Credit risk

Earning credits for environmental actions. That is the aim of the Green Credits Programme (GCP) unveiled by the Union government in October 2023. It has been touted as a first-of-its-kind, “innovative market-based mechanism”, promoting activities like tree plantation, water conservation, sustainable agriculture, waste management, air pollution reduction, mangrove conservation and restoration, sustainable building and infrastructure projects, and identifying environment-friendly products under a scheme, Ecomark.

By December 2024, the Union Ministry of Environment, Forest and Climate Change (MoEFCC) had only issued detailed guidelines only for plantation under GCP. On the face of it, they seem to encourage afforestation. But experts point to a lack of clarity in the rules, which they fear might do more harm than good.

The guidelines, issued between February and April 2024, say that the Indian Council of Forestry Research and Education (ICFRE), Dehradun, will be the administrator of GCP. Potential investors in afforestation projects—which may be companies, organisations or individuals—must apply to the ICFRE Director-General. Upon approval, the investors would pay the state forest departments that will create and maintain the plantations. The forest departments are directed to identify “degraded” land spanning at least 5 hectares (ha) for plantations. The investing entities would be awarded one green credit per tree, two years after the plantation is created and deemed successful. They may use the credits to fulfill obligations under the corporate social responsibility (CSR) or environmental, social and governance (ESG) norms. Or, they can trade credits to meet compensatory afforestation obligations under the Forest (Conservation) Act, 1980, which requires an entity to facilitate a new plantation in exchange for diverting forestland for non-forestry activities.

The guidelines have raised some questions. First, they were not clear on who will decide the payment for the projects, nor on the methodology for calculation. The rules also did not mention if the green credits would be scrapped, returned or stay valid if a plantation fails, says Prakriti Srivastava, former Principal Chief Conservator of Forests, Kerala. “A two-year period is too short to declare a plantation successful. These areas should be audited by an independent third party for at least up to 20 years,” she says.

Plantations must be a permanent addition to the ecosystem, not just for a two-year period, adds Gautam Aredath, policy analyst at Ashoka Trust for Research in Ecology and Environment (ATREE), Bengaluru. He says that though the Union government claims GCP is an innovative market mechanism, it only has one seller, the forest departments. The buyers, too, are likely to comprise corporate organisations who want to meet their environmental obligations or seek forest diversion. “This raises concerns about GCP merely acting as a proxy for compensatory afforestation,” says Aredath.

“The government is trying to make it easy for entrepreneurs and industrialists to acquire forest land by permitting them to offer, in exchange, money (in the form of green credits), instead of land for land as was the case so far,” says a March 19, 2024 open letter to MoEFCC by Constitutional Conduct Group, a collective of 91 former civil service officers. The letter warns that GCP may shrink the country’s forest area, threatening some of the densest and best protected forests that may be used for mining, industry and infrastructure development.

Concerns on potential loss of land

Experts also raise questions on MoEFCC’s directions on allocation of “degraded” land for plantation. The country lacks clear legal and ecological parameters to identify such lands, says Debadityo Sinha, senior resident fellow and lead, climate and ecosystems team, Vidhi Centre for Legal Policy, Delhi. This means natural openings in forests, grasslands and scrub forests may be incorrectly earmarked as degraded land. “Further, forest departments may want to maintain survivability of trees and would prefer species that require low maintenance and can withstand disturbances. This means very few plant species, which may not be suitable to every region, would be chosen,” he says.

In the guidelines released in February, MoEFCC stated that the plantation projects taken up under GCP must have 1,100 trees per ha. Then on April 12, the Union ministry issued an office memorandum which tweaked this point, declaring that projects should focus on “restoring landscapes”, not just plantation. However, it is unclear what this “restoration” entails. Later that month, People’s Union for Civil Liberties, a human rights body, released a letter saying GCP could harm critical and unique ecosystems which provide valuable ecological services, such as preservation of the soil quality and conservation of biodiversity. “In April, there were reports that more than 10,000 ha of ‘degraded forestland’ in 13 states have been identified for tree plantation under GCP. But the inventory does not list specific location, type of land and other ecological parameters. No process has been undertaken to obtain free, prior and informed consent of affected local communities and indigenous peoples,” says Lara Jesani, an environmental lawyer and national organising secretary of People’s Union for Civil Liberties.

Identifying “degraded” land also poses legal challenges. For instance, in 1996, while hearing the case T N Godavarman Thirumulkpad vs Union of India, the Supreme Court assured that all forest and forest-like areas in the records of Union, state and local governing bodies will be protected, even if they are not registered in government records. The ruling also directed states to classify and record unregistered areas, but little progress has been made so far. This means, says Srivastava, degraded unclassed state forests in Arunachal Pradesh, wastelands in Himachal Pradesh and other areas that should be protected under the 1996 ruling, stand vulnerable to diversion without following due process under the judgement.

“Reserved, protected and community forests notified under the Indian Forest Act, 1927, or its equivalent in states, also stand vulnerable to GCP. The rules do not mention that such areas are excluded from afforestation,” says Srivastava. Clearing such lands will also violate the Forest Conservation (Amendment) Act, 2023, which does not envisage using notified forests for compensatory afforestation.

Forest rights at risk

GCP also raises questions on forest rights. Under the Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006, (FRA), and the Panchayat (Extension to Scheduled Areas) Act, 1996, forest-dwelling communities can claim individual or community forest rights (CFR) over land they have conserved for generations. A 2020 analysis, “Estimating and Mapping CFR Potential” by ATREE says about 60,000 villages in Maharashtra, Madhya Pradesh, Jharkhand and Chhattisgarh could potentially claim CFR for a total area of at least 1,83,000 sq km. This could benefit about 62.6 million people. Aredath says only a fraction of this area has been recognised so far. The unclaimed land may be fenced off under GCP without consulting local communities, he warns.

Double counting

Another concern raised on GCP is its potential linkage with carbon credits. India, under its voluntary carbon market, allows entities to earn tradeable credits for carbon sequestration projects. In October 2023, the Union government suggested that an entity may be able to avail both green and carbon credits from a plantation. Such a provision is not mentioned in the afforestation guidelines released in 2024. Nevertheless, such a linkage could lead to double counting, says Trishant Dev, programme manager, climate change, Centre for Science and Environment, Delhi. “Double counting occurs when an environmental benefit, like carbon sequestration from a plantation, is counted in two different systems. If a project has already been funded through green credits, claiming carbon credits for it essentially means that the environmental benefit accrued from the project is being sold twice,” says Dev.

“People fail to realise that environmental integrity requires carbon credits to only be earned from a project if it is funded or made viable with money received by sale of credits. Simply inking it as an added benefit under GCP is against this principle,” he adds.

This was first published in the State of India’s Environment 2025