India’s Green Credit Programme: An Innovative Mechanism to Incentivize Eco-Friendly Actions

India’s Green Credit Programme

  • Why in news: Recently notified by Ministry of Environment, Forest and Climate Change
  • Part of LiFE movement announced by PM in 2021

The Ministry of Environment, Forest and Climate Change recently notified the draft ‘Green Credit Programme’ implementation rules for 2023. This new programme was first announced in the 2023-24 Union Budget to encourage environmental actions through market-based incentives. It is a follow-up action of the ‘LiFE’ campaign introduced by the Prime Minister in 2021.

Overview of Green Credit Programme

Green Credit Programme Overview
SectionsDetails
Introduction
  • Notification by Ministry of Environment, Forest and Climate Change
  • Element of LiFE movement
Green Credit Programme
  • Rewards eco-friendly actions via market mechanism
  • Synchronizes with domestic carbon market
  • 8 activities eligible for green credits
Administration & Governance
  • Managed by ICFRE
  • Directed by inter-ministerial steering committee
Significance
  • Promotes private sector’s environmental adherence
  • Assists organic farmers, FPOs
  • Enhances LiFE’s vision
Concerns
  • Threat of superficial eco-efforts (greenwashing)
  • Intensity of monitoring
  • Questioning emissions cut effectiveness
  • Distribution of resources
Way Forward
  • Develop solid methodology and standards
  • Engage in public discussions
  • Concentrate on lasting models
Conclusion Fresh market-driven approach. Need for careful execution. Potential to encourage eco-friendly actions.

What is Green Credit?

  • Definition
  • Market-based incentive mechanism
  • Complements domestic carbon market

‘Green Credit’ refers to incentives for environmentally positive activities, complementing the domestic Carbon Market. It aims to incentivize diverse eco-friendly actions beyond just CO2 emission reductions. The green credits will be tradable and those earning it can sell them on a proposed domestic market platform.

Eight key activities have been identified as eligible for generating Green Credits – Tree Plantation, Water Conservation, Sustainable Agriculture, Waste Management, Air Pollution Reduction, Mangrove Conservation, Ecomark Acquisition, and Sustainable Building and Infrastructure.

Thresholds and benchmarks will be developed for each Green Credit activity under the programme. The Indian Council of Forestry Research and Education (ICFRE) will administer the program.

The Green Credit Programme encourages private sector compliance with existing environmental obligations, while also providing support for organic farmers and FPOs. It helps realize the vision of the LiFE movement through pro-planet people and entities.

Overview of LiFE Movement

AttributeDetails
Introduction26th United Nations Climate Change Conference of the Parties (COP26) in Glasgow, 2021
FocusPromote environmentally conscious lifestyle
Alternative EconomyCircular economy as an alternative to “use-and-dispose” economy

Objectives of the LiFE Movement

Objectives
Use social networks to influence climate-centric social norms
Establish a global network of ‘Pro-Planet People’ (P3)
Foster an ecosystem that encourages sustainable environmental practices
Green Credit Programme
Green Credit Programme

Key Activities Eligible

There are eight key activities identified by the government as eligible for generating Green Credits: 

  • Tree Plantation – To promote activities for increasing the green cover across the country through tree plantation and related initiatives. 
  • Water Conservation – To promote water conservation, harvesting, efficiency and treatment/reuse, including wastewater. 
  • Sustainable Agriculture – To promote natural farming practices, land restoration, and improving productivity, soil health and nutritional value. 
  • Waste Management – To promote sustainable and improved practices for waste management including collection, segregation and treatment. 
  • Air Pollution Reduction – To promote measures for reducing air pollution and other pollution abatement activities. 
  • Mangrove Conservation – To promote conservation and restoration of mangroves. 
  • Ecomark Acquisition – To encourage manufacturers to obtain ‘Ecomark’ label for their eco-friendly goods and services. 
  • Sustainable Buildings – To encourage construction using sustainable technologies and materials.

Administration

  • The programme will be administered by the Indian Council of Forestry Research and Education (ICFRE). 
  • It will be governed by an inter-ministerial steering committee headed by the Environment Secretary.

About ICFRE

AspectDetails
Establishment1986
FunctionCoordinating and managing forestry research and education
ResponsibilityScientific research on forestry, training, policy & program implementation related to forestry

Significance

  • It encourages private sector compliance with existing environmental obligations. 
  • Provides support for organic farmers, FPOs and eco-friendly initiatives. 
  • Helps realize the vision of ‘Mission LiFE’ through pro-planet people and entities.

Concerns and Challenges

There are some concerns regarding the Green Credit mechanism: 

  • Risk of greenwashing, as companies may engage in superficial activities just for credit generation without addressing underlying environmental issues. 
  • Ensuring rigor of monitoring and fraud prevention may be challenging. 
  • Effectiveness in achieving urgent emissions reductions compared to more direct government efforts. 
  • Allocation of resources for administration rather than transformative environmental initiatives.

About Greenwashing

AspectDescription
DefinitionPractice of falsely marketing activities as environmentally friendly
Origin1986 by Jay Westerveld
CharacteristicsOften lacks credibility; used to improve image with minimal environmental impact

Way Forward

  • Methodology and standards must be robust to ensure credibility. 
  • Public consultations are important to address concerns before implementation. 
  • Focus can be on sustainable models like organic farming rather than monoculture tree plantations.

Conclusion

  • Innovative market-based mechanism
  • Caution needed in implementation
  • Potential to incentivize eco-friendly actions

The Green Credit Programme is an innovative market-based mechanism that has potential to incentivize eco-friendly actions by various stakeholders. However, caution is needed in its design and implementation to ensure environmental integrity. If executed responsibly, it can complement the domestic carbon market and help realize the vision of Mission LiFE.

FAQ

What is green credit policy in India?

The Green Credit Programme is a new policy introduced by the Ministry of Environment, Forest and Climate Change to incentivize environmentally positive activities through a market-based mechanism. Under this, ‘Green Credit’ refers to tradable incentives provided for eco-friendly actions that have a beneficial impact on the environment.

Which act is the green credit program under?

The Green Credit Programme is notified under the Environment Protection Act, 1986. The draft ‘Green Credit Programme Implementation Rules 2023’ have been issued by the Ministry of Environment, Forest and Climate Change under this Act.

What is green credit system?

The green credit system is a market-based incentive mechanism where individuals, companies, organizations etc. can earn green credits by undertaking activities like tree plantation, water conservation, sustainable agriculture, waste management etc. The green credits earned can then be traded on a dedicated exchange platform. It aims to encourage voluntary environmental actions across diverse sectors.

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