Earning and Using Green Credits

The Green Credit Programme is a market-based scheme created by the Green Credit Rules, 2023, notified on 12 October 2023 under the Environment (Protection) Act, 1986. It aims to reward voluntary environmental actions by individuals, communities, companies and organisations with tradeable green credits. The rules list a range of eligible activities, including tree plantation, water management, sustainable agriculture, waste management, air pollution reduction, mangrove conservation and eco-labelling, though in practice the programme began with tree plantation on degraded land, under methodologies issued and revised by the government.

The Indian Council of Forestry Research and Education is the administrator of the programme and maintains the registry and the platform. Green credits are different from carbon credits under the Carbon Credit Trading Scheme: they are not limited to greenhouse gas reductions, and their uses include meeting certain legal obligations, as the government may notify, and voluntary environmental commitments. This page explains how the programme works, how plantation-based credits are earned, how they can be used, and the legal points for companies and landholders.

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The programme at a glance

How plantation-based credits work

In the plantation stream, state forest departments identify parcels of degraded land, often degraded forest land, and list them on the programme's platform. An entity wishing to earn green credits registers, selects land, and pays the forest department the cost of plantation and maintenance as estimated by the department. The department carries out the plantation and maintains it for the required period. After the specified period, the plantation is evaluated, and green credits are calculated and issued to the entity according to the methodology.

The methodology has been revised since the programme's launch, in response to concerns about planting density, survival and ecological suitability. Earlier versions linked credits to the number of trees planted; later revisions moved towards outcome-based assessment, linking credits to the canopy and survival achieved after several years, rather than counting saplings at planting. Check the methodology in force when you commit, because it determines how many credits you will receive and when.

Using green credits

Green credits can be used in several ways. Companies can use them to show voluntary environmental action, for example in ESG reporting or CSR, subject to the rules on CSR spending under company law. The government has also indicated that credits earned from plantation on degraded forest land may be used to meet certain obligations, such as compensatory afforestation required for diversion of forest land, under conditions it has notified. This potential use has made the programme interesting to infrastructure and mining companies with forest clearance obligations.

Before relying on green credits for a legal obligation, confirm that the relevant notification allows it for your obligation, the conditions attached, and whether the forest authority accepts the credits in your case. Using credits that turn out not to satisfy the obligation leaves the obligation unmet. See forest clearance.

Green credits and carbon credits

Green credits and carbon credit certificates are separate instruments under separate laws. Carbon credit certificates are issued under the Carbon Credit Trading Scheme, 2023, made under the Energy Conservation Act, for measured greenhouse gas reductions or removals, and are used by obligated entities to meet emission intensity targets. Green credits are issued under the Green Credit Rules, made under the Environment (Protection) Act, for a wider range of environmental actions, and are not, in themselves, carbon credits. A single activity, such as a plantation, might in principle generate benefits recognised under both, but the rules on double counting and the specific methodologies determine whether both can be claimed. If you are planning a project with both in mind, take advice on structuring before you register. See carbon credits.

How to participate

Legal points for companies

Companies participating in the programme should look beyond the headline. Who owns the credits, and can they be transferred within a group or to third parties? What happens if the plantation fails because of drought, fire or encroachment: is there any adjustment, refund or replacement? How long is the maintenance period and who bears the cost of maintenance beyond the initial payment? Can the company claim the payment as CSR expenditure under company law, and if so, how does that interact with claiming credits? How will the credits be reported in BRSR, and are claims about them accurate under the greenwashing guidelines?

Where a company engages an NGO or contractor to manage participation, the agreement should cover these points, as well as reporting and access to information. Clear answers at the start avoid disputes years later, when the evaluation takes place.

Criticism and safeguards

The programme has faced criticism from environmental groups, mainly about planting on degraded forest land that may be ecologically important as open forest, grassland or scrub, the risk of monoculture plantations, and the possibility that credits could make it easier to divert natural forest by substituting plantations. The methodology revisions responded to some concerns. For companies, the reputational point is to choose sites and species carefully, favour native species and ecological restoration over simple tree counts, and avoid presenting credits as equivalent to protecting natural forest. Careful choices reduce both environmental and reputational risk.

Time and typical cost

Our fees are agreed in writing at the start, stage by stage. They are not linked to the outcome.

Green credits and carbon credits compared

Documents usually needed

Laws that apply

How we work

We are a litigation and advisory practice led by Advocate BK Singh, with offices in Dwarka (New Delhi) and Vaishali (Ghaziabad). This is what you can expect:

• Methodology explained: what you will get and when.
• Legal uses checked: before you rely on credits.
• Agreements reviewed: ownership, failure risk and maintenance.
• Claims kept accurate: for BRSR and marketing.
• Written fee terms: agreed stage by stage, never linked to the outcome.

Mistakes we see with green credits