NEW DELHI – The Union Environment Ministry has introduced a significant overhaul of its Green Credit Programme (GCP) to ensure more rigorous and verifiable environmental outcomes. Under new rules, green credits for tree plantation will now be awarded only after a minimum of five years, contingent on the trees’ survival and the successful development of a 40 percent minimum canopy density.
The move marks a key shift from the initial, less stringent methodology and aims to tie the incentives directly to the tangible success of afforestation efforts. The revised rules, which came into effect on August 29, replace the previous benchmark of awarding credits based on a minimum density of 1,100 trees per hectare within two years.
Non-Tradable Credits with an Exception
The tweaked norms also introduce a crucial change to the tradability of these credits. While the original GCP framework was designed to facilitate a market-based trading system for green credits, the new rules stipulate that credits earned for tree plantation will be non-tradable and non-transferable, except between a parent company and its subsidiaries.
However, companies can still use these credits once to fulfill legal obligations, such as for compensatory afforestation, corporate social responsibility (CSR) requirements, or other mandatory tree-planting activities. After a single such exchange, the credit is considered used up.
Rewarding Long-Term Restoration
According to the new government notification, one green credit will be awarded for each new tree that survives for more than five years and contributes to the 40 percent canopy density. The credit will be awarded only after evaluation and verification by designated agencies.
The GCP, launched by Prime Minister Narendra Modi in November 2023 at the UN Climate Conference in Dubai, aims to encourage voluntary environmental protection from companies and individuals. So far, over 57,000 hectares of degraded forest land have been registered under the program.
The revised methodology reflects a push for more substantive and long-term environmental restoration. By linking credit issuance to the survival and growth of the trees, the government is incentivizing not just planting, but genuine ecological recovery. The credits may also be used by companies for reporting under environmental, social, and governance (ESG) frameworks, allowing them to showcase their sustainability efforts.