INTRODUCTION

• The Green Credit Program (GCP), launched by India's Ministry of Environment, Forest and Climate Change, is an innovative market-based mechanism and is included under the 'Lifestyle for Environment' (LiFE) movement. It aims to incentivize voluntary environmental actions across various sectors, engaging individuals, communities, private sector industries, and companies.

GCP GOVERNANCE FRAMEWORK

• Oversight:

• The Ministry of Environment, Forest and Climate Change (MoEFCC) oversees the Green Credit Programme (GCP) in India. 

• The MoEFCC is the nodal agency for planning, promoting, coordinating, and overseeing the implementation of India's environmental and forestry policies and programs.

• Implementation and Management:

• Indian Council of Forestry Research and Education (ICFRE): This body acts as the GCP Administrator which is responsible for the program's day-to-day operations, including:

• Developing program guidelines and methodologies.

• Managing the issuance and verification of Green Credits.

• Monitoring and evaluation of the program's effectiveness.

• Operating the domestic market platform for Green Credit trading.

OBJECTIVE:

• Incentivize Environmental Actions Through Market Mechanism: 

• The program aims to  establish a market-based system that incentivizes individuals and organisations to go beyond compliance with environmental regulations. 

• Participants earn "Green Credits" for taking voluntary environmental actions, motivating them to contribute to environmental well-being.

• Generate Tradable Green Credits: 

• The Green Credits earned can be traded on a designated domestic market platform.

• This allows entities that find it difficult to undertake certain environmental projects (like tree plantation) to purchase credits from those who have generated them, which creates a financial incentive for environmental action and facilitates a market-driven approach to environmental improvement.

• Activities includes:

• Ecomark-based green credit: To encourage manufacturers to obtain an ‘Ecomark’ label for their goods and services.

• It provides accreditation and labelling for household and consumer products that meet specific environmental criteria while maintaining quality standards as per Indian norms.

• Products accredited under the Ecomark Scheme will adhere to specific environmental criteria, ensuring minimal environmental impact. 

• The program aims to boost consumer awareness of environmental issues and encourage eco-friendly choices. 

• It also drives manufacturers toward sustainable production, with a focus on accurate labelling to prevent misleading product information.

• The Central Pollution Control Board administers the Ecomark Scheme in partnership with Bureau of Indian Standards (BIS), which is the national body for standards and certification.

• 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.

• Sustainable building and infrastructure-based green credit: To encourage the construction of buildings and other infrastructure using sustainable technologies and materials.

SOVEREIGN GREEN BONDS

• Why in News:

• RBI to allow foreign investors in International Financial Services Centre (IFSC) to invest in Sovereign Green Bonds

• At present, foreign portfolio investors registered with SEBI are permitted to invest in SGrBs under the different routes available for investment by FPIs in government securities.

• GREEN BONDS

• Green bonds are issued by companies, countries and multilateral organisations to exclusively fund projects that have positive environmental or climate benefits and provide investors with fixed income payments.

• The projects can include renewable energy, clean transportation and green buildings, among others.

• India’s Sovereign Green Bonds Framework:

• First announced in the Union Budget 2022-23, the proceeds of these green bonds will be issued for mobilising resources for green infrastructure.

• Features of the SGrBs:

• SGrBs will be issued through Uniform Price Auction (a public sale in which a fixed number of similar things are sold at the same price).

• SGrBs will be eligible for Repurchase Transactions (Repo).

• SGrBs will also be reckoned as eligible investment for Statutory Liquidity Ratio (SLR) purpose.

• SGrBs will be eligible for trading in the secondary market.

• SGrBs will be designated as specified securities under the ‘Fully Accessible Route’ for investment in Government Securities by non-residents.

• The proceeds from the green bonds issuance will be deposited in the Consolidated Fund of India (CFI) in line with the regular treasury policy, and then funds from the CFI will be made available for the eligible green projects.

• Eligible Projects:

• Renewable energy, Energy efficiency, Clean transportation, Climate adaptation, Sustainable water management, Pollution control, Sustainable land use, Green buildings, Biodiversity conservation.

• Sectors not included:

• Nuclear power generation, landfill projects, alcohol/weapons/tobacco/gaming/palm oil industries and hydropower plants larger than 25 MW have been excluded from the framework.

• Implementing Agency:

• The Ministry of Finance has constituted a Green Finance Working Committee (GFWC) including members from relevant ministries and chaired by the Chief Economic Advisor.

SIGNIFICANCE:

For Environment: 

• Going Beyond Compliance: 

• Currently, environmental regulations set minimum standards. The GCP encourages actions that exceed those standards, promoting activities like water conservation and sustainable agricultural practices that benefit the environment in the long run.

• Participation from Diverse Groups: 

• The program is open to individuals, communities, industries, and companies which broadens the range of participants involved in environmental improvement efforts compared to traditional regulation-driven approaches.

• Improved Air and Water Quality:  

• By focusing on areas such as water conservation, the program can directly improve water quality. 

• It can also indirectly contribute to cleaner air by incentivizing sustainable practices.

• Enhanced Biodiversity: 

• Activities like afforestation (planting trees) encouraged by the program can create new habitats and support biodiversity.

• Combating Climate Change: 

• Though not its primary focus, the program can help mitigate climate change by promoting activities that lower carbon emissions or increase carbon sequestration, such as tree planting.

For Government:

• Meeting National Commitments: 

• As a signatory to international environmental agreements like the Paris Agreement, India has environmental targets to meet. 

• The GCP can support the government's efforts by incentivizing actions that reduce emissions, conserve resources, and promote sustainability.

• Domestic Environmental Goals: 

• The program can contribute to achieving national environmental goals outlined in initiatives like LiFE (Lifestyle for Environment), which promotes sustainable living.

• Improved Environmental Governance:

• Market-Based Approach: The GCP offers a market-based approach to environmental improvement, potentially complementing traditional command-and-control regulations which can lead to more efficient use of resources and broader participation in environmental efforts.

• Data Collection and Monitoring: The program can collect valuable data on environmental actions by various stakeholders, which can be used to improve environmental monitoring, inform policy formulation, and track progress towards environmental goals.

• Promoting Environmental Consciousness: 

• By creating a market for environmental actions, the GCP can raise public awareness about environmental issues and encourage a culture of sustainability.

• Engaging Diverse Stakeholders: The program's open participation structure can foster a sense of ownership and responsibility for the environment among individuals, communities, and businesses.

For Companies:

• Environmental Benefits:

• Meeting Sustainability Goals:

• Many companies have set sustainability goals to reduce their environmental impact. 

• The GCP provides a framework for companies to take concrete actions towards these goals, like water conservation or waste reduction, and earn recognition for their efforts.

• Enhanced Brand Image: 

• Consumers are increasingly concerned about environmental issues. 

• Participation in the GCP can help companies showcase their commitment to sustainability and improve their brand image.

• Compliance and Risk Management: 

• Stringent environmental regulations are becoming more common. 

• By proactively taking steps through the GCP, companies can potentially reduce their risk of non-compliance and associated penalties.

• Economic Benefits:

• Cost Savings: 

• Green initiatives encouraged by the GCP, like water conservation or energy efficiency improvements, can lead to long-term cost savings for companies.

• Access to Green Finance: 

• Companies with a strong Green Credit record may find it easier to access green finance options from banks and other financial institutions looking to support sustainable businesses.

For Citizens:

• Direct Contribution: 

• The program allows individuals to directly contribute to environmental improvement through actions like rainwater harvesting, tree planting, or waste management at home. 

• Earning Green Credits can provide a sense of accomplishment and encourage further environmental action.

• Lifestyle Changes: 

• The GCP can incentivize individuals to adopt more sustainable practices in their daily lives, such as reducing energy consumption or using public transport. 

• This contributes to a broader cultural shift towards environmental consciousness.

• Reduced Costs:  

• By adopting sustainable practices encouraged by the program, like reducing water usage or using energy-efficient appliances, citizens can potentially save money on utility bills.

• Environmental Education:  

• The program can raise awareness about environmental issues and motivate citizens to learn more about sustainable living practices.

Concerns regarding the Programme:

• Commodification of Environmental Conservation: 

• Critics argue that the GCP turns environmental conservation into a commodity, potentially undermining the spirit of India’s forest conservation laws.

• Forest Diversion Concerns: 

• The GCP’s provision for companies to “exchange” green credits for complying with compensatory afforestation requirements raises concerns that it could be exploited by industries seeking to ease forest diversion requirements, particularly in sectors like mining and infrastructure.

• Ecological Impact: 

• Planting trees as a part of afforestation efforts does not guarantee ecosystem improvement. 

• India’s diverse forest types require specific approaches, and planting the wrong types of trees could lead to the proliferation of invasive species or disrupt sustainable ecosystems.

• Monoculture Threat: 

• There’s a risk that the GCP may promote the replacement of natural forests with invasive monocultures, potentially harming biodiversity and ecological balance.

• Carbon Trading Controversy: 

• The GCP allows green credits resulting from carbon storage (e.g., tree planting) to be used for carbon trading. 

• However, the methodology for equating these activities is unclear, raising doubts about the effectiveness and legitimacy of such carbon trading schemes

WAY FORWARD:

• Standardisation and Quantification: 

• Develop clear and consistent methodologies for quantifying environmental benefits across different activities. 

• This could involve collaborating with research institutions such as IITs and environmental experts.

• Robust Verification System: 

• Invest in a robust verification system that utilises technology like remote sensing or blockchain to ensure the credibility of Green Credits. 

• Third-party verification agencies can also be involved.

• Demand Creation: 

• Encourage industries with high environmental footprints to participate as buyers by setting mandatory or voluntary environmental credit purchase targets. 

• Promote the program to businesses that can benefit from buying credits, like those in urban areas with limited space for green projects.

• Pricing of Credits: 

• Conduct market research and stakeholder consultations to determine a fair and transparent price for Green Credits that incentivizes both buyers and sellers.

• Solution for Monoculture:

• Give preference to indigenous species and encourage activities that promote ecological corridors and landscape connectivity between planting sites.

• Site Inspections: Incorporate mandatory site inspections during the verification process for afforestation projects to ensure a diversity of species is being planted.

• Remote Sensing Analysis: Explore using remote sensing techniques to monitor the composition of planted forests over time. This can help identify and potentially penalise projects that deviate from diverse planting plans

• Double Counting and Leakage Prevention: 

• Implement robust tracking systems and eligibility criteria for activities that generate Green Credits. 

• Invest in research to identify and mitigate potential leakage risks.

• Awareness and Capacity Building: 

• Launch public awareness campaigns about the GCP, highlighting its benefits for individuals, communities, and businesses. 

• Partner with NGOs and civil society organisations to build capacity at the community level.

• Regular Reviews and Improvement: 

• Conduct regular reviews of the program to assess its effectiveness and identify areas for improvement

  
  

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• • LiFE (Lifestyle For Environment): 

  • The LiFE Movement was proposed by India at the United Nations Climate Change Conference of the Parties ( COP26 ) held in Glasgow in 2021. 

  • The LiFE movement encourages an eco-conscious lifestyle that emphasises ‘ thoughtful and purposeful use ’ rather than ‘mindless and wasteful consumption.'

  • The LiFE initiative's aim is to inspire individuals worldwide to perform basic climate-friendly acts in their daily lives and to adopt an eco-friendly lifestyle .

  • The mission is to create and expand a global network of ‘ Pro-Planet People ‘ (P3).

CONCLUSION

The Green Credit Program (GCP) shows promise in advancing environmental action in India, but key concerns must be addressed to ensure its success. Addressing these issues will not only foster sustainability but also contribute to India's progress toward S

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Polity

Keywords:
GREEN CREDITS PROGRAMME ENVIRONMENT LiFE