– Gayathri K K* & Balabadruni Naga Satwik**


Instruments for both market and non-market-based approaches to combat climate change were agreed upon by the nations during the Conference of the Parties (COP26) held in Glasgow in 2021. 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.[1] Life also becomes a part of one of the updated Nationally Determined Contributions (NDCs) submitted by India to the UNFCCC to adhere to its commitment to the Paris Agreement.

Recently, India has launched several programs and schemes aimed to accelerate its move towards decarbonisation. The latest of these initiatives is the unveiling of the draft implementation rules for the ‘Green Credit Programme (GCP)’ (Draft Rules) by the Ministry of Environment, Forest and Climate Change (MoEFCC) on 26th June 2023, inviting suggestions and objections.[2] 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 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.

Draft Rules in a Glance – Features of the Green Credit

The Green Credit Program (GCP) made its debut during the presentation of the 2023-2024 Union Budget. Subsequently, in June 2023, the draft implementation rules for the program were released, setting the stage for its imminent launch. GCP 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. Thus, GCP aims to foster sustainable consumerism and lifestyle and also promotes voluntary actions from various stakeholders including private entities for the protection of the environment.

In its essence, the GCP functions as a complementary initiative to the domestic carbon market, an established cap-and-trade system facilitating the trading of emissions allowances among companies. While the carbon market primarily focuses on CO2 emissions, the GCP, in contrast, is concerned with 8 sectors earmarked by the Draft Rules. These 8 sectors are:

  1. Tree Plantation-based Green Credit– aimed at increasing the green cover of the country.
  2. Water-based Green Credit– covers all activities from water conservation to wastewater treatment.
  3. Sustainable Agriculture-based Green Credit– promotion and adoption of mindful, sustainable forms of agriculture which will focus on retaining the quality of the crops as well as the soil.
  4. Waste Management-based Green Credit- an important area considering the recent revamps and amendments of various waste management rules.
  5. Air Pollution Reduction based Green Credit– covers air pollution prevention and control measures.
  6. Mangrove Conservation and Restoration-based Green Credit– 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. This green credit promotes activities for the protection and restoration of mangroves.
  7. Ecomark-based Green Credit– environmentally friendly products are conferred ECO mark labels under the ECO mark Scheme, ecomark green credit aims to promote the obtaining of ECO mark labels by manufacturers.
  8. Sustainable building and infrastructure-based Green Credit- 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.

Participants earn green credits for engaging in these 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

A Steering Committee composed of representatives from various Ministries, domain experts, industry associations and other stakeholders is tasked with the governance and implementation of GCP.[3] The Indian Council of Forestry Research and Education will be the Administrator of GCP.  The Administrator will be responsible for developing the guidelines, processes for the implementation of GCP.[4] It will also have to constitute Technical or Sectoral Committees that are further 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 reporting and verifying each activity.[5] All guidelines, made by the Administrator will have to be approved by the Steering Committee. A Green Credit Registry shall be established by the Administrator for dealing with the registration of entities, maintaining databases and other functions mentioned therein.[6]

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 only says 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. However, measuring and equating environmental activities across sectors could pose challenges to the smooth implementation of the program.

The proposed market being a voluntary market 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 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. Foolproof 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.


* Gayathri K K, Research Associate, CEERA-NLSIU.

** Balabadruni Naga Satwik, Student, B.A. LL.B., Andhra University.

[1] Lifestyle for Environment – LiFE, (last visited on Jul. 9, 2023).

[2]  Green Credit Programme Implementation Rules, 2023, (last visited  Jul. 9, 2023).

[3] Rule 5.

[4] Rule 6.

[5] Rule 7.

[6] Rule 8.

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