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Ministry of Environment and Climate Change notifies the Green Credit Rules, 2023.

Ministry of Environment and Climate Change notifies the Green Credit Rules, 2023.

On 12th October 2023, the Ministry of Environment, Forest and Climate Change (“MoEFCC”) notified the Green Credit Rules, 2023, to promote market-based incentives for environmental actions. The Green Credit Programme aims to incentivize private sector entities, industries, and other stakeholders to undertake activities that have a positive impact on the environment, such as tree plantation, water management, sustainable development, waste management, air pollution reduction, mangrove conservation and restoration, eco-mark label development, and sustainable building and infrastructure. The MoEFCC had earlier issued the Draft of the Green Credit Programme Implementation Rules, 2023 in June 2023 for public consultations.

The key highlights of the Green Credit Rules are as below:

Objective

This Green Credit Programme (“Programme”) seeks to establish market-based mechanism for providing Green Credits to incentivise to, inter alia, private sector, industries, etc. for environment positive actions.

Relevant Definitions

  1. ‘Administrator’ means the Indian Council of Forestry Research and Education;
  2. ‘Designated Agency’ means an entity designated by the Administrator to conduct verification and submit reports to the Administrator as regard to the verification of the activities undertaken by an applicant for issuance of green credit;
  3. ‘Green Credit’ means a singular unit of an incentive provided for a specified activity, delivering a positive impact on the environment;
  4. ‘Registry’ means an electronic database system maintained by Green Credit Programme Administrator or its accredited agency to record issuance and exchange of Green Credits.

Green Credit Programme

The measures that can be taken up for protection, preservation or conservation of the environment are:

  1. Tree plantation;
  2. Water management;
  3. Sustainable development;
  4. Waste management;
  5. Air pollution reduction;
  6. Mangrove conservation and restoration;
  7. Eco mark label development; and
  8. Sustainable building and infrastructure.

Methodology of generating Green Credits

The methodology for calculating the Green Credit shall be notified by the Central Government on the recommendation of the Administrator. The calculation of Green Credit in respect of any activity undertaken shall be based on equivalence of resource requirement, parity of scale, scope, size and other relevant parameters required to achieve the desired environmental outcome.

Green Credit Programme Administrator and its functions

The Indian Council of Forestry Research and Education, shall be the administrator of the Programme which shall be responsible for the effective implementation of the Programme and shall discharge, inter alia, the following functions:

  1. Develop guidelines, processes and procedures for the implementation of the green credit programme under these rules:
  2. establish methodologies and processes for issuance of green credit (including Issuance of digital green credit), and equivalence of green credit generated from each identified activity;
  3. develop guidelines for the establishment and operation of the Green Credit Registry and trading platform: for self-certification or third-party certification for the registration of an activity for issuance of green credits and its inspection and verification by designated agency, for empanelment of auditors and audit by such auditors
  4. regulate matters relating to trading of green credit certificates and to safeguard Interest of sellers and buyers; and take preventive and corrective actions to prevent fraud or mistrust.

Steering Committee

A Steering Committee, comprising of representatives from the concerned Ministries/Departments, experts from the field of environment, industry associations and other relevant stakeholders will be setup to monitor the implementation of the Programme.

Technical Committee and its functions

The Central Government on the recommendation of the Administrator may constitute technical or sectoral committees, comprising of government officials and experts, for each activity for inter alia developing methodologies, standards and processes for registration of Green Credit activities and calculation as well as grant of Green Credits.

Green Credit Registry and its functions

The Green Credit registry will be in the form of an electronic database which contains inter-alia common data elements relevant to the issuance and registration of Green Credits. This registry will ensure accurate accounting of Green Credits, maintain a secure database, and provide information and support to participants in the Green Credit Programme.

Trading Platform

The trading platform for the exchange of Green Credits shall be established by the Administrator. The guidelines for the establishment and operation of the trading platform shall be issued by the administrator with the approval of steering committee.

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 these rules.

Demand Generation for Green Credits

The Green Credit Programme shall be based on voluntary participation of all stakeholders. The steering committee is responsible for recommending measures to generate demand for green credit.

Auditors

The Central Government will appoint independent auditors, on the recommendations of Steering Committee, to audit the activities of administrator, designated agency, green credit registry, trading platform and knowledge and data platform within one year at the end of every third financial year.

Our Take

The Green Credit Rules are a welcome step to promote market-based incentives for environmental actions. The Programme is based on voluntary participation and is open to all stakeholders, including the private sector, industries, and individuals. A key highlight of the Programme is the establishment of a multi stakeholder steering committee to monitor its implementation and recommend measures to generate demand for green credits. This is a welcome initiative by the MoEFCC to work with stakeholders through a public-private partnership to address any challenges that may arise out of implementing the Programme. The Government should develop a clear roadmap for the Programme’s implementation, including timelines for developing methodologies for generating green credits, setting up the Green Credit Registry and trading platform, and launching the Programme. Additionally, the Government could consider providing financial incentives to early adopters to encourage participation and build momentum.

Important Links –

Green Credit Rules, 2023 – https://egazette.gov.in/WriteReadData/2023/249377.pdf

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

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