India's New Market for 'Green Credits': A Promising Initiative for Environmental Sustainability Insight by LIBF India

PNN
New Delhi [India], October 9: In 2023-2024 budget speech, the announcement of the inception of a transformative era, referred to as 'Amrit Kaal' or the golden age, set to span the next 25 years. A central pillar of this initiative is a dedicated push for green growth, manifesting in the form of a groundbreaking 'green credit programme' under the purview of the Environment (Protection) Act. The program aims to "incentivize environmentally sustainable and responsive actions by companies, individuals, and local bodies while mobilising additional resources for such activities."
India, as the world's most populous country, has made significant strides in environmental consciousness, with initiatives like the "Mission LiFE (Lifestyle for Environment)" introduced at COP26 in Glasgow in 2021. This grassroots movement endeavours to promote environmentally conscious lifestyles, setting a target for at least 80 per cent of all Indian villages and urban areas to become "environment-friendly" by 2028.
The 'green credit programme' represents a pivotal step forward in this environmental journey, uniquely incentivizing eco-friendly actions across a spectrum of stakeholders. Notably, this program extends beyond traditional carbon credits, assigning monetary value to a diverse range of pro-environment endeavours.
"Green Credit Programme is a significant leap towards a sustainable future, which broadens the scope of environmental incentives. Despite challenges, these innovative pursuits are imperative as we strive to align economic progress with the well-being of our planet." says Aastha Arora, Learning and Development Consultant at The London Institute of Banking & Finance (LIBF) India.
Key Program Features
- Voluntary Participation: A standout feature of the green credit program is its voluntary nature, designed to foster demand for green credits.
- Diverse Stakeholders: The program seeks to engage a wide array of participants, including individuals, cooperatives, private sector industries, farmer groups, forestry enterprises, and urban and rural local bodies, encouraging environmentally responsible choices.
- Fungibility and Allocation: Allocation of green credits will consider factors such as resource requirements, scale, scope, and size, ensuring fungibility across all sectors. A technical committee may be established to develop methodologies for credit allocation, measurement, reporting, and verification.
- Trading Platform: The Indian Council of Forestry Research and Education (ICFRE) will spearhead the design of a trading platform for green credits in collaboration with a steering committee comprising domain experts and representatives from concerned ministries and industry associations. An accredited trading service provider will oversee the operation of this platform.
- Administration and Auditing: ICFRE will administer the green credit program, establishing transparent reporting mechanisms, including annual returns and progress reports submitted by certification agencies, green credit verifiers, and trading service providers. A government-appointed panel of auditors will periodically assess the program's integrity.
- Digital Infrastructure: A robust digital infrastructure will underpin the program, facilitating registration, self-assessment of eligible activities, and performance monitoring.
- Beyond Carbon Credits: Although the green credit program extends beyond carbon credits, it enables participants to accrue carbon credits in the carbon market, aligning economic activities with national climate goals.
Accredited Activities
The Ministry of Environment, Forest, and Climate Change (MoEFCC) plans to implement the program in phases, initially focusing on two to three activities from identified sectors:
1. Air Pollution Reduction: Promoting measures to reduce air pollution and other pollution abatement activities.
2. Eco-mark: Encouraging manufacturers to obtain the "Eco-mark" label for their goods and services.
3. Mangrove Conservation and Restoration: Promoting measures for the conservation and restoration of mangroves.
4. Sustainable Agriculture: Promoting natural and regenerative agricultural practices, land restoration, and improved agricultural productivity.
5. Sustainable Building and Infrastructure: Encouraging sustainable construction using eco-friendly technologies and materials.
6. Tree Plantation: Promoting activities to increase the tree cover across the country through plantation and related efforts.
7. Waste Management: Promoting sustainable waste management practices, including collection, segregation, and treatment.
8. Water: Encouraging water conservation, harvesting, efficiency, and wastewater treatment and reuse.
Thresholds and benchmarks will be established for each green credit activity to enable the generation and issuance of green credits.
Challenges and Opportunities
The global landscape is evolving with numerous ESG (environmental, social, and governance) reforms underway, and India's green credit program sets a commendable precedent by encompassing a wide spectrum of environmental and societal considerations.
However, challenges lie ahead, including the assessment of the relative value of diverse green credits and the risk of greenwashing. Rigorous strategies for demand generation and the establishment of a credible trading platform are pivotal for the program's success. Scale and trust will be integral factors in its effectiveness.
The interaction of the green credit system with existing carbon markets and sustainability reporting frameworks remains an intriguing aspect. Careful assessment and capacity building, informed by global best practices and critical feedback, will be imperative to ensure the program's resilience.
As India embarks on this ambitious journey towards environmental sustainability, the 'green credit programme' stands as a beacon of innovation, offering a holistic approach that goes beyond carbon to encompass the broader well-being of society and the environment.
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