Context
Parcels of degraded forest land close to 3,853 hectares have been identified by 10 states to be made available to earn and potentially trade green credits.
- Union Environment Ministry announced the rules for its Green Credit Programme (GCP) Chhattisgarh and Madhya Pradesh alone account for up to 40% of the available forest land.
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What are Green Credits?
- It is an innovative market-based mechanism whereby voluntary environmental actions will be incentivized by participation from various stakeholders like individuals, communities, private sector industries, and companies.
The Green Credits are Categorised into Eight key Areas:
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The Green Credit Programme (GCP)
- Green Credit Programme Launched by: The Ministry of Environment, Forest and Climate Change in line with the Lifestyle for Environment (LiFe) movement at the recent COP28 in Dubai.
- Administered by: The Indian Council of Forestry Research and Education (ICFRE).
- Green Credit Programme Aim: To Generate Green Credits through plantation on degraded wasteland with its initial phase focusing on water conservation and afforestation.
- Green Credit Programme Features:
- Creation of a land bank: Registered and approved entities ( individuals, groups, public and private sector units) can pay to finance afforestation projects in specific tracts of degraded forest and wasteland.
- State forest departments will carry out the actual afforestation.
- Each planted tree would be worth one ‘green credit’ after two years of planting and an evaluation by the International Council of Forestry Research and Education (ICFRE).
- Offsetting mechanism: Companies can then use these green credits to offset some of their obligations under India’s compensatory afforestation laws.
- A Market-based Approach: The Green Credit Programme creates a market-based incentive for environment-positive actions like water conservation or soil improvements, apart from just carbon emission reductions.
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Concerns Regarding Green Credit Programme
- Increased Risk of more forest land diversion: The Green Credit Programme facilitates the creation of land banks by linking them to compensatory afforestation activities, which could enable more diversion of forest land to commercial entities.
- No economies of scale: The Indian market being undeveloped with a restricted number of participants could lead to inefficient transactions due to an unbalance in the number of buyers and sellers.
- Market volatility: Green Credit Programme would cause the value of green credits to fluctuate in value and result in businesses facing uncertainties related to their environmental investments.
- It would slow down the programme’s efficiency, with delays in receiving credit and receiving revenues from trades, and affect its success.
- Risk of Greenwashing: For efficient administration of the scheme, stronger regulations are needed to guarantee ongoing monitoring and validation of claims, which would otherwise risk mere greenwashing.
- No standard unit of measurement: The green credit system does not yet have a standard unit of measurement, unlike the carbon market (prices a standard unit per tonne of carbon emitted ), as it is complicated to determine as they are accrued from various activities and across different sectors.
Compensatory Afforestation Law
- Administered under The Forest (Conservation) Act, 1980, based on the Polluter’s Pay Principle
- Purpose: The law obliges any industry or institution that has razed forest for non-forestry purposes, to provide an equivalent amount of non-forest land to forest authorities and pay for its afforestation.
- Provisions:
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- The compensatory land needs to be as near as possible to the forest tracts which have been razed.
- In case of unavailability, twice the amount of ‘degraded’ forest land (usually land with very low tree density but officially marked as forest) may also be made available for compensatory afforestation.
- Net Present Value Rule: Companies also need to compensate for the value of the forest ecosystem, called the ‘net present value’, which is lost due to the diversion of the forest land.
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Also Read: Green Credit Rules May Damage Forests: Say Experts
April 8, 2024
