By Suteekshna Dubey

Abstract

Time and again India has experimented with energy-saving techniques and is now getting involved in the trading of carbon credits as it develops its domestic carbon market. India has stood up to the plate by creating the innovative Green Credit Programme at a time when environmental awareness is no longer just a trend but a pressing requirement. This ground-breaking project intends to create a market-based system for rewarding voluntary eco-friendly behaviors.

Introduction to India’s Green Credit Programme:

The Central Government, on  June 26, 2023, established the Green Credit Programme, a voluntary domestic market mechanism in the exercise of the power conferred by sub-section 2 (iii) of section 3 of the Environment (Protection) Act of 1986 (29 of 1986).

Some of the sectors identified by the Programme are Tree Plantation-based Green Credit, water-based Green Credit, Sustainable Agriculture Green Credit, Waste Management Green Credit, Air Pollution Reduction Green Credit, Mangrove Conservation and Restoration Green Credit, Ecomark Green Credit, Sustainable Building and infrastructure based Green Credit.

The Green Credit Programme is primarily a component of LiFE (Lifestyle for Environment), a larger government effort. A grassroots movement called LiFE aims to stop climate change and promote a sustainable lifestyle based on moderation and conservation. To encourage the widespread use of rooftop solar installations in Indian metropolitan areas, the Green Credit Programme is essential. The programme provided inexpensive financing choices and regulatory incentives to encourage the residential segment as well as commercial building owners to adopt solar energy by installing solar panels on their rooftops. In essence, this transition to clean and renewable energy sources sought to lessen dependency on fossil fuels while allowing building title holders to produce clean electricity and pay less for it.

Collaboration within the G 20

The new programme was released at a time when India was about to host the G20 Presidency and was required to reflect upon its obligations to fight global warming, which includes attaining net-zero emissions by 2070. In its Nationally Determined Contributions (NDCs), India also promised to increase its forest and tree cover to create a carbon sink that can absorb 2.5 to 3 billion tonnes of carbon dioxide. India is promoting the overarching element of LiFE which is intended to be a broad movement based on lifestyle and behavior. Its interpretation of the living paradigm emphasizes the value of traditional knowledge and ways of living. Life can encourage market forces to innovate to promote sustainable consumption choices by influencing consumer behavior.

India’s G20 priorities include a “Green Development Pact”, which is expected to comprise a roadmap of activities over the next decade to confront the environmental crisis through international cooperation. This is done to formulate development plans with climate action in mind. The Green Development Pact is anticipated to serve as a road map of significant initiatives to drive green development worldwide over the coming ten years. This Pact is intended to be supported by five pillars: the Circular Economy, Climate Finance, Accelerating Progress on SDGs, and Energy Transitions and Energy Security. Lifestyle of Environment (LiFE) is one of these pillars.

Databases across different mediums have reflected the need to expedite some similar regimes. According to The International Resource Panel estimates, the G20 countries’ material usage increased from 19 billion tonnes to 73 billion tonnes. Along with the growth in absolute consumption, the G20’s percentage of worldwide consumption has also increased, going from 62% to 74%. According to the International Energy Agency, the G20 countries consumed more than two-thirds of the world’s energy in 2019 (Approx.71.6%). The Global Carbon Project estimates that the G20 is responsible for 94% of all CO2 emissions between 1850 and 2019. India has the lowest per capita emissions among the G20 nations and its emissions are less than half the global average. Therefore, it is abundantly evident that the G20 must set an example for promoting green growth that is equitable and sustainable.

A G20 Sherpa Meeting side event titled “Green Development: Need for an Ambitious Vision for the 21st Century” was organized by India’s G20 Presidency Secretariat, Government of India, in association with the United Nations in India and Observer Research Foundation (ORF), March 30. This is especially true now that India has unveiled a bold plan to increase funding for equitable climate action and sustainable development. India is also setting the standard for sustainable consumerism around the world with its LiFE strategy.

Green Financing And Sustainable Development:

One of the broad concepts reflected by the Green Credit Programme was to attract business houses by streamlining the exercise in the trade and investment areas. In 2007, India recognized the significance of Green Financing, a sustainable or responsible kind of funding that successfully supports initiatives that help the environment, such as those that lower greenhouse gas emissions, increase energy efficiency, or promote the circular economy. Green bonds, which are used to fund environmentally friendly initiatives, have been introduced by a number of banks and financial institutions. The Reserve Bank of India then developed measures to encourage banks to support sustainability objectives. The central bank included small-scale renewable energy projects in 2015 as part of the Priority Sector Lending programme. Indian banks developed internal policies to decrease their lending to carbon-intensive industries and switch to a green financing method of credit in response. This has also caused several industries with high carbon emissions to re-evaluate their business strategies and switch to eco-friendly production techniques.

India, one of the biggest emitters of greenhouse gases worldwide, needs more than US$10 trillion to reach its goal of net zero emissions by 2070. Both the public and private sectors are taking several actions that will boost the availability of funding and investment possibilities.

Institutional and other investors buy debt securities such as green bonds that finance environmentally friendly projects. Venture capital firms and private equity investors actively fund start-ups and early-stage companies that focus on sustainability and reducing environmental and social impact. Given the government’s push for sustainable development and the increasing need among businesses and investors to develop strong sustainability credentials, the Reserve Bank of India has introduced guidelines for banks and non-bank financial companies (NBFCs) to accept “green deposits”. The purpose is to ensure funds are utilized for energy efficiency, clean transportation, climate change adaptation, sustainable water and waste management, green buildings, and terrestrial and aquatic biodiversity conservation. An ESG category of mutual funds was also introduced by the Securities and Exchange Board of India (SEBI). Asset management firms in India can now introduce many ESG funds, and as reporting on these factors becomes more rigorous and transparent, investor confidence will increase.

All these initiatives are to meet some end goals by 2070. By incorporating mammoth business houses and incentivizing sustainable usage of resources, investment funding would be attracted towards the companies with more greener approach and a whole new perspective will build up towards the rising importance of green regimes.

Administrative Matrix:

All entities registered for Accredited Compensatory Afforestation under the instructions issued by MoEFCC (Ministry of Environment, Forest and Climate Change) vide No.FC-11/159/2022-FC, dated January 24, 2023, is required to register with the Green Credit Registry to participate in the initiative. The Central Government will set up digital processes for self-evaluations, registration, issuance, monitoring, audit, and verification of activities that qualify for Green Credits to streamline the Green Credit Programme. As a result, the effective and open programme will use a common electronic database called the Green Credit Register, which will keep track of important data on the issuance, ownership, transfer, and acquisition of Green Credits.

Early Concerns:

Although the scheme might encourage environmental protection, experts are worried that, if it is not adequately regulated, it could result in greenwashing. There is a lack of clarity regarding the specifics of how the credits would be calculated, how the benefits would be measured, and what would happen if the credits were fake. The Green Credit Programme (GCP) does not yet have a standard unit of measurement for the benefits garnered across numerous activities, which range from tree plantations to sustainable infrastructure, unlike a carbon market, which values a standard unit of per tonne carbon emitted. Although the GCP is intended to operate independently from the carbon market, the programme outline warns that there may be some overlap if the “green credit” also reduces carbon emissions.

Conclusion:

Although the initiative is yet to launch its effects on the market structure, this programme is an ideal example of combating a social and environmental issue by penetrating the country’s economy and impacting the circular economy. Experts are still apprehensive at an implementation level as it needs heavy compliance with the authorities and companies with minimal capital might face difficulty in the first instance. This bolsters the ESG regime that every company beyond a particular authorized capital has to follow under the Companies Act. Observations speak that the national regime has been taking stricter initiatives to incorporate all the sectors within this loop of sustainable use of resources. This makes it evident that more of these initiatives are yet to be introduced and compliance with these would be the only prudent and viable option in the hands of an individual or a corporate body.

Author’s Bio

Suteekshna Dubey is a final-year law student (three-year LL.B.) at Jindal Global Law School. She is interested in changes in industrial, energy, and technology sectors, affecting public policy.

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