Thailand SEC approves local carbon credit funds approved

The Securities and Exchange Commission (SEC) has approved the establishment of carbon credit funds in Thailand in order to raise money to help businesses seeking to reduce their emissions.

The funds would be open to institutional investors under two models, said Pravej Ongart-sittigul, a senior assistant secretary-general of the SEC.

The first model is a carbon credit fund to allot to a company that operates a business involved in greenhouse gas emission reduction. The returns to the company, which is the fund's unitholder, will be received as carbon credits.

The second type allots units to the public who will obtain returns in cash.

Both funds would invest up to 85% of net asset value in securities or assets related to greenhouse gas emission reduction. These could include carbon credits and carbon credit forward contracts.

As well, equity and bonds issued by a company set up in Thailand and involved in carbon reduction could make up at least 65% of net asset value.

The SEC is gathering comment from market participants until Sept 23.

"A carbon fund will be a key mechanism for raising funds from local and foreign institutional investors for carbon reduction projects in Thailand," said Mr Pravej. "It will play an active role to collect credits for investors and approach industries in developed countries to access the carbon credit trade in Thailand more easily. As well, it will support the activities and business that help reduce greenhouse gas emissions."

Somchai Boonnamsiri, CEO of Krung Thai Asset Management, said the carbon credit market in Thailand was still small but had great potential given rising concern about climate change.

The presence of such funds locally, he said, would also encourage large industries to reduce greenhouse gases.