The Central Government vide notification dated 12th October, 2023 has issued the Green Credit Rules, 2023. The primary objective of the Green Credit program is to encourage environmental conservation and sustainability through market-based mechanisms. The key features of the program are as follows:
- Tradable Green Credits: The program aims to generate “green credits” through various environmental activities and make them tradable on a domestic market platform. These credits are essentially units of incentives for specific activities that have a positive impact on the environment.
- Encourage Compliance: The Green Credit program encourages industries, companies, and other entities to meet their existing obligations under environmental laws. It also motivates other individuals and organizations to voluntarily undertake environmental measures to generate or purchase green credits.
- Not for Legal Compliance: Green credits generated or procured to fulfill legal obligations under existing environmental laws are not tradable. This ensures that green credits are primarily used to incentivize voluntary environmental actions.
The Green Credit program is designed to promote various environmental activities, and these activities include but are not limited to:
- Tree plantation to increase the country’s green cover.
- Water management for conservation, harvesting, and efficient use.
- Sustainable agriculture to promote natural and regenerative practices.
- Waste management to encourage sustainable practices.
- Air pollution reduction measures.
- Mangrove conservation and restoration.
- Ecomark label development to incentivize manufacturers to obtain an ecomark label for eco-friendly goods and services.
- Sustainable building and infrastructure to encourage environment-friendly construction practices.
To obtain green credits for these activities, a person or entity must register their activity with the Administrator. The application for registration is made electronically through a website established by the Central Government. Once the application is received, the designated agency verifies the activity, and upon successful verification, the Administrator grants a certificate of green credit.
Methodology and Trading
The methodology for calculating green credits and the procedure for generating them are determined by the Administrator. It is based on equivalence of resource requirements, scale, scope, and other relevant parameters necessary to achieve the desired environmental outcome. The methodology for evaluation and verification of activities is also defined by the Administrator.
To facilitate trading, the Administrator establishes and maintains a trading platform, where green credits can be bought and sold. Additionally, a Green Credit Registry is established to keep track of green credits and their issuance.