Green Credit Program (GCP)

Why in the news ?

• The Ministry of Environment, Forest and Climate Change (MoEF&CC) has notified methodologies under the Green Credit Program (GCP), 2023, for the “calculation of green credits for afforestation activities.”
• This initiative has emerged as a market-based mechanism to promote environmental protection and sustainable development.

What is the Green Credit Program (GCP), 2023 ?

The Green Credit Program is a voluntary and innovative mechanism that encourages various stakeholders—such as industries, state governments, and philanthropic organizations—to undertake activities that have a positive impact on the environment.

Eligible Activities

• Sustainable agricultural practices
• Waste management
• Reduction in air pollution
• Afforestation

Key Features

• Voluntary participation: Participation is completely optional.
• Credit trading: Green credits can be traded on a domestic platform.
• ESG disclosure: Companies can include them in their ESG (Environmental, Social, Governance) reporting.
• Administrative body: Indian Council of Forestry Research and Education (ICFRE), Dehradun.

What is Green Credit (GC) ?

• Green Credit is an incentive unit given for activities that have a positive impact on the environment.
• It is tradable on exchanges, similar to carbon credits.
• Under GCP, it is implemented under the Environment (Protection) Act, 1986.
• It directly benefits individuals and communities.

Difference Between Green Credit and Carbon Credit

Note: All green credit activities may be eligible for carbon credits, but carbon credit activities are not always eligible for green credits.

Concerns Related to the Green Credit Program

1. Incentivizing non-forest areas: Companies may prefer buying credits rather than actual reforestation, affecting real environmental protection.
2. Lack of real forest cover increase: GCP often uses degraded or existing forest land, reducing the chances of creating new forest areas.
3. Assessment and long-term sustainability: There is no clear standard system to measure tree survival or the success of afforestation projects, potentially giving credits to failed projects.

Way Forward

• Recognize green credits as commodity derivatives like carbon credits.
• Develop quantitative methodologies: Just as carbon credits follow the “one ton CO₂ equivalent emission reduction” standard, green credits should have clear calculation standards.
• Prevent double incentives: Activities eligible for both green credit and carbon credit should be clearly defined.

Conclusion

The Green Credit Program is a positive and meaningful initiative, but its success depends on clarity, transparency, and monitoring in credit issuance and trading processes.