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

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.