Abstract: India is among the multiple developing countries which is hit hardest by climate change and its multiple obstructive implications. In an effort to combat climate change and to move towards a more sustainable way of living, Prime Minister Narendra Modi in his address in Conference of the Parties (COP26) outlined the five elements called the Panchamrit and Mission Lifestyle for Environment, LiFE as a part of India’s “Nationally Determined Contributions” (NDCs). The LiFE mission aims to make a measurable impact towards sustainable development through environment conscious actions of individuals and communities. As a part of this mission the “Carbon Credit Trading Scheme” (here after referred as ‘CCTS’) and the “Green Credit Programme” (here after referred as ‘GCP’) were launched. This paper focuses on the GCP rules, it’s genesis, components, implementation, impact, criticisms and suggestions for its improvement. This analysis of the GCP rules is done in consonance with the broader LiFE mission and other environmental movements towards sustainable development in India including the Ecomark scheme, polluter pay’s principle and others.
Keywords: Green Credit Programme Rules, LiFE moment, Ecomark, greenwashing, circular bioeconomy.
Introduction:
Prime Minister Modi by a National declaration at the 26th session of the Conference of the Parties (COP26) to the United Nations Framework Convention on Climate Change (UNFCCC) held in Glasgow, United Kingdom launched the “Lifestyle for Environment (LiFE) Mission”. This mission aims to promote an environmental conscious lifestyle focussing on sensible and deliberate utilisation of resources instead of unintelligent and destructive consumption by individuals. In this national statement PM Modi also outlined the “five nectar elements, Panchamrit,” to combat the environmental catastrophe of climate change. These National goals include the aim of reaching its non-fossil energy capacity to 500 GW, to use renewable energy to meet fifty percent of its energy requirements, to reduce its total projected carbon emissions by one billion tonnes and reduce the carbon intensity of its economy by less than forty-five percent as a time bound goal by 2030 and lastly, it aims to achieve nationwide net zero emissions by 2070.
The objectives of the LiFE mission includes the mobilisation of a minimum 1 billion Indians and other global citizens to contribute to this mission through individual and collective action to protect and preserve the environment during 2022 to 2027. Then it aims to transform Eighty percent of all Indian villages and urban local bodies as environment friendly entities by 2028. As a form of recognition to individuals participating in this effort to adopt an environment conscious lifestyle, they would be recognised as ‘Pro Planet People’. Additionally, Mission LiFE is to be implemented through a three-pronged strategy aimed to change the collective approach towards sustainability. The demand phase is the first, which targets at pushing people to practise modest yet effectual environment-friendly actions in their everyday lives. Following this, is the supply phase as large-scale changes in individual demand are expected to nudge industries and markets to make required changes in its supply and procurement strategies to respond to the revised consumer demands. At last as a consequence of changes in demand and supply dynamics brought about by the first and second phase subsequently leads to the third phase of policy change to accommodate these changes which in turn is expected to trigger a shift towards ecological friendly government and industrial policies to enable sustainable development through sustainable production and consumption practices.
Under this LiFE Scheme, a Government notification was issued on October 12th 2023, by the Ministry of Environment, Forest and Climate Change (here after referred to as ‘MoEFCC’) to launch the GCP. The objective of the GCP rules is to provide a bridge between market profitability and environmental sustainability. The Green Credit Programme is described in the Union Ministry’s notification as an “innovative market-based mechanism to incentivise environment positive actions that will help promote the LiFE movement. It is launched at the national level to leverage a competitive market-based approach for green credit for incentivising environmental actions of various stakeholders. The green credit programme will incentivise environmental positive actions through market-based mechanism and generate green credit, which would be tradable and made available for trading on a domestic market platform. The administration of the Green Credit programme is under the responsibility The Indian Council of Forestry Research and Education (here after referred as ICFRE). It is also important to note that the Green Credit programme is independent of the carbon credit under the Carbon Credit Trading Scheme, 2023”.
The GCP rules under its fourth section identifies eight sectors for these activities that encompass multiple diverse ecosystems that could enable a comprehensive and refined market based response to environmental challenges. There is also great democratisation of environmental stewardship as private entities are also called upon along with their corporate counterparts to participate in this scheme. This programme thus, can be seen as a beginning of a new era of environmental consciousness.
However, the success of the scheme depends upon the proper muti-level implementation by a robust institutional setup. Additionally, the rules seem ambiguous and not equipped to manage practical hindrances. For instance, the possibility of multiple governance and administrative mechanisms managing a single forest unit such as the overlapping ownership of land between the forest department and the customary rights of a village community who exercise their right under the Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006. Then is the issue of fungibility of these green credits across sectors which questions the creation of hierarchy and grading amongst different ecological services leading to commodification of environmental conservation. Another problem arises as a consequence of the contradiction between the Indian forest conservation laws which obligates any industry that causes deforestation of forested land for non-forestry purposes to provide the same amount of non-forest land to forest authorities and pay them to afforest that land while the GCP allows companies to exchange the green credits gained from compensatory afforestation activities which could possibly ease the procedure for companies to divert forestland for mining and infrastructure activities. The possibility of greenwashing is another criticism that this scheme faces which shall be discussed in the following sections of the paper along with the provisions and analysis of the Green Credit Rules.
Research Methodology:
The doctrinal research methodology is employed in this research paper, with great focus on available secondary sources such as the guidelines and notifications released by the MoEFCC on the GCP rules in addition to news and web articles on the same consisting of discussions by experts and various stakeholders. As these guidelines and rules have been released recently, not many articles, reports and research have been conducted on the same. Additionally, secondary sources on other environment sustainability missions in India have also been referred to in this paper for a holistic comparison and analysis of the GCP.
The paucity of academic resources on GCP rules along with limitation of time and resources to conduct an on-ground analysis are some of the major limitations of this paper.
Review of Literature:
The GCP and its rules are relatively recent concept as launched only in October 2023. As a result of this, while there are multiple news and online articles and discussions about this topic there is minimal to no available research document or journal articles on this topic. Thus, this research paper has used the available secondary resources from credible news sources such as the Economic times, The Hindu article by Jacob Koshy on “What are the new Green Credit Programme rules?” In addition to online articles of Down to Earth and others cited. A primary source for this research has been the official notifications and statements released by the MoEFCC, National Statements given by the Prime Minister, and a written reply by the Union Minister for Power and New and Renewable Energy, R.K Singh.
Method:
Through a Gazette notification dated 12th October 2023, the GCP rules was launched at the national level, innovative, market-based mechanism to encourage environment positive actions under the broader LiFE mission. This section would look at its various provisions.
These rules, to be termed as Green Credit Rules, 2023, has been specified in section 1, whereas its objectives are outlined in section 2. One crucial point to be noted in section 2 is the provision “Provided that the green credit generated or procured to fulfil any obligation in compliance of any law for the time being in force shall not be tradable.” This ensures corporate entities and individuals do not use these rules to escape their legal environmental responsibilities. The term Green Credit is defined in section 3(C) “ as a singular unit of an incentive provided for a specified activity, delivering a positive impact on the environment.” Another important provision of these rules is section 4 that recognises the eight important categories activities comprising of “tree plantation, water management, sustainable agriculture, waste management, air pollution reduction, mangrove forest conservation and restoration, Ecomark label development and sustainable building and infrastructure”. Section 5 and 6 states that the method of generating and calculating the Green Credits shall be determined by the Administrator, ICFRE. Section 7 provides for the powers and responsibilities of the Administrator who is declared to be responsible for the effective implementation of the GCP, including its management and operation under these rules. The Administrator is responsible for creating the mechanism for implementation of these rules including establishment and operation of the Green Credit Registry and trading platform, regulation of matters relating to trading of green credit certificates and to safeguard interest of sellers and buyers; and take preventive and corrective actions to prevent fraud or mistrust.
A Steering Committee that shall be responsible for the monitoring of the implementation of the Green Credit programme under these rules is constituted by the Central Government and established under Section 8 of the Green Credit Rules. This committee shall consist of representatives from the Ministries or Departments, experts from the field of environment, industry associations and other relevant stakeholders as the Central Government may consider appropriate. This provision gives a broad inclusive approach in determining various important facets of environmental sustainability.
A Green credit registry is to be maintained for registration and issuance of green credits as per Section 10 of the green credit rules. Furthermore, the subsequent sections of these rules deal with provisions about the trading platform, knowledge and data platform, designated agencies, demand generation for green credit and auditors.
The provisions of the Green credit rules aim at industrial responsibility and environmental sustainability but on a voluntary basis contrary to the Polluters Pay Principle (PPP) also followed in India. “The World Commission on Environment and Development, in its report, had suggested that ‘environment cost’ of ‘economic activity’ ‘can be internalised-paid by the enterprises’.” As a result of this the PPP was developed initially as an economic and administrative measure to encourage enterprise to encourage enterprises to invest in “preventive, restorative or compensatory measures to combat the environment problem” later developed as a robust legal measure to minimise environmental pollution. Thus the green credit rules provides economic encouragement based on voluntary activity while there already exists other provisions such as the PPP that imposes stringent legal obligation and are complementary to each other.
Another positive implication of the Green credit rules is that it can promote, enable and enhance India’s chances of developing and sustaining a circular bioeconomy and energy transitions. “A circular bioeconomy refers to a alternative economic structure based on a framework of using renewable natural capital to transform and manage our land, food, health and industrial systems, to achieve sustainable development.” The Green credit rules is a market-based mechanism which provides for opportunities for limiting greenhouse gas emission along with other environmental benefits. If implemented well with a robust methodology of concerted and coordinated efforts by stakeholders, it provides an option to put wasted resources to effective use. The circular bioeconomy framework presents a promising strategy for producing bioenergy and biomaterials, presenting a sustainable solution that addresses the interconnected challenges of energy and the environment. Currently G20 countries contribute to over 70% of global energy consumption with a meagre 7% of which is the energy produced from waste inclusive of biowaste. India’s contribution to energy in the form of bioenergy is higher than other G20 nations but its usage happens is a very inefficient manner. There is an urgent need to accelerate the usage of sustainable energy resources such as biomass in the face of the rising climate and environmental challenges on one hand and rising demand for energy and materials on the other. Thus, the Green Credit rules greatly promote and enable a circular bioeconomy for sustainable development.
The Green Credit Rules can also be seen in consonance of the National Mission for Enhanced Energy Efficiency (NMEEE) which is one of the 8 missions under the National Action Plan on Climate Change (NAPCC) and the Perform, Achieve and Trade (PAT), the flagship programme under the mission implemented by Bureau of Energy Efficiency (BEE) under the aegis of Ministry of Power. “The PAT scheme is a market mechanism that aims to reduce Specific Energy Consumption (SEC) in energy intensive sectors through promotion of cost effectiveness by issuing certificates for saving excess energy which can be traded.” Thus, both Green credit rules and PAT are market based mechanisms bridging the gap between market profitability and environment sustainability.
The GCP complements the CCTS launched alongside itself. “The CCTS aims to create the Indian Carbon Market, aligning with India’s emission reduction targets and the vision for net-zero by 2070.” Independent of CCTS the Green credit rules legally validates the GCP to promote voluntary generation of tradeable green credits stimulating a domestic market that enables individuals and organisations to trade green credits and fulfil their ecological obligations. The GCP and CCTS schemes encourages corporates through significant opportunities and incentives to actively contribute to climate action by investing in rural India in the form of fulfilling their Corporate Social Responsibility (CSR). These schemes promote socio-economic development in rural areas “ based on the concept of ‘shared value projects’, creating benefits for both communities and businesses, driving CSR investments in environmental and sustainability initiatives while the corporates earn green and carbon credits offering monetary benefits.” For instance, CSR investments in sustainable agriculture initiatives with rural communities leads to improvement of local rural environment on one hand and monetary benefit for the business on the other. Thus, Business’s through the GCP, CCTS and legal CSR can achieve a triple victory, firstly by addressing environmental concerns, then by contributing to rural development, and lastly by bolstering their corporate reputation.
The market based financial incentives through green credits enables the opportunity to promote and expedite the adoption of low-emission, sustainable practices in various sectors, including agriculture which may positively function to recognises and compensate farmers or agricultural businesses for adopting environmental-friendly practices. Additionally, this market based incentive mechanism can lead to productive utilisation of bio-based residues in energy generation which subsequently helps in mitigating air pollution while creating opportunities of augmenting sustainable materials.
Lastly, another very pertinent counterpart and provision within the Green Credit Rules is the Ecomark scheme, whose labelling is one of the eight activities under the Green credit rules for obtaining green credits. The Ecomark scheme was notified by the MoEFCC to enable consumers to choose products that are eco-friendly in their design, process etc. “This scheme provides accreditation and labelling for household and consumer products that meet specific environmental criteria while maintaining quality standards as per Indian norms. These accredited products adhere to specific environmental criteria, ensuring minimal environmental impact. It will build consumer awareness of environmental issues and encourage eco-conscious choices. It will also motivate manufacturers to shift towards environmentally friendly production”. Both the Green Credit Rules and Ecomark scheme has been launched simultaneously under the LiFE mission to contribute towards sustainable development of India in line with its effort to combat climate change.
Suggestions:
The analysis of the GCP based on the legally validated Green Credit rules, it is a positive policy aimed to improve economic and environmental sustainability however, there are a few criticisms that these rules face. A prominent criticism is the possibility of greenwashing. “Greenwashing refers to making false or exaggerated claims about environmental sustainability and related activities without any significant environmental benefit being contributed only to create a positive image about the entity claiming to participate in the initiative.” Essentially, this raises the concern of the possible misuse of this scheme by inviduals and organisations who might engage in superficial activities solely to generate tradeable green credits. Thus, there needs to be effective monitoring of the application of the scheme to prevent misuse. Secondly, the afforestation activity needs to be scrutinised as planting trees does not automatically boost ecosystems and planting the wrong types of trees could fester invasive species preventing a sustainable ecosystem. Thus, not merely afforestation but afforestation specifying the tree or plant type in the particular tract of land is necessary to be effective and not be detrimental to the ecosystem. Another concern arises about the ambiguity about the fungibility of these green credits across different sectors. Clear guidelines need to be established about these practical aspects which have been designated as the responsibility of the Administrator to design in consultation with the Central Government. This also brings forth the requirement of a third-party monitoring and review framework for determining the equitable distribution of benefits to different beneficiaries along with a considerable consultation with the scientific community and practitioners for arriving at a consensus on acceptable estimates of benefits and sharing. Therefore, as experts suggest, “ the effective implementation of this programme requires a well-structured approach in a phased manner, with clear objectives, reliable data and effective monitoring. Additionally attention needs to be focussed in the following areas of in-depth exercise on assessment and valuation of ecosystem services, developing harmonised protocols for monitoring, reporting and verification, financial instruments, certification, regulatory mechanism and public awareness”.
Conclusion:
Therefore, the Green Credit Rules have a positive origin and intention of achieving environmental and economic sustainability whose success depends upon numerous factors such as technological advancement, financial support, unambiguous policies, effective implementation and monitoring among others. This programme aims to separate business prosperity from the mere consumption of products and to develop a environment friendly and sustainable production and consumption system promoting the production of easily reusable and recyclable goods, minimising waste and maximising their value through the Ecomark scheme and other environment positive voluntary activities to achieve a sustainable economic development based on environment sustainability.
By – Manushree Sarkar
B.A.LL.B (2023-2028)
Jindal Global Law School