ADB Urges Systemic Reforms to Close Thailand’s Climate Investment Shortfall

A new brief from the Asian Development Bank (ADB), supported by experts Karan Chouksey, Peter du Pont, Michael Rattinger, and Sarinee Achavanuntakul, paints a revealing portrait of Thailand’s climate finance efforts between 2018 and 2024. Drawing on over 660 publicly available projects, the report aggregates information from corporate sustainability reports, national carbon credit databases, government budgets, financial disclosures, and international climate finance portals. It also integrates investment benchmarks from leading institutions such as the United Nations Framework Convention on Climate Change (UNFCCC), International Monetary Fund (IMF), and the World Bank to position Thailand’s climate trajectory within global standards. The result is the country’s first comprehensive estimate of climate finance flows tied to its Nationally Determined Contributions (NDCs).

Strong Corporate Momentum, But Skewed Investment Priorities

Thailand mobilized an impressive ฿1.6 trillion ($47.1 billion) in climate mitigation financing over the six years. However, this funding has been unevenly distributed. A striking 63.5% of the total investment was directed toward mitigation in the energy and transport sectors. The energy sector alone received nearly half of all climate funding, ฿761 billion ($22.4 billion), driven by booming investments in solar photovoltaic systems, green hydrogen, and electric infrastructure. Notable projects included solar PV installations worth ฿276.4 billion ($8 billion), green hydrogen ventures at ฿232 billion ($6.8 billion), and transport electrification totaling over ฿137.8 billion ($4 billion). Electric vehicles and wastewater management also featured prominently.

Despite these gains, adaptation, the cornerstone of resilience, received less than 1% of total funding. Key sectors like water management, sustainable agriculture, and disaster preparedness remained drastically underfunded, threatening long-term economic stability in a country highly exposed to rising sea levels, erratic rainfall, and extreme weather.

The corporate sector emerged as the leading investor, contributing ฿717 billion ($21.1 billion), or 44.8% of the total. Commercial banks followed with 20.2%, while state-owned enterprises and the government accounted for 16.3% and 15.3%, respectively. Multilateral institutions, development banks, and impact investors together contributed just over 3%. The year 2023 saw a notable surge in corporate financing, influenced by emerging ESG norms, the EU’s Carbon Border Adjustment Mechanism, and new domestic frameworks like the Thailand Taxonomy and green bond guidance from the Securities and Exchange Commission.

A Gaping Investment Deficit Threatens Long-Term Goals

Even with progress in some sectors, Thailand’s financing trajectory remains deeply misaligned with its climate ambitions. According to ADB estimates, the country will need to raise between $22 billion and $28 billion annually from 2030 to 2050 to stay on track toward carbon neutrality by 2050 and net-zero emissions by 2065. Presently, the average annual climate investment hovers around $8 billion, leaving a massive gap of $11 billion to $17 billion each year.

ADB’s analysis reveals sector-specific shortfalls. The energy sector, while the best-funded, still requires nearly double its current annual investment. The transport sector needs more than twice its current funding, rising from $2.5 billion to around $6 billion annually. Agriculture, a vital sector for both economic development and food security, faces a funding gap of up to $2.3 billion annually. Industry, waste management, and forestry each show deficits ranging from hundreds of millions to over a billion dollars per year. The stark visual in the report’s chart comparing current and required investments highlights the scale of the challenge.

Institutional Fragmentation and Transparency Barriers

One of the core issues slowing climate finance deployment is a fragmented governance system. Responsibilities are siloed among ministries and agencies, leading to disjointed efforts and limited policy coherence. The absence of a unified national strategy for climate finance means that funding decisions are often driven by short-term returns or political interests rather than long-term climate resilience and economic transformation.

Moreover, financial transparency is lacking. Without a centralized platform to track public budgets, private investments, and international grants, policymakers are left to make decisions in the dark. Corporate disclosures remain sparse, and where they exist, they often omit critical information. This lack of standardized reporting weakens accountability, making it harder to identify where funds are flowing and where they aren’t.

A Roadmap for Reform: Five Strategic Solutions

To address these bottlenecks, the ADB outlines a five-pillar strategy to mobilize investment and improve governance. First, it calls for catalytic finance mechanisms to de-risk climate projects through blended finance models that combine concessional and commercial capital. Such tools are vital for scaling early-stage ventures like offshore wind, electric vehicle charging networks, or climate-resilient farming systems. Second, expanding green capital markets through instruments such as green bonds and sustainability-linked loans can help attract both institutional and retail investors interested in ESG-aligned assets.

Third, the report urges institutional strengthening, particularly enhancing the role and authority of the Department of Climate Change and Environment to coordinate implementation across ministries. Fourth, the ADB recommends establishing transparent project selection frameworks and public-private partnership models to ensure investment decisions are based on climate impact and alignment with national goals. Finally, a national climate finance repository is needed to track, verify, and publish financial flows, improving both transparency and strategic planning.

While Thailand has made meaningful progress, especially in mitigation, the current trajectory is insufficient to meet its long-term climate goals. With an annual financing gap exceeding $10 billion and critical sectors still starved of investment, the country faces a pivotal moment. Bridging this gap will demand not only more capital but smarter systems: blended finance, data transparency, inter-ministerial coordination, and strategic prioritization. The ADB brief makes it clear, Thailand’s future climate resilience hinges not just on ambition, but on execution.