Green Credit Program (GCP): What is it? And Its Significance

December 7, 2023

GS Paper III Environment

Context: Recently, the Indian Prime Minister launched the Green Credit Program.

During COP28 in Dubai, he emphasized that the Green Credit program surpasses the commercial nature of carbon credits.

What is the Green Credit Program?

Launched by: The Ministry of Environment, Forest and Climate Change in October 2023.
- The Green Credit program was first announced in the 2023-24 Union Budget to incentivize voluntary environmental actions of various stakeholders.
Administered by: The Indian Council of Forestry Research and Education (ICFRE).
Focus on: Generating Green Credits through plantation on degraded wasteland.
- Its initial phase focuses on water conservation and afforestation.

Green Credit program

A Market-based Approach: It is an effort to create a market-based incentive for different kinds of environment-positive actions, not just for carbon emission reductions.
- This Green Credit program attempts to use this market-based mechanism for other environmental actions, like water conservation or soil improvements.
CSR Obligations: As a starting point, the private companies would buy these green credits as part of their CSR obligations.
- The Companies Act, 2013 provides for Corporate Social Responsibility (CSR). Companies are required to spend a minimum of 2% of their net profit over the preceding three years as CSR.
Measurement on Performance: Methodologies and standards to measure and verify such actions are still being developed. The market would also need to be developed.
Significance: Green Credit program has a wider reach as it could benefit both individuals and communities.
- At COP28, the Indian PM offered the concept to the international community, in the hope of creating a market for green credits at an international level.
  - While the carbon markets focused more on industry and corporations.
- Surpassing the Carbon Credits: The initiative has the potential to achieve optimal returns beyond just carbon.
- Achievement towards Sustainable Development Goals (SDGs): It would be a step towards achieving
  - SDG 12: Responsible Consumption and Production
  - SDG 13: Climate Action
  - SDG 15: Life on Land
Concerns: The initiative may lead to Greenwashing.
- Greenwashing is the act of making false or misleading statements about the environmental benefits of a product or practice.
- Experts are also raising concerns about the effectiveness of the mechanisms, monitoring, and verification.

Know more about the Green Credit Scheme here.

Carbon Credit:

It represents the amount of Carbon Dioxide that has either been removed from the atmosphere or recycled. It generally represents the reduction in greenhouse gas emissions.
Its concept originated from the Kyoto Protocol.

Earlier Available Practice:

Trade in Carbon Credits: Such a market-based system for carbon already exists, at both the national and international levels, that allows trade in carbon credits.
Claim for Credits: Companies, or nations, can claim carbon credits if they take action to reduce their carbon footprint.
- These credits can be traded for money.
- Companies unable to achieve their emission standards pay to buy these credits and improve their performance.