-81. DOI: 10.1080/17583004.2017.1418596
4. [4] Engler, D, Gutsche, G, Simixhiu, A, Ziegler, A. On the relationship between corporate CO2 offsetting and pro-environmental activities in small- and medium-sized firms in Germany. Energy Economics 2023; 118: 106487. DOI: 10.1016/j.eneco.2022.106487
5. [5] Ouazzani Chahidi, L, Mechaqrane, A. Energetic and economic analysis for improving greenhouse energy efficiency. Journal of Energy Systems 2021; 5(4): 296-305. DOI: 10.30521/jes.950754
6. [6] Wang, K, Lin, C. Can Low-Carbon Transition Impact the High-Quality Development of the Manufacturing Industry?—Experience Evidence from a Low-Carbon Pilot Policy. Sustainability 2024; 16(23): 10739. DOI: 10.3390/su162310739
7. [7] Durrani, N, Raziq, A, Mahmood, T, Khan, MR. Barriers to adaptation of environmental sustainability in SMEs: A qualitative study. PLoS One 2024; 19(5): e0298580. DOI: 10.1371/journal.pone.0298580
8. [8] Köhl, M, Neupane, PR, Mundhenk, P. REDD+ measurement, reporting and verification – A cost trap? Implications for financing REDD+MRV costs by result-based payments. Ecological Economics 2020; 168: 106513. DOI: 10.1016/j.ecolecon.2019.106513

9. [9] Adu, DA, Chen, XH, Hasan, M, Zhu, X, Jellason, N. The relationship between entrepreneurial energy efficiency orientation and carbon footprint reduction: The mediating role of green networking and identification of barriers to green practices. Journal of Environmental Management 2023; 347: 119256. DOI: 10.1016/j.jenvman.2023.119256
10. [10] Olekanma, O, Rodrigo, LS, Adu, DA, Gahir, B. Small- and medium-sized enterprises' carbon footprint reduction initiatives as a catalyst for green jobs: A systematic review and comprehensive business strategy agenda. Business Strategy and the Environment 2024; 33(7): 6911-6939. DOI: 10.1002/bse.3846
11. [11] Hampton, S, Blundel, R, Eadson, W, Northall, P, Sugar, K. Crisis and opportunity: Transforming climate governance for SMEs. Global Environmental Change 2023; 82: 102707. DOI: 10.1016/j.gloenvcha.2023.102707
12. [12] Herce, C, Martini, C, Toro, C, Biele, E, Salvio, M. Energy Efficiency Policies for Small and Medium-Sized Enterprises: A Review. Sustainability 2024; 16(3): 1023. DOI: 10.3390/su16031023
13. [13] Kochar, R, Kalsie, A, Deka, N. Voluntary Carbon Markets (VCMs) in a nutshell: A systematic review based on the empirical evidence from across the globe. Journal of Cleaner Production 2025; 522: 146261. DOI: 10.1016/j.jclepro.2025.146261
14. [14] Thailand, "Factory Act B.E. 2535 [Unofficial English translation]," ed: Royal Thai Government Gazette, 1992.
15. [15] Thailand, "Factory Act (No. 2) B.E. 2562 (2019)," vol. 136, ed. Bangkok, Thailand: Royal Thai Government Gazette, 2019.
16. [16] Department of Alternative Energy Development and Efficiency, Ministry of Energy, Thailand. Manual: Explanation of Energy Conservation Act B.E. 2535 (Amended) for Designated Factory / Designated Building. Bangkok, Thailand: Department of Alternative Energy Development and Efficiency, Ministry of Energy (DEDE), 2009.
17. [17] Department of Economic and Social Affairs Statistics Division. International standard industrial classification of all economic activities (ISIC). United Nations Publications, 2008.
18. [18] National Statistical Office of Thailand. Thailand Standard Industrial Classification 2009 (TSIC 2009). Bangkok, Thailand: The National Statistical Office (NSO), 2021.
19. [19] Wongsapai, W. Performance Tracking of Thailand's Energy Management System under Energy Conservation Promotion Act. Energy Procedia 2016; 100: 448-451. DOI: 10.1016/j.egypro.2016.10.200
20. [20] Wongsapai, W, Daroon, S. Estimation of greenhouse gas mitigation potential from carbon intensity and energy data analysis from Thai industrial sector. Energy Reports 2021; 7: 930-936. DOI: 10.1016/j.egyr.2021.07.048
21. [21] Wongsapai, W, Fongsamootr, T, Chaichana, C. Evaluation of energy saving potential for small and medium enterprises (SMEs) in Thailand. Energy Procedia 2017; 141: 228-232. DOI: 10.1016/j.egypro.2017.11.097
22. [22] Department of Alternative Energy Development and Efficiency (DEDE). Thailand Energy Efficiency Situation 2022. Information and Communication Technology Center 2022.
23. [23] Department of Alternative Energy Development and Efficiency, Ministry of Energy, Thailand. Thailand Energy Efficiency Situation 2022. Bangkok, Thailand: Department of Alternative Energy Development and Efficiency, Ministry of Energy (DEDE), 2022.
24. [24] Koo, M, Yang, S-W. Likert-Type Scale. Encyclopedia 2025; 5(1): 18. DOI: 10.3390/encyclopedia5010018
25. [25] Jaitiang, T, Vorayos, N, Vorayos, N, "The Energy and Environmental Efficiency Assessment of Energy System: A Case of Thailand’s Industry," in 2022 12th International Conference on Power, Energy and Electrical Engineering (CPEEE), ed, 2022, pp. 303-309.
26. [26] Eggleston, H, Buendia, L, Miwa, K, Ngara, T, Tanabe, K. 2006 IPCC guidelines for national greenhouse gas inventories. 2006.
27. [27] Mazhar, M, Domingues, AR, Bull, R, O'Boyle, S, "Small and medium-sized enterprises: Hard to reach, data-poor but rich in creative potential as agents of change for decarbonisation," ed: European Council for an Energy Efficient Economy, 2022.
28. [28] Hampton, S, Blundel, R, Wahga, A, Fawcett, T, Shaw, C. Transforming small and medium-sized enterprises to address the climate emergency: The case for values-based engagement. Corporate Social Responsibility and Environmental Management 2022; 29(5): 1424-1439. DOI: 10.1002/csr.2279
29. [29] Yao, X, Huang, R, Song, M. How to reduce carbon emissions of small and medium enterprises (SMEs) by knowledge sharing in China. Production Planning & Control 2019; 30(10-12): 881-892. DOI: 10.1080/09537287.2019.1582096
30. [30] O’Keeffe, JM, Gilmour, D, Simpson, E. A network approach to overcoming barriers to market engagement for SMEs in energy efficiency initiatives such as the Green Deal. Energy Policy 2016; 97: 582-590. DOI: 10.1016/j.enpol.2016.08.006
31. [31] Rawlings, J, Coker, P, Doak, J, Burfoot, B. Do smart grids offer a new incentive for SME carbon reduction? Sustainable Cities and Society 2014; 10: 245-250. DOI: 10.1016/j.scs.2013.04.003