Opinion – Green Credits Programme: Seeds Of Change Planted But Calls For Dedicated Care

India, through its Green Credits Programme (GCP), has laid the foundation for a market-based mechanism to incentivize voluntary eco-friendly initiatives such as water conservation, waste management, sustainable agriculture, and afforestation in particular. The program was notified on October 12^th, 2023 under the Environment (Protection) Act of 1986, with the aim of encouraging industries, companies, and other entities to meet obligations under law as well as voluntarily undertaking environmental measures through buying or generating green credits.

GCP Simplified: How it Works

The GCP is administered by the Indian Council of Forestry Research and Education (ICFRE), an autonomous body under the Ministry of Environment, Forests, and Climate Change (MoEFCC). The process begins with participants—individuals, corporations, or public sector entities—registering their environmental projects, such as tree planting on degraded lands, with the ICFRE. State forest departments allocate suitable land parcels (typically at least 5 hectares) and execute the activities using funds provided by the participants. After a two-year period, the ICFRE evaluates the outcomes—for instance, the survival and growth of planted trees—and awards green credits based on predefined methodologies. Each tree, if it meets the criteria, equates to one green credit, with a minimum planting density of 1,100 trees per hectare.

These credits are then tradable on a domestic market platform, allowing participants to sell them to entities seeking to meet obligations like compensatory afforestation under the Forest Conservation Act or Environmental, Social, and Governance (ESG) commitments mandated by the Securities and Exchange Board of India (SEBI).

GCP has the potential to deliver long-term value across multiple dimensions

As of April 2025, out of 25,654 hectares of land registered for eco-restoration, 21,988 hectares have already been selected by more than 384 registered participants. Public Sector Undertakings (PSUs) in the Coal, Oil & Gas, and Power sectors dominate the registrant pool, with Indian Oil Corporation (14,248 hectares) topping the list, followed by Power Grid Corporation of India Ltd (4,372 hectares). and NTPC Limited (1,853 hectares).

Environmental Impacts

·         Carbon Sequestration: Afforestation increases the green cover and provides a carbon sink through biological sequestration, enhancing air quality in the long-term. India is on its way to achieve its target of additional 3 billion tonnes of CO2 equivalent (CO2e) sequestered carbon; GCP will accelerate this significantly.

·         Land Use Optimization: GCP specifically targets degraded forest land parcels identified by MoEFCC for afforestation activities. In the long-term, this will transform under-utilized lands to create significant ecosystem value while offering economic opportunities too.

·         Biodiversity Conservation: Accounting for 7-8% of species in the world, India is ‘megadiverse’ and a critical link in the global biodiversity conservation efforts. GCP-driven tree plantation, if managed to meet local ecosystem conditions, can protect endangered native species and revive habitats for flora and fauna.

·         Soil Health and Water Availability: Afforestation reduces top soil erosion and enhances organic nutrients, while also checking water loss through increased retention and underground water recharge. Other initiatives under GCP such as water conservation and sustainable agriculture will co-benefit from extensive afforestation.

Social Impacts

Community Awareness: According to the Forest Survey of India, more than a third of Indian villages are classified as ‘forest-fringe’. GCP provides ample opportunities for an inclusive approach that boosts community participation in and awareness on environmental protection.

Public Health: Air pollution has claimed more lives globally than did significant diseases like HIV/AIDS, tuberculosis, and malaria, establishing itself as a critical public health threat. Increased air and water quality from expanding tree cover will contribute to health outcomes, particularly in rural areas in India.

Economic Benefits

Job Creation and Rural Development: An estimated 300 million people in India are dependent on forests for their livelihood; an expanding forest cover will provide economic security and more income generation opportunities to this vulnerable section. Further, increased demand for sustainable agriculture enables job creation in rural areas containing mass migration to cities.

Reduced cost of compliance: For the participating entities, especially private companies, GCP reduces administrative and logistical burdens, providing a credible and cost-effective way of contributing to afforestation. In addition, trading of green credits opens up a sustainable revenue stream that can lead to long-term financial gains.

Corporate Sustainability Performance: Claiming green credits will enable companies and other entities to take on an environmental stewardship role, leading to differentiation, reputation gains, and improved access to capital.

Resolving ambiguities and uncertainties is crucial to maximize the outcomes of GCP

The Green Credits scheme is ambitious and a step in the right direction, but fails to address the inherent complexities, leaving participants and experts guessing on several counts. It is imperative for the Government to address these gaps effectively, fostering confidence and creating strong incentives for participating entities to ensure sustained, long-term adoption.

Clearer Methodology and Measurable Outcomes

The tree plantation methodology notified in February 2024 marks a significant departure from its more detailed earlier draft. Lack of a comprehensive methodology that considers survival rates, project tenure, and ecological goals, can undermine the efforts of participating entities leading to sub-standard outcomes.

Robust Monitoring and Maintenance Framework

Plant survival rates depend on several factors and can be abysmally low when ineffectively managed. In its current form, GCP provides no specification on maintenance of saplings during the 2-year growth phase and ensuring its long-term survival.

Prevention of Greenwashing and Double Claiming

GCP needs to clarify its relationship with carbon credits and establish mechanisms to avoid participating entities claiming both green credits and carbon credits from the same project. Ambiguities and conflicting claims can erode market confidence discouraging entities from participation.

Ecologically Sensitive Design

Although the draft methodology recommends species for states based on rainfall, tree plantations need to be carefully managed with due consideration to the local ecosystem; ignoring these issues would lead to low survival rates or monoculture.

Stronger Regulatory Oversight

The scale and sensitivity of the program calls for a dedicated regulatory body that can conduct site audits or accredit third-parties to oversee implementation and penalize non-compliance and fraud.

Inclusion of Diverse Activities

Although Green Credit Rules, 2023 identifies eight eligible initiatives, currently GCP is heavily focused on tree plantation. Diversifying the program to include other activities would enable participating entities to weigh their options and make a balanced choice between environmental goals and other priorities.

By Akash Keshav, Co-founder and CEO, Sprih