India’s Green Credit Programme: A Market-Based Approach to Environmental Stewardship

The Government of India has launched a significant, market-based initiative, the Green Credit Programme (GCP), with the notification of the Green Credit Rules, 2023, on October 12, 2023. This programme is designed to leverage a competitive market mechanism to incentivise individuals, industries, companies, and other entities to undertake voluntary environmental actions that deliver positive impacts. As a vital component of the nation’s broader ‘LiFE’ (Lifestyle for Environment) movement, the GCP aims to promote sustainable living by driving behavioral changes toward environment-friendly practices.

Core Objectives and Mechanism

The primary objective of the GCP is to encourage environmental positive actions and generate a quantifiable incentive in the form of a Green Credit (GC), defined as a singular unit of incentive for a specified activity that positively impacts the environment. These Green Credits are designed to be tradable within the entities of a particular industry/company in-lieu of their forest diversions, thereby creating an economic value for environmental good.

The scope of activities eligible for generating Green Credits is broad, covering key areas of environmental concern:

1. Tree Plantation: Promoting activities to increase green cover.

2. Water Management: Encouraging water conservation, harvesting, and wastewater treatment/reuse.

3. Sustainable Agriculture: Promoting natural and regenerative agricultural practices for soil health.

4. Waste Management: Advancing circularity and environmentally sound management practices.

5. Air Pollution Reduction: Measures for pollution abatement.

6. Mangrove Conservation and Restoration.

7. Ecomark Label Development: Encouraging manufacturers to obtain the Ecomark label.

8. Sustainable Building and Infrastructure: Promoting environment-friendly technologies and materials in construction.

A crucial distinction is established in the rules: the GCP operates independently of the Carbon Credit Trading Scheme, 2023, under the Energy Conservation Act, 2001. However, an environmental activity that generates Green Credits may concurrently possess climate co-benefits, such as carbon emission reduction or removal, and may also be eligible to secure carbon credits under the separate scheme. Importantly, any Green Credit generated or procured to satisfy an existing legal obligation under any law in force shall not be tradable.

The Governing Structure

To ensure the effective implementation and integrity of the programme, a robust governing and administrative structure has been established:

• Administrator: The Indian Council of Forestry Research and Education (ICFRE), an autonomous body under the Ministry of Environment, Forest and Climate Change, serves as the Administrator. Its responsibilities include developing guidelines, registration processes, establishing the Green Credit Registry and Trading Platform, and overall management.

• Green Credit Registry: This electronic database is maintained by the Administrator or a designated agency for the registration and accurate accounting of every issued Green Credit.

• Trading Platform: Established with the Central Government’s approval, this platform will facilitate the market-based trading of Green Credits.

• Steering Committee: Constituted by the Central Government, it monitors implementation, reviews the programme, and makes recommendations on activities and sectors to be included.

• Technical Committees: These are constituted for each specific activity to assist the Administrator by developing technical methodologies for the calculation and verification of a single unit of Green Credit.

• Designated Agencies: These entities are responsible for the on-ground verification and assessment of the activities undertaken by applicants for the purpose of Green Credit issuance.

Modalities for Forest Restoration and Tree Plantation

Detailed modalities have been specified for ‘Tree Plantation,’ one of the key eligible activities, focusing on the restoration of degraded forest land. The implementation framework outlines specific roles for State and Divisional Nodal Officers and sets clear criteria for Green Credit Applicants (GCAs).

Roles and Eligibility:

• Nodal Agencies: The Forest Departments/Forest Development Corporations of States and UTs act as Nodal Agencies.

• State Nodal Officer (SNO): A Principal Chief Conservator of Forests rank officer, responsible for overall coordination and monitoring.

• Divisional Nodal Officer (DNO): The Divisional Forest Officer/Deputy Conservator of Forests, responsible for facilitating GCA activities.

• Land Eligibility: Only degraded forest land parcels under the control of the State/UT Forest Department are eligible. These parcels must be a compact area with a minimum size of 5 hectares and be free from all encumbrances. Crucially, Protected Areas (Wildlife Sanctuaries, National Parks, and Tiger Reserves) are not eligible.

The Implementation Process:

Any person or entity (GCA) seeking Green Credits must follow a structured process involving the Green Credit Programme Portal:

1. Land Registration & Selection: The DNO identifies and uploads eligible land parcels (minimum 5 Ha) to the portal. The GCA selects the approved land parcel.

2. Detailed Project Report (DPR): The GCA prepares a comprehensive 10-year DPR detailing restoration objectives, year-wise interventions, and financial outlays, including establishment and maintenance costs. The DPR must be approved by the SNO.

3. MoU and Costs: A Memorandum of Understanding (MoU) is signed between the DNO and the GCA. The MoU explicitly states that it does not create any ownership, usufruct, or commercial interest for the GCA. The GCA must deposit 10% of the project cost as an administrative fee and bear the entire cost of implementation.

Generation and Use of Green Credits

The generation of Green Credits is tied to verifiable outcomes:

• Claiming Threshold: A GCA is eligible to submit a claim for Green Credits only after a minimum period of five years from the start of the restoration activities and upon achieving a minimum canopy density of 40%.

• Issuance: The issuance is based on vegetation status as verified by a Designated Agency. One Green Credit is awarded for each surviving tree older than five years within the restored parcel, provided the 40% canopy density threshold is met.

• Maintenance Deposit: Prior to the issuance of the Green Credits, the GCA is mandated to deposit the maintenance cost for the remaining period out of the 10-year DPR duration.

The Green Credits generated from tree plantation can be exchanged for meeting various obligations, including Compensatory Afforestation compliance, Corporate Social Responsibility (CSR) requirements based on cost incurred, or fulfilling other statutory tree plantation obligations. However, for tree plantation, the issued Green Credits are explicitly declared non-tradable and non-transferable (except between holding and subsidiary companies) and cannot be used to fulfil site-specific plantation obligations related to the implementation of any project or activity.

Conclusion

India’s Green Credit Programme marks a pioneering step toward monetizing environmental action, integrating private sector participation into national conservation efforts. By establishing a quantifiable, market-linked incentive, and setting clear, outcome-based criteria, particularly for the challenging task of degraded forest land restoration, the GCP aims to foster a sustainable and accountable regime of environmental stewardship, aligning economic activity with ecological restoration.