The Ministry of Environment, Forest and Climate Change’s ambitious Green Credit Programme (GCP), which aims to promote environmental protection through tradable green credits, was launched despite significant legal concerns raised by the Ministry of Law and Justice. The programme, designed to reward individuals, communities, and private industries for engaging in actions that benefit the environment, such as increasing forest cover, implementing sustainable agriculture, and enhancing water management, seeks to foster pro-planet activities while offering participants the ability to trade their green credits on a domestic platform.
However, records obtained through the Right to Information (RTI) Act reveal that the Law Ministry flagged potential legal challenges to the programme just days before its formal launch. A week before the Ministry of Environment officially notified the Green Credit Rules on October 12, 2023, the Legislative Department under the Ministry of Law and Justice raised concerns about the programme’s compatibility with the Environment Protection Act, 1986 (EPA), which serves as the foundational legal framework for environmental policies in India. The department specifically cautioned that the provisions of the EPA “perhaps” did not support the business model envisioned by the Green Credit Programme, suggesting that the proposed rules may not align with the law’s core objectives.
Despite these legal apprehensions, the Environment Ministry pressed ahead with the programme’s rollout. Internal records show that the ministry was advised twice by the Legislative Department to consult with the Department of Legal Affairs to assess the legality of the Green Credit Rules. The Department of Legal Affairs, which provides legal advice to ministries, was not consulted before the rules were finalized. The Environment Ministry, however, defended its decision, arguing that the EPA grants the central government the authority to implement nationwide programmes aimed at environmental protection, which the Green Credit Programme falls under.
The Green Credit Programme was officially announced shortly before Prime Minister Narendra Modi’s address at the Dubai Climate Conference in December 2023, underscoring the government’s commitment to addressing climate change. Under the programme, participants can earn tradable green credits for actions such as afforestation, sustainable farming practices, and water conservation. These credits, which are meant to serve as a form of environmental currency, can then be traded on a domestic platform to meet legal requirements, including compensatory afforestation for industrial or infrastructure projects that may affect the environment.
Since its launch, the Green Credit Programme has seen considerable interest, with 384 entities, including major public sector undertakings like Indian Oil Corporation Ltd, Power Grid Corporation of India Ltd, and National Thermal Power Corporation Ltd, registering for participation. The programme is seen as a way to incentivize corporate and individual efforts to mitigate the environmental impact of development activities, providing a financial mechanism to encourage sustainable practices across sectors.
However, the programme’s rapid progression, in the face of legal uncertainty, has raised questions about the government’s approach to environmental regulations and the broader implications of market-based mechanisms like tradable credits. On August 18, 2023, Environment Minister Bhupender Yadav approved the final draft of the Green Credit Rules before sending it to the Law Ministry’s Legislative Department for review. The Legislative Department, on October 5, 2023, raised concerns about the legal validity of the rules under the Environment Protection Act, urging the Environment Ministry to conduct a legal review with the Department of Legal Affairs.
The Ministry of Environment responded by defending the legal standing of the Green Credit Programme, asserting that it aligns with the objectives of the EPA, which empowers the government to take action for the prevention, control, and abatement of environmental pollution. An officer from the Environment Ministry noted in internal documents that the EPA allows for the planning and execution of nationwide environmental programmes, which the Green Credit Rules were designed to support.
Despite the concerns raised by the Law Ministry, the Environment Ministry moved forward with the notification of the Green Credit Rules on October 13, 2023. In response to further legal queries regarding the programme’s methodology for tree plantation-based credits, a component of the GCP, the Legislative Department once again highlighted the absence of advice from the Department of Legal Affairs, which had not been consulted on the latest draft notification. In its response, the Environment Ministry simply referred back to its earlier submissions from October 2023, reiterating that the legal concerns had been duly considered and that the programme’s importance warranted its swift implementation.
The Green Credit Programme has drawn both support and criticism, with environmentalists praising its potential to incentivize sustainable practices but also raising concerns about the environmental integrity of a market-based system. As the programme continues to unfold, the question of its legal standing remains a significant issue, especially as market-based environmental mechanisms like carbon credits face growing scrutiny globally. The Ministry of Environment’s decision to press ahead with the GCP, despite legal doubts, could set a precedent for future environmental policies that blend market incentives with regulatory frameworks. Whether the programme will stand up to legal challenges in the long term remains to be seen, but its implementation represents a bold step in the Indian government’s efforts to address climate change through innovative, market-driven solutions.
