Description

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Context

Concerns were raised regarding the legal validity of Green Credit Programme under the Environment (Protection) Act, 1986 especially by the Ministry of Law and Justice. Despite these concerns the Green Credit Rules, 2023 were notified and implemented.

Features of the Green Credit Programme

Feature	Description
Launched By	Ministry of Environment, Forest and Climate Change
Objective	To incentivize environmental conservation activities through a tradable credit system
Legal Backing	Environment (Protection) Act, 1986
Implementation Year	2023
Participants	Individuals, communities and private industries earn Green Credits for engaging in ecofriendly activities such as afforestation, water conservation and sustainable agriculture.
Tradability	Green Credits can be traded on a domestic exchange to meet environmental obligations
Market Mechanism	Functions like carbon credits, but focuses on environmental activities beyond emission reduction
Notable Participants	384 entities including 41 Public Sector Undertakings such as Indian Oil Corporation Ltd, Power Grid Corporation of India Ltd and NTPC Ltd

Objectives

Enhancing Forest Cover.

Rewarding activities like rainwater harvesting and wetland conservation.

Promoting Sustainable Agriculture by encouraging organic farming, soil conservation, and agroforestry.

Creating an Incentive-Based System by allowing entities to earn and trade Green Credits for environmental contributions.

Complementing Carbon Credit Markets by providing additional environmental benefits beyond emission reductions.

How GCP Works?

Individuals, communities and industries engage in approved eco-friendly activities.

Participants receive Green Credits based on their environmental contributions.

Credits can be sold on a domestic platform.

Companies needing to fulfill environmental obligations e.g., compensatory afforestation can purchase credits.

The Environment Ministry ensures that actions leading to Green Credits align with sustainability goals.

Green Credit vs Carbon Credit

Feature	Green Credit	Carbon Credit
Governing Law	Environment (Protection) Act, 1986	Energy Conservation Act, 2001
Focus Area	Broader environmental activities (afforestation, water conservation, sustainable agriculture)	Carbon emission reduction
Beneficiaries	Individuals, communities, industries	Primarily industries and corporations
Market Mechanism	Traded on a domestic exchange	Traded in national & international carbon markets
Climate Co-benefits	May qualify for carbon credits, reducing carbon emissions	Cannot be converted into Green Credits

Concerns

The Legislative Department of the Ministry of Law and Justice flagged concerns that the Environment (Protection) Act, 1986 perhaps does not support the business model of tradable Green Credits.

It advised the Environment Ministry to consult the Department of Legal Affairs before proceeding.

The Environment Ministry justified the move stating that the EPA permits the planning and execution of environmental programmes.

The programme was rolled out without formal legal review just before Prime Minister Modi’s announcement at the COP28 Summit in Dubai.

Experts argue that a legislative amendment would have ensured better legal clarity similar to the 2023 amendment to the Energy Conservation Act for carbon credit trading.

Market Viability

Unclear demand and supply dynamics for Green Credits.

Risk of low adoption by industries due to voluntary nature.

Sources:

INDIANEXPRESS

PRACTICE QUESTION

Q. Consider the following statements regarding the Green Credit Programme.

The GCP operates under the Energy Conservation Act, 2001.
The programme allows individuals, communities and industries to earn tradable green credits.
Green credits can be exchanged on national and international platforms like carbon credits.

Which of the statements given above is/are correct?

(a) 1 and 2 only

(b) 2 only

(d) 1, 2 and 3

Answer: b

Explanation

Statement 1 is incorrect. The Green Credit Programme operates under the Energy Conservation Act, 2001.

Statement 2 is correct. Individuals, communities and industries can earn green credits for activities like afforestation, water conservation and sustainable agriculture.

Statement 3 is incorrect. Green credits are tradable on a domestic platform but not in international carbon markets like carbon credits.