A greenwash?

On June 26, the Union Ministry of Environment, Forests and Climate Change proposed the draft Green Credit Programme Implementation Rules 2023—a first-of-a-kind instrument that seeks to incentivise individuals, industries and local bodies to earn from environmentally positive actions.

A green credit is a singular unit of a credit provided for a specified activity undertaken. The draft rules identify eight sectors for these activities: tree plantation; water; sustainable agriculture; waste management; air pollution reduction; mangrove conservation and restoration; ECO Mark (a government scheme to identify environment-friendly products); and sustainable building and infrastructure.

While the ministry has invited suggestions to the rules within 60 days following the release, Down To Earth speaks to experts on the importance of the initiative in terms of steering individual and community actions towards sustainable living and the potential concerns and challenges.

“A much-needed paradigm shift”

MADHU VERMA

SENIOR ECONOMIC ADVISOR, IORA ECOLOGICAL SOLUTIONS

The green credit programme could be a harbinger of a new era of environmental consciousness. It represents a much-needed paradigm shift from the conventional focus on carbon emissions to a more holistic approach by recognising and incentivising efforts such as water conservation and waste management. With identification of eight key sectors, the programme lays the foundational framework for a market-based approach to environmental conservation. By encompassing diverse ecosystems such as wetlands, riverine landscapes, urban areas, and grasslands, the scheme could foster a more comprehensive and nuanced market response to ecological challenges. Encouraging community organisations to participate in conservation could democratise environ-mental stewardship, infusing it with local knowledge. Enabling incentives through wetland banking and debt-for-nature swaps could further innovate the financial mechanisms available for conservation.

From the governance point of view, the scheme commendably leverages financial incentives to drive environmental sustainability. However, there is an opportunity to broaden the spectrum of rewards. Complementing financial incentives, recognition and non-financial rewards could foster a more inclusive approach to conservation. Recognising citizens for their initiatives at the local or ward level, for example, could instill a sense of ownership.

The scheme’s success, however, hinges on a robust institutional structure for multi-level implementation. The potential establishment of a Bureau of Environmental Services could be a pivotal step, overseeing the valuation and trading of environmental credits or rewards at all levels of governance. Such a dedicated body would ensure that diverse environmental impacts are systematically integrated into the market mechanisms, enhancing the efficacy of the scheme.

“Legal responsi-bility should not be tradeable”

MEENAL TATPATI

LAWYER AND RESEARCHER

At first glance, the rules seem ambitious, but upon closer inspection they are ambiguous. They aim to monetise carbon credits and create a trading market for credits arising from a range of activities across eight sectors. These activities are mitigation measures to clean up water, air, soil and the environment, as mandated by law and the principle of “polluter pays” as laid down by judicial precedent.

What this essentially means is that if a builder uses sustainable building practices, they can use that to generate a “green credit” which becomes a tradable commodity rather than a legally-mandated responsibility. We are turning the polluter pays principle on the head! This logic flows all through the programme, as it envisages providing incentives in the form of “green credits” to individuals, farmer producer organisations, cooperatives, forestry enterprises, sustainable agriculture enterprises, urban and rural local bodies, private sector, industries and organisations. In doing so, it equates individuals, farmer producers and cooperatives with industries. It allows for creation of steering committees with industry associations as represe-ntatives who will guide the governance and implementation of the programme.

If we focus on forestry enterprises as a source of green credits in India, a single unit of land may have multiple governance mechanisms and admini-strative agencies. The owner of the land may be the forest department, but it could also be within customary boundaries of a village community which would be rights-holders and managers of the forestry enterprise under the Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006.

Another issue is the proposed fungibility across sectors, which raises the question of how to compare ecosystem services. It is detrimental to create a hierarchy amongst different offset activities because it is a reductive way of looking at the environment and biodiversity.

Lastly, the draft rules allow for self-certification of green credits and accreditation of the Green Credit Registry through digital processes. But the mechanisms of self-accreditation have not been expanded on, nor are there any insights on how self-accreditation, monitoring and evaluation will be digitised.

“Greenwashing, efficacy are key concerns”

RAMANJANEYULU GV

EXECUTIVE DIRECTOR, CENTRE FOR SUSTAIN-ABLE AGRICULTURE

The draft rules can integrate mechanisms to quantify and support ecosystem services, providing invaluable support to organic farmers and farmer producer organisations. As a catalyst for sustainable actions and living, the programme empowers individuals, companies and local bodies to contribute positively to the environment.

However, similar to other ecological or social payment systems, it may face the risk of greenwashing. Greenwashing involves making false or exagger-ated claims about enviro-nmental sustainability to create a positive image without actually delive-ring significant environm-ental benefits. There is a concern that some entities might engage in superfi-cial activities solely to generate green credits. This highlights the importance of establi-shing robust methodolo-gies to ensure the programme’s effective-ness and prevent misuse.

Moreover, questions arise about the efficacy of these mechanisms in achieving urgent emissions reductions. It is essential to consider whether resources should be allocated towards monitoring and fraud prevention or directed towards more transforma-tive, government-led efforts to drive enviro-nmental improvements.

For any trading platform, the key to success lies in achieving a critical mass of partici-pants to maintain a balance between buyers and sellers. As a domestic platform, the programme might initially have a relatively low number of users, leading to potential inefficiencies in transactions. Therefore, ensuring smooth, efficient sale of green credits, and providing prompt payments is crucial to the programme’s success and market liquidity.

“‘Pull’ factors will drive green credits”

M L JAT

GLOBAL RESEARCH PROGRAM DIRECTOR, RESILIENT FARM AND FOOD SYSTEMS, INTERNATIONAL CROPS RESEARCH INSTITUTE FOR THE SEMI-ARID TROPICS (ICRISAT)

The link between climate change and agriculture is complex. Climate change is impacting agriculture and agriculture is contributing to climate change. Over decades, significant efforts have been made to develop and push climate-smart agriculture technologies and practices, but their adoption has remained slow. This is no different than use of technologies in other areas where the classical “push” approach may not lead to impact at scale.

This is especially true of smallholder-dominated systems where farming households have bio-physical and socio-economic complexity and diversity. They need a “pull” factor. Financial instruments or incentives through green credit can create an enabling environment to accelerate the adoption of low-emission, sustainable practices in various sectors, including agriculture. In the context of incentivising farmers to create a “pull” factor, green credit could be a mechanism that recogn-ises and compensates farmers or agricultural businesses for adopting environmental-friendly practices. These services can include clean water, air, sustainable land management, carbon sequestration and biodiversity conservation.

Green credits could be a game-changer for adoption of low emission and resilient farming practices, helping farmers, civil society and the environment. However, scientific implementation of the programme needs well-structured approach in a phased manner, with clear objectives, reliable data and effective monitoring. In-depth exercise on assessment and valuation of ecosystem services, developing harmonised protocols for monitoring, reporting and verification, financial instruments, certification, regulatory mechanism and public awareness are some aspects that need attention to implement the programme.

This was first published in the 1-15 September, 2023 print edition of Down To Earth

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