Green Credit Rules were notified by the Ministry of Environment Forest and Climate Change (MoEFCC) on 12th October 2023, giving legal validity to Green Credit Programme (GCP) in India. GCP becomes part of several programs and schemes India has launched in a bid to adhere to several of its international commitments. One such commitment can be traced back to the decisions taken during the Conference of the Parties (COP26) held in Glasgow in 2021, wherein it was agreed that market and non-market-based instruments shall be adopted to combat climate change. In the same event, ‘Lifestyle for Environment’ (LiFE) was launched by the Prime Minister of India, as a mass, grassroots-level movement to foster a sustainable lifestyle. LiFE also becomes a part of one of the updated Nationally Determined Contributions (NDCs) submitted by India to the UNFCCC under the Paris Agreement.
The inspiration behind the GCP can be traced to successful programs implemented in other countries. For instance, the United States’ Renewable Portfolio Standard and the European Union’s Emissions Trading System have proven their efficacy in reducing greenhouse gas emissions and promoting the adoption of renewable energy sources. By drawing lessons from these international models, the GCP aspires to emulate their achievements and create a similar positive impact on India’s environmental landscape. GCP is meant to complement the proposed Carbon Credit Trading Scheme (CCTS) introduced by the Energy Conservation (Amendment) Act, 2022. GCP, like CCTS, is a market-based mechanism to combat climate change. However, it is broader in scope than Carbon Credits as it goes beyond CO2 reductions, allowing tradable green credits for a broader range of sustainable practices.
THE GREEN CREDIT RULES IN A GLANCE
The Green Credit Programme
GCP is a market-based mechanism to incentivise environmentally positive activities through the generation of ‘Green Credit’ which are tradable in the domestic market. GCP aims to promote industries, companies and other entities to purchase green credits for meeting their obligations under other existing laws, however, green credits bought for this purpose cannot be traded. It is pertinent to note that participation in GCP is completely on a voluntary basis. Green credits can be generated through performing diverse activities listed out in Rule 4, they are:
- Tree Plantation- aimed at increasing the green cover of the country.
- Water-management– covers all activities from water conservation to wastewater treatment.
- Sustainable Agriculture– promotion and adoption of mindful, sustainable forms of agriculture which will focus on retaining the quality of the crops as well as the soil.
- Waste Management- activities for the environmentally sound management of various types of waste.
- Air Pollution Reduction– covers air pollution prevention and control measures.
- Mangrove Conservation and Restoration– mangroves are imperative to the sustenance of the sensitive ecology and marine lives along several coastal areas in India as well as for the communities living in these areas. Activities for the protection and restoration of mangroves could generate green credits.
- Ecomark Label– environmentally friendly products are conferred ECO mark label under the ECO mark Scheme. Ecomark green credits aims to promote the obtaining of ECO mark labels by manufacturers.
- Sustainable building and infrastructure- sustainable urban planning is a crucial yet overlooked aspect in climate change mitigation; this green credit aims to incorporate sustainable technologies in the construction of new buildings.
GCP thus welcomes the participation of individuals, businesses, and organizations, irrespective of their size or scale of operations, to participate in the trade of green credits which will incentivize investing in more climate-conscious activities and also let these entities meet their obligations stemming from other legal instruments.
In its essence, the GCP will function as a complementary initiative to the domestic carbon market, an established cap-and-trade system facilitating the trading of emissions allowances among companies. As mentioned before, while the carbon market primarily focuses on CO2 emissions, the scope of GCP is wider as it covers a broad set of activities. Participants earn green credits for engaging in activities that have a positive impact on the environment, and these credits can then be traded on a market platform on a voluntary basis. This approach provides flexibility and allows for the efficient exchange of credits. This provides an additional incentive for participants to earn green credits, and it also allows for the transfer of environmental benefits between different stakeholders. For example, a business that is located in a region with a high demand for green credits could sell its credits to other businesses or organizations in the region. This would allow the business to generate revenue from its environmental efforts, and it would also help to meet the demand for green credits in the region.
Authorities responsible for the implementation of the Rules
Administrator- the Indian Council of Forestry Research and Education will be the Administrator of GCP. The Administrator will be responsible for the effective implementation of GCP and is obliged to develop guidelines, processes and for the same. The methodology for calculating the value of a green credit corresponding to the activity undertaken and the procedure for the evaluation and verification of green credits shall also be devised by the Administrator. The Administrator is responsible for developing guidelines on trading platform (on which trading of green credits will take place- Rule 11), knowledge and data platform (which will report sectoral progress and update relevant data to ensure transparency- Rule 12), market stability mechanism, protecting the interest of market players, fees to be levied from registered entities among other. Additionally, the Administrator or designated agency shall establish and maintain an electronic database called the Green Credit Registry (GCR). As per Rule 4, to take part in GCP, entities will have to apply to register the activity proposed to be undertaken with the Administrator and all such applications will be verified by a designated agency. A certificate of green credit will be granted by the Administrator based on the report submitted by the agency post verification. GCR will be used for the registration and issuance of green credit. An accurate accounting of the issuance of green credits shall also be ensured by GCR.
Steering Committee- constituted by the Central Government, comprising of members from Ministries or departments, environmental experts, industry and other stakeholders is responsible for the monitoring and implementation of GCP. This committee can make recommendations to the Central Government on activities and sectors to be covered by GCP or any other matters referred to it by the Central Government.
Technical Committee- Based on the recommendation of the Administrator, a Technical Committee will be set up by the Central Government. Members of ministries and departments associated with the activity undertaken will constitute the Technical Committee and is responsible for developing and making recommendations to the Administrator regarding the methodologies for measuring and allocating one unit of Green Credit based on various environmental activities and the mechanisms for registration, reporting and verifying each activity. Technical Committee can render advice to the Administrator on technical matters.
Challenges and Opportunities for the Green Credit Program
While the obvious challenges of lack of awareness about the program or the lack of a market for green credits exist, GCP is bound to face challenges while developing the methodologies for generating Green Credit. The Draft Rules had mentioned that thresholds and benchmarks for generating green credits will be developed in the future by the concerned authorities and to ensure ‘fungibility’ (quality of being interchangeable across sectors) environmental outcomes would be equated on the basis of scope, size and other parameters factored in. While measuring and equating environmental activities across sectors could pose challenges to the smooth implementation of the program, the notified Rules have omitted this altogether.
The proposed market being voluntary also raises concerns as to promote the participation of the private sector, strict regulation of the State might have to be compromised. Without strict regulation, it opens floodgates for corporate entities to merely buy green credits from other players in the market. This brings us to the next challenge which is the growing instance of greenwashing by corporations. Greenwashing amounts to various false claims or promises made by companies to guise themselves as climate-conscious establishments but in reality doing next to nothing for the protection and restoration of the environment.
GCP is undoubtedly a positive market-based mechanism that will help in achieving India’s decarbonisation goals and ensure sustainable development and a way of living across sectors and among its citizens, respectively. However, the program, being at its nascent stage, has to put in adequate checks and balances in the subsequent stages to prevent the misuse of the same by powerful individuals and companies. Fool-proof methodologies for allocating green credits combined with regular oversight could achieve the dual objectives of the program- conserve and restore the environment and boost the economy.
 Research Associate, CEERA, NLSIU
 B.A LL.B (Andhra University)
 Green Credit Rules, 2023, https://egazette.gov.in/WriteReadData/2023/249377.pdf (last visited on Oct. 20, 2023).
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