Clarifying plans to strike an energy balance

As Thailand accelerates its transition to a low-carbon economy, energy policymakers are revising the country's oil strategy to balance decarbonisation goals with energy security.

Sarawut Kaewtathip, director-general of the Department of Energy Business (DOEB), is outlining how the revised 2026 oil plan aims to expand biofuel use, modernise oil infrastructure and prepare the industry for declining fossil fuel demand.

How will the 2026 oil plan differ from the 2024 version?

The revised plan is designed to support Thailand's goal of achieving a balance between greenhouse gas emissions and carbon absorption by 2050, said Mr Sarawut.

A key focus is the wider adoption of biofuels across all transport modes. The plan promotes greater use of biodiesel and ethanol in road transport, sustainable aviation fuel (SAF) in the aviation sector, and low-carbon marine fuels for shipping.

Authorities want motorists to reduce reliance on fossil fuels by switching to E20 gasohol, which contains 20% ethanol, and B20 biodiesel, blended with 20% methyl ester.

The government is also stepping up support for SAF to help cut aviation emissions.

In the maritime sector, ship operators are being encouraged to use B24 marine biofuel, a blend of 24% methyl ester derived from used cooking oil and 76% very-low-sulphur fuel oil.

Liquefied natural gas (LNG) is expected to play a larger role as a transition fuel, said Mr Sarawut. LNG burns more cleanly than oil and coal, reducing greenhouse gas emissions by 20-30% compared with conventional oil, he said.

The fuel offers a driving range of more than 1,000 kilometres per tank, compared with 300-400km for compressed natural gas.

What is the direction for biofuel development?

The Energy Ministry is using the Oil Fuel Fund to encourage greater consumption of E20 and B20, with the aim of building long-term public acceptance of biofuels.

Under the strategy, E20 is being positioned as Thailand's standard gasoline grade, while B20 will continue to be promoted as an alternative diesel fuel.

Mr Sarawut said overcoming consumer misconceptions remains one of the biggest challenges. A survey conducted by the DOEB and Chulalongkorn University found 40% of car owners and 55% of motorcycle users were unaware that their vehicles could run on E20.

Even among owners of compatible vehicles, concerns persist. Roughly 40% of car drivers and 64% of motorcycle users surveyed said they worried that E20 could damage engines or reduce performance.

Those concerns persist despite assurances from automakers that most vehicles manufactured since 2008 can safely use E20. Many consumers associate the fuel's lower price with inferior quality.

How will officials help oil refineries adapt to the clean energy transition?

The government plans to encourage refiners to evolve into biorefineries, said Mr Sarawut. Unlike conventional refineries that process crude oil, biorefineries use agricultural feedstocks and organic waste to produce fuels and chemical products.

Ethanol is derived primarily from sugar cane and cassava, while methyl ester is produced from palm oil.

Thailand is already recording investment in SAF production. Bangchak Corporation and PTT Global Chemical are using used cooking oil as feedstock to manufacture aviation biofuel.

He said the DOEB is working with the Board of Investment to provide enhanced incentives for companies investing in SAF production facilities.

Are there plans to keep oil and chemical logistics in line with the transition?

Infrastructure modernisation is a pillar of the new plan, with authorities promoting pipeline transport, reforming tax collection and expanding fuel storage facilities, said Mr Sarawut.

Pipeline transport is a priority because it produces no direct greenhouse gas emissions during operations and offers a higher level of safety than road transport. Unlike fuel trucks, pipelines can help reduce carbon emissions associated with oil distribution.

The government wants to increase the share of oil transported through pipelines to 45-55% of the total.

To support this goal, the DOEB is working with Thai Petroleum Pipeline Co and BAFS Pipeline Transportation Co on the third phase of the northern fuel pipeline expansion project linking Saraburi and Ang Thong provinces.

The department is also studying a shift in excise tax collection from origin depots to destination terminals.

Under the current system, operators are required to pay tax as soon as fuel leaves the source depot, even though the fuel is still in transit and has not yet been sold. Moving tax collection to destination terminals would align tax payments more closely with actual fuel distribution.

The measure is expected to improve cash flow for operators by reducing the need to set aside large amounts of working capital for advance tax payments.

The revised oil plan also calls for expanding fuel storage capacity in provincial areas and at border terminals to support Thailand's net-zero ambitions while strengthening energy security.

Larger regional storage facilities would allow greater use of pipelines and rail transport for bulk fuel shipments, reducing dependence on long-haul tanker trucks and lowering carbon emissions throughout the supply chain.

Additional storage capacity would also provide larger buffer stocks in regional markets, helping to safeguard supplies during global supply chain disruptions or natural disasters.

When is oil demand expected to peak, and how will Thailand adjust?

A joint study by the DOEB and Chulalongkorn University predicts Thai fuel demand to peak this year before entering a prolonged decline as the country advances towards its net-zero target.

By 2050, national fuel consumption is expected to fall to roughly half of peak levels.

Gasoline and diesel are projected to experience the sharpest decline as electric vehicle adoption accelerates.

In contrast, liquefied petroleum gas and jet fuel demand are expected to fall more gradually because households and the aviation sector face a slower energy transition.

Mr Sarawut said three strategies will help oil supply chain operators navigate the shift.

The first is integrating biorefinery technologies into existing refineries, allowing operators to co-process bio-based feedstocks with crude oil and produce low-carbon fuels for sectors that are difficult to electrify, particularly aviation and shipping.

The second is focusing on petrochemicals by redirecting part of refining capacity away from transport fuels and towards chemical feedstocks, where long-term demand growth is expected to remain stronger.

The third strategy is developing dual-purpose infrastructure. Oil terminals and pipeline networks will be adapted to handle both conventional petroleum products and emerging low-carbon fuels, enabling the industry to remain competitive as energy consumption patterns evolve, he said.