Green Credit Programme – The Core IAS

Green Credit Programme

What is Green credit?

  • The ‘Green Credit’ means a singular unit of an incentive provided for a specified activity, delivering a positive impact on the environment.
  • The Green Credit Programme as a mechanism that complements the domestic Carbon Market.
  • While the domestic carbon market focuses solely on CO2 Emission reductions, the Green Credit System aims to meet other environmental obligations as well, incentivizing sustainable actions by companies, individuals, and local bodies.
  • The green credits will be tradable and those earning it will be able to put these credits up for sale on a proposed domestic market platform.
  • The Green Credit Programme (GCP) launched, was first announced in the 2023-24 budget under Mission LiFE.
  • The Ministry of Environment issued the draft ‘Green Credit Programme Implementation Rules 2023’ under the Environment Protection Act of 1986.
  • Under this, individuals, industries, FPOs, ULBs, gram panchayats and private sectors, etc., will be able to earn “green credit” for undertaking environment-friendly actions.
  • The green credits will be tradable on a proposed domestic market platform.
  • It follows the principle of LiFE – Lifestyle for Environment – to encourage sustainable lifestyles by driving consumers/communities towards behavioural changes to incentivise environment-friendly practices.

How will the program be implemented?

  • The Green Credit Programme (GCP) aims to leverage a competitive market-based approach and incentivise voluntary environmental actions of various stakeholders.
  • The environment ministry has identified 8 select activities for which green credit can be earned.

Green Credit Activities:

  • Tree Plantation-Based Green Credit: To promote activities for increasing the green cover across the country through tree plantation and related activities.
  • Water-Based Green Credit: To promote water conservation, water harvesting and water use efficiency / savings, including treatment and reuse of wastewater.
  • Sustainable Agriculture-Based Green Credit: To promote natural and Regenerative Agricultural practices and land restoration to improve productivity, soil health and nutritional value of food produced.
  • Waste Management-Based Green Credit: To promote sustainable and improved practices for waste management, including collection, segregation and treatment.
  • Air Pollution Reduction-Based Green Credit: To promote measures for reducing air pollution and other pollution abatement activities.
  • Mangrove conservation and restoration-based green credit: To promote measures for conservation and restoration of mangroves.
  • Ecomark-based Green Credit: To encourage manufacturers to obtain ‘Ecomark’ label for their goods and services.
  • Sustainable Building and Infrastructure-based Green Credit: To encourage the construction of buildings and other infrastructure using sustainable technologies and materials.
  • Through the programme, thresholds and benchmarks will be developed for each Green Credit activity.


  • Trade Market – The green credits will be tradable and be made available for trading on a domestic market platform.

The Trading Service Provider accredited by the GCP administrator will establish the trading platform for the exchange of Green Credit Certificates.

The mechanism will be implemented in a phased manner.

  • Implementation – A steering committee headed by the environment secretary will govern the implementation of GCP.

The steering committee will not only approve procedures for institutionalising the GCP.

It also approves its rules and regulations and make recommendations to the central government for issuance of Green Credit Certificate.

  • Administrator – The Indian Council of Forestry Research and Education (ICFRE) will be the administrator of the programme.
  • ICFREwill manage, monitor and operate the entire programme.
  • The institute will develop guidelines, processes and procedures for implementation of the programme.


  • To create a market-based (supply and demand) mechanism for incentivising voluntary environmental actions/ individual or community behaviour.
  • To encourage the private sector as well as other entities to meet their existing obligations, stemming from other legal frameworks.

GCP vs carbon markets: Unlike carbon markets, where only greenhouse gas (GHG) emissions were traded, the GCP accounts for a wide range of actions and nowhere in the world such a wide range of actions are considered.


  • It accounts for and incentivise individual and community actions, besides corporate and businesses.
  • The environmental activity generating Green Credits under Green Credit Programme (GCP) may have climate co-benefits such as reduction or removal of carbon emissions.
  • Such activity may accrue both green credits as well as carbon credits which may be sold under Green Credit market or carbon market respectively.
  • Helps to realise the vision of ‘Mission LiFE’ through pro-planet people and entities.
  • The GCP will encourage private sector industries and companies as well as other entities to meet their existing obligations, stemming from other legal frameworks.

Significance of the GCP:

  • It’s a first-of-its-kind instrument that seeks to value and reward multiple ecosystem services to allow green projects to achieve optimal returns beyond just carbon.
  • The scheme will allow project proponents to also access carbon markets additionally.
  • The Green Credit Programme will also encourage private sector industries and companies as well as other entities to meet their existing obligations, stemming from other legal frameworks, by taking actions which are able to converge with activities relevant for generating or buying green credits.
  • The guidelines bring together mechanisms to quantify and support ecosystem services together and would be of great help for organic farmers and FPOs.
  • It’s a first of its kind instrument that seeks to value and reward multiple ecosystem services to allow green projects to achieve optimal returns beyond just carbon.

 Similar mechanisms elsewhere: In some countries (France, Germany and Sweden), social services generate credits – taking care of the elderly for a certain number of hours, for instance, gets one some credit that you can exchange in a salon.


  • The draft was a good statement of intent but its implementation would be extremely challenging.
    • This is due to the difficulty in establishing the equivalence between various actions.
    • For example, how much water one saved is equivalent to a tonne of CO2 prevented from emissions is difficult to establish.
  • Monitoring, reporting and verification challenges.
  • A strong risk of greenwashing – the appearance of doing a lot without actually achieving much beneficial impact.
  • Experts are concerned that the market-based mechanism of green credits may lead to Greenwashing.
    • Greenwashing refers to the practice of making false or exaggerated claims about environmental sustainability or achievements to create a positive image while not actually delivering significant environmental benefits.
  • The fear is that companies or entities may engage in tokenistic or superficial activities to generate green credits without making substantial efforts to address environmental issues.
  • There are also concerns about the effectiveness of these mechanisms in achieving urgent emissions reductions and the allocation of resources for monitoring and fraud prevention instead of more transformative efforts directed by the government.

Way ahead:

  • Capacity needs to be built to monitor these systems and prevent fraud.
  • It will save resources that could be diverted to more transformational pollution control and biodiversity protection efforts.
  • It will be crucial to ensure that the methodology and the standards are robust and additional strategies that would create enough demand for the green credits for the viability and stability of the market.
  • There is a need for a careful assessment and implementation of the Green Credit System, particularly its focus on tree plantation and afforestation.
  • It is important to consider unresolved forest ownership and governance rights, ecological and biodiversity challenges, and global critiques of carbon credit schemes.
  • Internal discussions and public consultations are important to address these aspects.