India’s Proposed Green Credit Programme: Promoting Sustainable Practices and Combating Climate Change 

 

Introduction & Background

Climate change is causing serious flooding in the capital city of New Delhi and nearby states like Himachal Pradesh, Punjab, Chandigarh, Uttarakhand, and Haryana. The Meteorological Department says that February 2023 was the hottest in India since 1901. India is the world’s third-largest contributor of greenhouse gas emissions and has taken specific steps to protect the environment in the past. In 2008, it launched the National Action Plan on Climate Change. It set climate goals for 2030 as part of the Paris Agreement and in 2022, at the 27th United Nations Conference of Parties, it highlighted how the private sector can help adapt to climate change. The plan to issue green bonds was announced in February 2022, and in January 2023, the Indian Government released the first green bonds. A Green Bond is a fixed-income debt instrument, like a normal bond, that is used to fund “green” projects like those that use renewable energy, clean transport, manage water, etc.   The most recent thing the government did was release the Draft Green Credits initiative.

Proposed Green Credits Programme

Under the Environment Protection Act, the Ministry of Environment, Forest, and Climate Change has drafted rules for a Green Credit Programme. The Draft rules were announced on June 27, and the public will have 60 days to comment on them. The Draft Rules explain that a “Green Credit” is “a single unit of an incentive given for a certain activity that is good for the environment.” The project aims to give people, companies, and organizations7 a reason to do good things that further the “Mission LIFE” vision and help make changes that are good for the environment and the planet. There will be a National level Green Credit Programme. This will give people a competitive and market-based way to earn Green Credits. This will give different groups a reason to contribute to the environment independently. In addition to giving people and communities reasons to act in specific ways, the Green Credit Programme will encourage private sector industries, companies, and other entities to meet their legal obligations by taking actions that can be combined with activities that can be used to earn or buy Green Credits.

 

  1. European Union, Greenhouse gas emission report, World Ranking https://ourworldindata.org/grapher/total-ghg-emissions?tab=chart&country=IND~CHN~USA~European+Union+%2827%29~OWID_WRL
  2. https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1847812
  3. Praveen Raju , Janhavi Joshi and Preethika Nannapaneni, “India: Green Bonds” (19 September 2022) Spice Route Legal https://www.mondaq.com/india/environmental-law/1231314/green-bonds

Overview of the Draft Rules

 

The program will be put into place in stages, and tasks will be split into different sectors. The draft regulations have named seven sectors: tree planting, water, sustainable agriculture, waste management, reducing air pollution, mangrove preservation, eco-mark, and sustainable building. More sectors can be added later. As required by law, there will be thresholds and benchmarks for each Green Credit action that generates and gives out credits. To keep things flexible across sectors, the environmental impact of any Green Credit action will be judged based on resource needs, the similarity of scale, scope, size, etc., and should be worth one unit of Green Credit. The Program’s digital processes will include self-evaluations of activities qualified for Green Credits, registration, awarding, monitoring performance, and more. A steering committee would be set up to review, monitor, and approve the procedures and guidelines needed to carry out the plan. The committee would also make suggestions to the central government about any changes that needed to be made. An Administrator will be in charge of running the scheme as a whole. A Green Credit Registry will be kept in an electronic database. This database will handle the registration and tracking of green credits and keep records of transactions as directed by the Steering Committee. Green Credits could be traded on a trading platform, and there would be a data platform to track what is happening in each area. Accredited Green Credit Verifiers will be in charge of checking information and sending reports to the Administrator so that Credits can be granted.

Benefits of Green Credits

The program’s focus on various sectors, such as tree planting, water management, sustainable agriculture, waste management, and reducing air pollution, demonstrates a comprehensive approach to addressing multiple environmental challenges. With a reward system where the benefits are clear, it’s easy for an individual to sign up for such a program. This contrasts complicated environmental programs like carbon trading or REC, which are hard for laypersons to understand. The scheme provides clear incentives like cash or tax reductions that can be redeemed later and a clearly described value of a Green Credit; it’s easy for people to inculcate environment-positive changes in their actions to match the incentives and become more eco-friendly and pro-planet. Each Green Credit is gained under an action that will be verified by the Accredited verifiers and would therefore ensure the genuineness of the Credit. Such a process would ensure a verifiable and measurable ecological impact from initiatives taken under the Programme.

The Green Credit program follows an incentive-based method rather than attaching punitive measures in case of non-compliance with norms. Experts believe this would be a good step towards inculcating environmental actions within an organization and would be more effective than imposing an environmental tax as it is very probable that enforcement mechanisms effectively regulate such taxation. A company’s future in the industry is based upon its success in creating a sustainable business model over time to show a positive attitude and convey their good intentions to regulators. It may be a personal responsibility that the executives may feel towards contributing to climate preservation. By aligning with sustainable practices, businesses can enhance their reputation, attract customers and investors, and contribute to climate preservation. It is crucial to seize this opportunity to drive meaningful change and empower stakeholders to actively participate in mitigating climate change and creating a greener future.

Drawbacks of the Draft Rules

The draft rules aren’t clear about how the credits will be calculated. It says a value will be found by looking at “the equivalence of resource requirement (for a project), parity of scale, scope, size, and other relevant parameters.” Experts say it’s essential to be careful when figuring out how much good something does. There is also the risk of greenwashing, making goods, activities, or policies seem more environmentally friendly or less harmful to the environment than they are. Green credits are meant to go along in the sectors the companies operate. Greenwashing is when you only buy credits and do nothing else with it. It might be easier for the companies to put it under sustainability efforts and action for SDG goals. Greenwashing can happen if a company lies about or oversells its credits, buys credits that can’t be trusted, or buys credits that have nothing to do with what the company does. The Green Credit System needs to have firm methods and standards of implementation. Also, it is important to develop more ways to ensure enough demand for green credits to keep the market going and stable. It is important to carefully evaluate and carry out the strategy, especially when planting trees and restoring forests. Careful consideration must be taken about unresolved forest ownership and control rights, problems with ecology and biodiversity and global criticisms of carbon credit schemes. These issues are best dealt with through internal talks and public consultations.

Conclusion

In conclusion, the Green Credit Programme is a potential strategy to fight climate change and encourage more environmentally friendly practices. The benchmarks and limits for each Green Credit action ensure that the activities that earn credits can be measured and help the environment. Even though the Draft rules aren’t clear about how credits are calculated, and greenwashing is still a risk, the implementation system needs to be improved and strengthened. This includes setting clear methods and standards for credit checking, stopping misleading practices, and ensuring the Green Credit System is reliable and open. Creating a strong market demand for green credits and dealing with possible problems linked to forest ownership, biodiversity, and criticisms from around the world will require careful evaluation and the participation of stakeholders.

In response to the bad effects of climate change, the Green Credit Programme is a big step forward for India in fighting climate change, meeting international commitments, and supporting sustainable development. By fixing the drawbacks of the draft rules and building on their good points, India can create a strong and effective system that encourages people to take care of the environment, encourages new ideas, and helps create a more sustainable and resilient future.

 

  • Need for regulation of the Green Credits Scheme in India which encourages environment-friendly behaviour,

https://india.mongabay.com/2023/07/green-credit-scheme-encourages-environment-friendly-behaviour-but-needs-strong-regulation-to-work/