Green Credit Scheme

Context: The government’s proposed ‘market’ scheme seeks to foster sustainable living by offering incentives for a range of activities such as afforestation, water conservation, and waste management. This will be achieved by generating ‘green credits’ as a means of encouragement.

Green Credit Scheme

About the scheme

  • The Ministry of Environment, Forest and Climate Change has issued the draft ‘Green Credit Programme Implementation Rules 2023’ under the Environment Protection Act of 1986, marking a significant step towards integrating environmental conservation with economic incentives.
  • This draft proposes the generation and trading of green credits, a key component of the Mission LiFE initiative.

Highlights of the Green Credit Scheme

Green Credits: Green Credit means a singular unit of an incentive provided for a specified activity, delivering a positive impact on the environment

Generating Green Credits for Environmental Actions

  • Individuals and organizations can generate “green credits” by actively participating in various initiatives. These initiatives include afforestation programs, water conservation efforts, etc. 
  • By engaging in these activities, individuals and organizations not only contribute to environmental sustainability but also earn credits that can be traded for monetary value.

A Market-Based Approach

  • It adopts a competitive market-based approach, aiming to motivate not only individuals and communities but also private sector industries, companies, and other entities to fulfill their environmental obligations and acquire Green Credits.
  • Creating Demand for Green Credits
  • To ensure the effectiveness of the Green Credit Scheme, the government plans to enact laws or regulations that incentivize companies and organizations to purchase green credits for trading.

Diverse Sectors for Green Credit Generation

  • The draft identifies eight sectors for green credit generation, each playing a vital role in environmental sustainability.
  • The eight sectors are: increasing the country’s green cover through tree plantation and related activities, promoting water conservation and harvesting, implementing water-use efficiency measures, adopting natural and regenerative agricultural practices, undertaking land restoration, improving soil health and nutritional value of food produced, managing waste effectively, and reducing air pollution.

Special Provisions for Conservation and Restoration

  • The draft also includes specific provisions for mangrove conservation and restoration-based green credits.
  • Recognizing the significance of mangroves in protecting coastal ecosystems, the inclusion aims to promote measures for their conservation and restoration.
  • The eco-mark-based green credits encourage manufacturers to obtain eco-mark labels for their goods and services and sustainable building and infrastructure-based green credits promote the construction of environmentally-friendly structures using sustainable technologies and materials.

Establishing the Trading Platform

  • The establishment and operation of the trading platform for green credits will be guided by the guidelines issued by the green Credits administrator, with the approval of a steering committee.
  • A trading service provider accredited by the administrator will be responsible for establishing the trading platform in accordance with the approved guidelines.
  • This ensures a transparent and efficient mechanism for trading green credits.
  • Incentivizing Individual and Community Actions
  • Inclusion of regulatory provisions to account for individual and community actions alongside corporate and business actions. This move aims to incentivize and reward individual and community efforts toward environmental conservation.

Phased Implementation

  • The mechanism will be implemented in phases. Initially, 2-3 activities from eight sectors are being considered for piloting the Programme. Later, more activities will be added from the selected sectors. 


The proposed Green Credit Scheme introduced by the Environment Ministry represents a significant step towards promoting sustainable living and environmental stewardship. By incentivizing a range of activities through the generation and trading of green credits, the government aims to encourage individuals, communities, and private sector entities to actively participate in environmental initiatives. 

Mains Practice Question

Q. The ‘Green Credit Scheme’ initiative aims to encourage climate-conscious action from all the stakeholders to collectively reduce carbon footprints. Discuss. (10 marks; 150 words)

Previous Year Question (2016)

Q. Which of the following best describes/ describe the aim of the ‘Green India Mission’ of the Government of India?

1. Incorporating environmental benefits and costs into the Union and State Budgets thereby implementing the `green accounting’.

2. Launching the second green revolution to enhance agricultural output so as to ensure food security to one and all in the future.

3. Restoring and enhancing forest cover and responding to climate change by a combination of adaptation and mitigation measures.

Select the correct answer using the code given below.

(a) 1 only

(b) 2 and 3 only

(c) 3 only

(d) 1, 2 and 3

Scroll down for answer









Answer: (c)


2 thoughts on “Green Credit Scheme

    1. You’re welcome!

      If you have any other questions or requests, please don’t hesitate to ask.

      I wish you all the best in your preparation for the UPSC Civil Services Examination!

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