- Eco-restoration work to generate green credits has started on 152 land parcels across the country.
- Public sector undertakings in oil and coal are leading commitments to generate green credits.
- In the absence of a clear unit of exchange or monitoring mechanism, experts say it is difficult to assess the scheme’s effectiveness.
Eco-restoration work towards the generation of green credits is underway in over 3,000 hectares of land in India, even as the government is working to devise a formula to make such credits quantifiable and tradable.
The programme, launched in October 2023, seeks to incentivise “voluntary environmental actions” by making them tradable. Activities such as tree plantations, rainwater harvesting, and waste management are among those that can yield credits for trade. But the contours of the scheme – particularly the fungibility of these credits across different activity types – are still being worked out.
In a reply to a question raised in the Lok Sabha on November 25, the Ministry of Environment, Forests, and Climate Change revealed that eco-restoration work towards generating green credits had already begun in 152 land parcels of degraded forest land, amounting to 3,409 hectares. The largest of these land parcels is in Gujarat (974.9 hectares).
Vinay Kumar, director of the Green Credit Cell at the Indian Council of Forestry Research and Education (ICFRE), told Mongabay India that a committee had been set up to develop a baseline for credits across different types of eco-restoration activities, and said a proposal had been sent to the Union Environment Ministry for finalisation. The ICFRE has been tasked with administering the programme.
“The main purpose of the scheme is to award entities who undertake environmentally friendly actions. We’ve formed a committee to come up with an equivalence formula between different activities, which will also lead to fungibility of the credits,” said Kumar. “The question of issuing the credits only arises two years after the eco-restoration work has started, at which point it can be quantified.”
But in the absence of a clear unit of exchange or monitoring mechanism, experts say it is difficult to assess the scheme’s effectiveness. The scheme was fast-tracked by the government despite calls for clarity and opposition from conservationists.
According to Kumar, the equivalence formula will take into account factors like the cost of eco-restoration works, type of land, vegetation cover (such as changes in canopy cover), area treated, and climatic factors (such as rainfall and soil moisture levels). “The programme will definitely need close monitoring. We plan to use advanced IT equipment, technologies like Google Earth and satellite data from the Space Applications Centre to track impacts of eco-restoration. Third party auditors will also be brought in to monitor compliance,” Kumar added.
Oil and coal public sector leads in green credits
Though the scheme has been pitched by the government as voluntary, inviting the participation of individuals, tree-plantation based credits can be bought by companies to compensate for forest loss caused by development projects. Tree plantation-based credits can also be used to meet compliances under Corporate Social Responsibility (CSR) and Environmental, Social, and Governance (ESG) reporting, according to a government notification issued in February 2024.
So far, 384 entities, including individuals, NGOs and private sector units, have signed up to participate in the scheme. Of the 384, 40 are public sector undertakings.
Data from the Green Credit Programme website shows the top biggest takers are public sector undertakings (PSUs) in oil and coal – natural resource intensive sectors whose projects have also led to forest diversion. As part of the green credit programme, Indian Oil Corporation Limited has committed to the eco-restoration of 11,890 hectares of degraded forest land – the largest commitment – followed by Powergrid Corporation India Limited (4,372 hectares), an electrical power transmission company, and thermal power generator NTPC (1,853 hectares.)
“We wanted to start with only PSUs to understand the scale and expense of the scheme’s implementation,” said Kumar. “This is the first time in India or anywhere else in the world that such a scheme is being attempted. We will slowly open it up to other players.”
Entities interested in generating green credits can select parcels of degraded forest land that have been identified by states, and pay for the eco-restoration works, which will be carried out by state forest departments. Once generated, the credits can be sold and bought in a market system that will run parallelly to India’s upcoming domestic carbon market.
The potential for green credits to compensate for deforestation from setting up projects could be a point of conflict, particularly if the seller of credits is also responsible for deforestation and pollution, said Tushar Dash, an independent researcher who works on forest and indigenous rights.
Prevailing norms under the Forest (Conservation) Act require that any time forest land is diverted for non-forest purposes, like mining or infrastructure development, project proponents must compensate for this forest loss by paying for plantations on non-forest land. This process is managed by the Compensatory Afforestation Fund Management and Planning Authority (CAMPA). By introducing a market mechanism to this process, entities who have generated green credits but diverted forest land for their own projects, have the option to sell excess credits for a profit. “This process will facilitate clearances and give the private sector an entry into forest management, a proposition that has been opposed multiple times,” Dash said.
Dash also pointed out that the green credit rules do not explicitly safeguard the rights of forest dwelling communities who may have historically accessed such land. Guidelines on implementing eco-restoration for green credits say that “fencing, as appropriate, may be provided if protection against anthropogenic pressures is necessary in any site.”
To this, Kumar said the rules don’t negate the rights of forest dwellers. “Once work starts, it will benefit local communities because it will generate jobs for them.”
From tree plantations to eco-restoration
In February 2024, the Union Environment Ministry released a methodology for the calculation of green credits that focussed exclusively on tree plantations. After some of the stipulations were criticised – such as a minimum of 1100 trees per hectare, with each tree generating one credit – the Ministry subsequently released guidelines that eased some of these conditions, shifting the focus away from only tree plantations to “eco-restoration.”
These guidelines, released on April 12, 2024, say, “The activities for eco-restoration may not be limited to plantation of trees and may include plantation of shrubs, herbs, grasses, besides taking up soil and moisture conservation works, terracing, rain water harvesting, and other measures as may be required per the site conditions for eco-restoration.”
Even with a broader set of stipulations, the question of how each credit is valued remains, said Trishant Dev, Programme Officer of Climate Change at the Centre for Science and Environment. “Marketising environmental benefits could open the door to market speculation, where actors keep an excess of credits with them and sell at an opportune moment to make a profit,” he said, adding, “Speculation has not been good for carbon markets because it inflates the price of credits. Whether something similar will play out with green credits needs to be seen.”
Banner image: Plantations in Sindhudurg District Maharashtra, India. Image by Rohitjahnavi via Wikimedia Commons [CC BY-SA 4.0]
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