The Ministry of Environment, Forest and Climate Change has notified the Draft Green Credit Programme Implementation Rules, 2023 (hereinafter referred to as “Draft Rules“) on 26th June, 2023. The proposed Green Credit Programme is a national level program in pursuance of Government of India’s mission titled ‘LiFE – Lifestyle for Environment’ which seeks to combat climate change, enhance environment actions to propagate a healthy and sustainable way of living based on traditions and values of conservation and moderation, and for sustainable and environment-friendly development. The Draft Rules have been circulated after almost seven months of the Energy Conservation (Amendment) Act, 2022, which introduced the enabling provisions for implementing a carbon credit trading scheme in the country.
The Draft Rules introduce the concept of Green Credit which has been defined as a singular unit of an incentive provided for a specified activity, delivering a positive impact on the environment. The Draft Rules identify various sectors such as tree plantation, water conservation/ harvesting/ saving activities, sustainable agriculture, waste management, air pollution reduction, mangrove conservation and restoration, ecomark and sustainable building and infrastructure as Green Credit generating activities. Since, these sectors also result in reduction or removal of carbon, the Draft Rules have distinguished Green Credits from Carbon Credit and provide that an activity generating Green Credit under the Green Credit Programme may also get Carbon Credits for the same activity under the carbon market. The implementation of Green Credit programme will be in a phased manner, and initially only two or three of the identified activities will be considered for designing and piloting the programme.
The proposed Green Credit Programme is aimed at leveraging a competitive market-based approach for Green Credits so as to encourage private sector industries and companies to meet their environmental obligations and to incentivise voluntary environmental actions taken by various stakeholders.
The Draft Rules do not envisage the prospect of export of Green Credits. The Minister of Power while addressing the Rajya Sabha during the discussion for Energy Conservation (Amendment) Bill, 2022 had clarified that the export of carbon credits would be allowed only after India meets its NDCs. Although the Introduction to the Draft Rules state that the Green Credits shall be available for trading in the domestic market, MoEF&CC may consider the prospect of allowing export of green credit which could act as an incentive. The export of Green Credits would also require a methodology for conversion of Green Credit to carbon credit which is commonly traded in the international market.
This article was originally published in Mondaq on 5 July 2023 Written by: Nawneet Vibhaw, Partner. Click here for original article
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