In October 2023, India’s Ministry of Environment, Forest, and Climate Change launched the Green Credit Program (GCP) as part of the LiFE movement (Lifestyle for Environment) announced by Prime Minister Narendra Modi at COP 26 at Glasgow.

The GCP is a national initiative addressing climate change, sustainability, and eco-conscious practices. It is an interesting initiative aimed at incentivizing voluntary environmental actions across various sectors facilitating India’s announced Nationally Determined Contributions (NDCs).

Differentiating itself from the Carbon Credit Trading Scheme, the GCP incentivizes ecopositive actions, creating tradable green credits for environmental activities like tree plantation, water management, sustainable agriculture, waste management, air pollution reduction, and more.

To be administered by the Indian Council of Forestry Research and Education, applicants register online for verification, culminating in the issuance of a green credit certificate. This innovative programme encourages entities to embrace eco-friendly measures for a sustainable future. This inclusive approach is an innovative initiative aimed at making the LiFE movement more effective at the grassroots level.

The involvement of not only industries but also common people as stakeholders in achieving our NDCs is very encouraging. Traditionally, environmental initiatives have often been seen as the sole responsibility of industries and government bodies. However, by extending this responsibility to individuals, it transforms the landscape of environmental action.

This inclusive strategy recognizes that sustainable change requires a collective effort, where every citizen plays a role in mitigating climate change and fostering environmental conservation. By engaging the common person as a stakeholder, the initiative not only increases environmental awareness but also encourages individual actions that collectively contribute to achieving Climate action and therefore NDCs.

This shift in mind-set, from environmental responsibility being a top-down process to a shared, bottom-up effort, holds the potential to drive significant positive changes in the country’s environmental policies and practices. In essence, this approach acknowledges the power of collective action, harnessing the strength of both industries and the general population to work together in advancing environmental sustainability and combating climate change.

It reflects a broader, more holistic perspective on environmental responsibility and paves the way for a more sustainable and environmentally conscious future. We foresee many pros of the scheme. Market-Based Incentives: The programme introduces a market-based instrument, which is a novel approach to incentivize environmentally friendly actions by a common person.

This will encourage a broader range of stakeholders, including individuals, industries, and local bodies, to participate in environmental conservation. Diverse Sector Coverage: The programme initially focuses on water conservation and afforestation but identifies eight sectors in all.

This comprehensive approach recognises that environmental conservation involves various activities and is not limited to carbon emissions reduction. It takes a holistic view of environmental sustainability. Digital Platform: The use of a user-friendly digital platform for project registration, verification, and credit issuance streamlines the administrative processes, making it more efficient and accessible. Hopefully it would be based on block chain technology for the wider transparency of the generated and traded credits.

Tradable Credits: The ability to trade green credits on a domestic market platform adds a layer of flexibility, enabling those who earn credits to leverage their efforts for economic gain. This could attract more participants to the programme. However, in line with the trajectory of any developing environmental commodity mechanism, there exist valid concerns and apprehensions regarding the potential for misuse within the system.

We anticipate that as this market mechanism continues to evolve, there may be certain challenges and issues that need to be addressed. Our primary concern revolves around the potential for “greenwashing” within marketbased mechanisms.

It is imperative to address this issue and ensure robust safeguards against deceptive or exaggerated claims about environmental efforts. Without adequate oversight and technological mechanisms integrated into the system, there is a substantial risk that some participants may exploit the programme for personal gain without making meaningful environmental contributions.

To prevent such misuse and maintain the programme’s integrity, we must establish a framework that incorporates advanced monitoring and verification technologies. This will not only protect the Green Credits system from manipulation but also enhance its credibility, fostering trust among stakeholders and reinforcing the programme’s effectiveness in driving genuine environmental improvements.

Our reference points to the historical experience of Clean Development Mechanism (CDM) Certified Emission Reductions (CER) under the Kyoto Protocol. This context is significant because it serves as a valuable lesson in the potential pitfalls of environmental credit systems. To ensure the programme’s effectiveness and prevent misuse, robust methodologies are crucial. Defining and measuring the environmental impact accurately is a complex task and requires careful monitoring and regulation.

Ensuring that the credits earned genuinely represent meaningful contributions to the environment is essential. One of the primary areas that require further clarification pertains to the precise meaning and value of Green Credits, which remains somewhat ambiguous at this stage. The definition of what constitutes a Green Credit and how its value is determined needs more transparency and standardized guidelines.

Furthermore, there is a need for clarification on the relationship between the Carbon Credits system developed by the Bureau of Energy Efficiency (BEE) and the Green Credits system being developed by the Indian Council of Forestry Research and Education (ICFRA).

It is essential to understand whether these two systems work in tandem, complementing each other, or if they operate in isolation. Clear guidelines and coordination mechanisms between these two systems are crucial to ensure that activities generating both Green Credits and Carbon Credits are properly accounted for, and the potential overlaps are resolved effectively. In addition to our existing considerations, we believe it is crucial to establish a minimum or base monetary value for Green Credits.

This can be achieved through the implementation of a structured pricing mechanism within each of the eight defined categories. By assigning a minimum monetary value to Green Credits, we ensure that these environmental credits hold tangible worth, which in turn incentivises their participation and contribution.

A structured pricing system would provide clarity and consistency in determining the value of Green Credits, preventing undervaluation, and ensure that these credits adequately reflect the environmental benefits they represent. Furthermore, this approach can stimulate greater interest and investment in activities related to the eight defined categories, as participants can more confidently assess the economic benefits of their environmental efforts. It creates a stronger market for Green Credits, creating a competitive environment where individuals, companies, and organisations are encouraged to maximize their contributions to these categories while also promoting economic growth and sustainability.

In the context of any market-based system, it is essential to acknowledge the regulatory challenges that need to be addressed. These challenges encompass the crucial tasks of clearly defining and effectively enforcing the rules and standards that govern credit issuance, trading, and utilization. Strong and well-enforced regulations are a cornerstone for the success of the programme, ensuring that it can fulfil its intended objectives.

In conclusion, the Green Credit Programme is a positive step towards encouraging voluntary environmental actions and recognising a broader range of eco-friendly activities. However, to be successful, it needs a robust regulatory framework to prevent misuse and ensure that the credits represent real environmental benefits. The effectiveness of the programme will depend on the ability to address these concerns and create a transparent and trustworthy system for green credits.

(The writer is Chair, Environment & Green Hydrogen Committee, PHD Chamber of Commerce and Industry, and Managing Director, Greenstat Hydrogen India Pvt. Ltd. He can be reached at jpglobalconsultinggroup@gmail.com)