On 27th June, The Ministry of Environment, Forest and Climate Change (“MoEFCC”) issued a notification containing the Draft of the Green Credit Programme Implementation Rules, 2023 (“Green Credit Rules”) for public consultation. The Green Credit Programme aims to leverage a competitive market-based approach for Green Credits thereby incentivising voluntary environmental actions of various stakeholders such as private sector industries and companies as well as other entities. The Green Credit Programme will enable such entities to meet their existing obligations, stemming from other legal frameworks, by taking actions which are able to converge with activities relevant for generating or buying Green Credits. The MoEFCC, vide notification dated 18th July 2023, has declared 31st July 2023 as the last date for seeking suggestions or comments regarding the Green Credit Rules.
The key highlights of the Green Credit Rules are:
Objective: The Green Credit Programme (“Programme”) has been drafted for promoting the Government of India’s ‘LiFE’– ‘Lifestyle for Environment’ movement for “combating climate change, enhancing environment actions to propagate a healthy and sustainable way of living based on traditions and values of conservation and moderation, and for sustainable and environment-friendly development”.
The Programme accordingly will further the LiFE movement by seeking to establish market-based mechanisms for providing Green Credits. Such a Programme would incentivise adoption of environmentally friendly practices by various entities like the private sector, industries, etc.
The Green Credits will be made available to individual and entities, engaged in selected activities and who undertake environmental interventions and the same will made available for trading on a domestic market platform. Additionally, in case an environmental activity generating Green Credits also reduces/removes carbon emissions, the same shall be eligible to claim carbon credits as well.
Relevant Definitions
- ‘Accredited Green Credit Verifier’ means an entity accredited and authorized by the Green Credit Programme Administrator (i.e. Indian Council of Forestry Research and Education) to carry out verification activities in respect of the Programme;
- ‘Green Credit’ means a singular unit of an incentive provided for a specified activity, delivering a positive impact on the environment;
- ‘Registered Entity’ means any entity, registered for generation of Green Credits;
- ‘Registry’ means an electronic database system maintained by Green Credit Programme Administrator or its accredited agency to record issuance and exchange of Green Credits.
- ‘Third-party certifiers’ means an entity that certifies an activity for its registration;
- Verification’ means an independent evaluation of the green credit activity by the accredited Green Credits Verifier for acquiring Green Credits.
- ‘Empanelled Auditors’ means an entity empanelled by the Central Government for auditing the entire system of the Programme.
Implementation Mechanism
A phase wise approach for implementation of the Programme will be adopted. In the first phase, two to three activities from the sectors indicated below will be considered for designing and piloting the Programme:
- Tree Plantation-based Green Credit: To promote activities for increasing the green cover across the country through tree plantation and related activities.
- Water-based Green Credit: To promote water conservation, water harvesting and water use efficiency/savings, including treatment and reuse of wastewater.
- Sustainable Agriculture based Green Credit: To promote natural and regenerative agricultural practices and land restoration to improve productivity, soil health and nutritional value of food produced.
- Waste Management based Green Credit: To promote sustainable and improved practices for waste management, including collection, segregation and treatment.
- Air Pollution Reduction based Green Credit: To promote measures for reducing air pollution and other pollution abatement activities.
- Mangrove Conservation and Restoration based Green Credit: To promote measures for conservation and restoration of mangroves.
- Ecomark based Green Credit: To encourage manufacturers to obtain Ecomark label for their goods and services.
- Sustainable building and infrastructure based Green Credit: To encourage the construction of buildings and other infrastructure using sustainable technologies and materials.
Methodology of generating Green Credits
Thresholds and benchmarks will be developed for each Green Credit activity for generating and issuance of Green Credits. In case of any obligation under any law, the thresholds and benchmarks will be aligned with that obligation. The environmental outcome, achievable by any Green Credit activity, will be based on equivalence of resource requirement, parity of scale, scope, size and other relevant parameters, and will be considered for allocation of one unit of Green Credit in respect of each activity.
Steering Committee
A Steering Committee, comprising of representatives from the concerned Ministries/Departments, domain experts will be setup to oversee the implementation of the Programme. Specifically, the Steering Committee will have to carry out the following functions:
- Grant approvals in respect of procedures, guidelines, etc. for implementation of the programme.
- Make recommendations to the Central Government on – measures to create demand for the programme, activities and sectors to be covered under the programme and in respect of matters referred to it by the Central Government
- Review and monitoring the implementation of the programme.
Green Credit Programme Administrator and its functions
Indian Council of Forestry Research and Education shall be the Administrator of the Programme which shall discharge, inter alia, the following functions:
- Develop guidelines, processes and procedures for implementation of the Programme;
- Constitute Technical or Sectoral committees for each activity to facilitate in developing methodologies and processes for registration of Green Credit activities and issuance of Green Credit.
- Develop methodologies, standards, registration process and associated Measurement, Reporting and Verification mechanism
- Establish methodologies and processes for equivalence of Green Credits generated from each identified activity;
- Develop guidelines for establishment and operation of Green Credit Registry and trading platform, for issuance of digital Green Credits for each activity, for self-certification of Green Credits, and for accreditation of Green Credit Registry, third-party certifiers, Green Credit Verifiers, for grant of Green Credits, and for auditing of the Programme.
- Accreditation and registration of the Green Credit Registry, third-party certifiers, Green Credit Verifiers and Trading Service Providers.
- Collect fees from Registered Entity as per the approved guidelines.
Technical Committee and its functions: The Administrator may constitute technical or sectoral committees, comprising of Government officials and experts, for each activity for developing methodologies, standards and processes for registration of Green Credit activities and grant of Green Credits.
Green Credit Registry and its functions: The Green Credit registry will be in the form of a standardized electronic database which contains inter-alia common data elements relevant to the issuance, holding, transfer and acquisition of Green Credits. This registry’s mandate, inter alia, also extends to register entities, grant & record green credits, indemnify registered entities in case of any loss caused to such entity due to security breach in the database, not attributable to such registered entity, establish linkages with other national and international registries, etc.
Trading Platform: The guidelines for the establishment and operation of the Trading Platform shall be issued by the Administrator with the approval of Steering Committee. The trading platform for the exchange of Green Credits shall be established by the Trading Service Provider accredited by the Administrator. Furthermore, the trading service provider shall perform functions regarding the trading of Green Credits, in accordance with the approved guidelines.
Knowledge and Data Platform: A knowledge and data platform will be established as an online platform developed for providing transparency on the various types of activities being undertaken and for reporting sectoral progress under the Programme.
Accredited Green Credit Verifiers: Accredited Green Credit Verifiers shall conduct verification and submit reports to the Administrator for grant of Green Credits in accordance with provisions of the guidelines.
Demand Generation for Green Credits: The Programme shall be based on voluntary participation of all stakeholders. Furthermore, all entities registered for Accredited Compensatory Afforestation shall register with the Green Credit Registry under the Programme as the same will be eligible for consideration under these guidelines for allocation of Green Credits.
Empanelled Auditors: The Central Government may empanel auditors for audit of the entire system of the Programme functioning and administration from time to time.
Our Take
The Programme is a laudatory initiative by the MoEFCC as it seeks to use a market-based mechanism to incentivise multiple stakeholders to use environmentally friendly practices. Additionally, the Programme, in line with principles of good governance, seeks to converge existing schemes/activities like compensatory afforestation, extended producer responsibility, etc. and providing green credits for the same. Another aspect of the Programme that merits attention is the convergence with carbon credit and such an activity generating Green Credits may also get Carbon Credits from the same activity under carbon market. The MoEFCC has, in compliance with the pre-legislative consultative policy, sought comments from the public on the Programme before notifying the same. The same approach should be adopted whilst notifying various operational guidelines under the Programme such as issuance of digital green credits, trading of green credits, etc.
Links
Notification dated 26th June 2023 containing draft provisions of the Green Credit Programme Implementation Rules, 2023 – https://moef.gov.in/wp-content/uploads/2023/06/Draft-GCP-Notification-Inviting-Comments-27062023.pdf
Notification dated 18th July 2023 declaring 31st July 2023 as the last date for seeking suggestions or comments regarding the Green Credit Programme Implementation Rules, 2023 – https://egazette.gov.in/WriteReadData/2023/247420.pdf
