Navigating the Green Credit Landscape: From Buzzwords to Sustainable Actions
These days, ESG. SDG. and Net-Zero are the buzzwords. It is good to buzzword these wonÕs and feed the air of ÒchangeÓ in the atmosphere. However, Net-Zero cannot be the ultimate goal. If we achieve Net-Zero, we are still on the brink or on the edge; we must evolve towards Net Positive. What we need to plan and act on is how we can be Net Positive in the coming time with minarum impact on the current equilibrium
The Green Credit Initiative was first introduced by the Ministry of Environment, Forest and Climate Change on 13 October 2023. The Green Credit Initiative was launched by the HonÕble Prime Minister on the sidelines of COP 28. It is an initiative within the governmentÕs Lifestyle for Environment. or LIFE, movement. The Green Credit Rules, 2023 wen notified on 12 October 2023, under the Environment Protection Act, 1986. These rules put in place a mechanism to encourage voluntary environmental positive actions resulting in the Issuance of green credits. In its initial phase. Voluntary tree plantation is envisaged on degraded land, wasteland, watershed areas, etc., under the control and management of Forest Departments.
The generation of Green Credit under the Green Credit Rules, 2023, is independent of the carbon credit under the Carbon Credit Trading Scheme, 2023. The governance structure of GCP includes steering committee members from concerned ministries/departments, experts, and institutions. The Indian Council of Forestry Research and Education (ICFRE) is designated as the GCP administrator and is responsible for the Implementation and management of GCP. The digital process of GCP includes a dedicated web platform and GC registry for streamlining operations. Additionally, methodologies and guidelines, including registration, accounting, and GC issuance monitoring, ensure the transparency and accountability of GCP.
There are initially two main priorities of the initiative, water conservation and afforestation. It also includes various sectors in its domain, such as sustainable agriculture, sustainable building and infrastructure, waste management, sir pollution reduction, mangrove conservation and restoration. and the Eco Mark.
The Environment Ministry defined the initiative as a market-based mechanism designed to incentivise voluntary environmental actions across diverse sector industries, and companies. Under this scheme, green credits will be assigned to specific environmental activities and treated as tradable commodities. These green credits will be able to be sold on domestic market platforms.
The main purpose of this initiative is to boost voluntary environmental activities like tree plantation, water conservation, sustainable agriculture, and waste management by incentivising them for big corporations and private companies bringing about a change in the climate issues faced by the country.
While launching the web portal for the scheme at COP28 PM Modi said. ÒThe manner in which we give importance to our Health Card In Ife, we have to similarly start thinking in the context of the environment. We will have to see what is to be done to add positive points to EarthÕs Health CardÓ.
The Central Government, on the recommendation of the Administrator, hereby notifies the following methodology for the calculation of green credit in Respect of tree plantation:
The Forest Department of overy State and Union Territory shall identify degraded land parcels including open forest and scrub land, wasteland and catchment areas under their administrative control and management, which shall be mate available for tree plantation to promote activities for increasing the green cover across the country for the purposes of generating Green Credit.
The land parcel identified for plantation must be free from all encumbrances and must have a size of five hectares or above.
Any person or entity desirous of undertaking tree plantation for the purposes of generating Green Credit may apply to the Administrator.
On receipt of the application, the Administrator shall identity any land referred to in paragraph 1 and assign the same to the applicant, requiring them to submit a proposal for undertaking tree plantation for the generation of Green Credit
On receipt of the proposal, the Administrator shall prepare and issue a demand note to the applicant, which shall include the cost of tree plantation and administrative expenses, If any, to be paid to the Administrator within a period specified in the demand note
The applicant shall pay the amount to the Administrator on or before the period specified in the demand note through a bank draft or such other means of payment as may be decided by the Administrator.
On payment of the amount the Administrator shall direct the Forest Department to carry out the tree plantation in line with the management plan or working plan, which shell be completed within a period of two years from the date of payment.
On completion of the tree plantation, the Forest Department shall submit a report in this regancl to the Administrator and issue a certificate of completion of the tree plantation to the applicant.
On receipt of the report, the Administrator, after evaluation and verification of the tree plantation activity, may generate and issue Green Credit to the applicant under the said Rules, based on the total number of trees planted in the assigned land parcel and on the report and certification of completion of the tree plantation activity.
The Green Credit shall be calculated at the rate of one Green Credit per tree grown through the tree plantation on such a land parcel, subject to a minimum density of 1100 trees per hectare, based on the local silvi-climatic and soil concitions, on the certification of completion of the tree plantation provided by the concerned Forest Department.
The Green Credit generated under the sold Rules may be exchanged for meeting the compliance of compensatory afforestation in case of the diversion of forest land for non-forestry purposes under the Van (Sanrakshan Evam Samvardhan) Adhiniyam, 1980 (69 of 1980), as applicable.
The Green Credit generated in lieu of tree plantation under the said Rules may be used for reporting under environmental, social, and governance leadership indicators or under corporate social responsibility under the applicable rules made under any law for the time being in force
Implications for Various Stakeholders
Environmental offsets (credits) are essentially encouraging the mission towards a ÒNet-zeroÓ journey. In the mid to long term, environmental change impacts everyone, from nations to individual citizens.
Every day, global consciousness regarding our environmental footprint and natural resource usage intensifies. To mitigate climate change, nations are enforcing carbon taxes on industries that pollute more than the permissible norms.
Meanwhile, investors are increasingly prioritising companies with strong ESG (Environmental, Social, and Governance) compliance when making investment decisions, recognising these companies as more sustainable and better poised for long-term growth.
For individuals, this represents a commitment to the environment; for communities, it is an opportunity to contribute positively to the environment and promote a healthy, sustainable life. For the private sector, it provides commercial and communication leverage as it helps offset carbon credits.
Future Outlook and Recommendations
The green credit market will inevitably grow under the given circumstances to ultimately reduce the 1.5-degree target; otherwise, the resultant effects could be devastating and lead to major economic downfall for many countries.
In view of the above, one must strive to accumulate eligible credits and enhance processes to reduce carbon footprints. Trades of various environmental offset credits will flourish. While it may initially appear as a cost burden to manufacturers, it will ultimately find a fine balance in market pricing within 5-10 years. After entering the growth curve, it will become a routine process like other regulatory or import-export taxes and will be integrated into Raw Material Costs (RMC).
Many entities are still unaware of the green credit system and the opportunities it presents. To overcome this, awareness campaigns, promotional schemes, and overall cost-benefit analyses must be explained in simple terms.
Moreover, the process to obtain these credits is often seen as extensive, thorough, and costly, deterring some from pursuing them. The process of issuing verification, validation, and issuance of credits should be made simpler and easily accessible. More agencies, aggregators, verifiers, and related ecosystems need to be enhanced. Efforts must be intensified to educate and streamline processes to make these credits more accessible and appealing. Tools for monitoring and verification mechanisms, regular audits, and unbiased verification are essential.
Scaling up is a challenge, so embracing technology to streamline credit issuance, tracking, and trading is essential.
How will the Programme function?
GREEN CREDIT SCHEME
Operationalising GCP on a large scale requires establishing institutional arrangements, for which the government has selected the Indian Council of Forestry Research & Education (ICFRE) as the noda agency, along with a steering committee and a technic committee Successful implementazion nécessitates developing a methodology to measure verify, and report environmental benefits. This creates a demand for cloud-based, real-time, and
wireless technology tools that are affordable and have the least carbon footprint for deployment.
These tools ensure that energy and water data of bulidings are tracked electronically and cannot be tampered with, verified live over the cloud. Platforms like ÒKnow Your Building will facilitate unlocking and operationalising the green credit program in buildings.
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