Before rolling out Green Credits, Environment Ministry sidestepped Law queries

It flagged this to the Environment Ministry twice, advising it to “examine the legality of the proposed Green Credit Rules in consultation with the Department of Legal Affairs”. While the Legislative Department drafts laws for ministries, the Department of Legal Affairs advises them on legal matters.

Records show that the Environment Ministry proceeded with the programme without the suggested legal review, notifying it shortly before Prime Minister Narendra Modi’s public announcement at the Dubai climate conference in December 2023.

It justified its decision by arguing that the Environment Protection Act (EPA), 1986 — the parent law under which the Green Credit Rules were notified — permits the planning and execution of a nationwide programme for the prevention, control, and abatement of environmental pollution.

What is the GCP?

Under the programme, individuals, communities and private industries that engage in environment-positive actions get tradable ‘green credits’. Such actions could include increasing forest cover, water management, and sustainable agriculture. These credits can then be traded on a domestic platform to meet legal obligations such as compensatory afforestation for industrial or infrastructure projects.

Since its launch, 384 entities, including 41 PSUs such as Indian Oil Corporation Ltd, Power Grid Corporation of India Ltd, and National Thermal Power Corporation Ltd, have registered for participation under the scheme.

The to and fro

According to records obtained under the RTI Act, Environment Minister Bhupender Yadav approved the final draft of the Green Credit Rules on August 18, 2023, before sending it to the Law Ministry’s Legislative Department for vetting.

On October 5, 2023, the Legislative Department, apart from suggesting tweaks from a drafting angle, noted, “Perhaps, the provisions of the Environment (Protection) Act, 1986, do not support such business objects or activity and rules to be framed for the purposes. In view of the above, the administrative ministry may examine the legality of the proposed Green Credit Rules in consultation with the Department of Legal Affairs.”

Explaining the rationale, a highly placed source in the Law Ministry drew a parallel with the Energy Conservation Act, which was amended in 2023 to enable the creation of a carbon credit trading scheme after the Law Ministry made similar observations on the market-linked mechanism.

In response to the Law Ministry’s suggestion, the Environment Ministry argued that the GCP simply supported environmental protection and improvement, placing it well within the scope of the EPA. In response to the Legislative Department’s comments, a scientist-level officer in the environment ministry noted in internal files on October 10, 2023, that the EPA “provides power to the central government for planning and execution of a nationwide programme for prevention, control and abatement of environmental pollution”.

In the same correspondence chain, a director-level officer in the environment ministry noted that observations made by the Law Ministry have been “duly considered”. “Matter has been discussed. Considering the importance of launch and early roll out for implementation of the Green Credit Programme, it is proposed to notify the Green Credit Rules in the official gazette,” the file noting states.

The Environment Minister approved the draft rules on October 12, 2023, and they were published on October 13.

The question of the legality of GCP Rules came up again on January 4, 2024. While reviewing the Environment Ministry’s draft notification on the methodology for tree plantation-based credits, a pilot component of the GCP, the Legislative Department noted it had no record of advice from the Department of Legal Affairs. To this, on January 29, 2024, the Environment Ministry simply referred to its submissions from October 10, 2023.

Responding to the queries by The Indian Express on whether it got the GCP rules examined by the Legal Affairs department, the Environment Ministry said, “LD, MoLJ (Legislative Department, Ministry of Law and Justice) had suggested for examination of the legality of the proposed GCR in consultation with DoLA (Department of Legal Affairs). It is to be noted that the observations of LD, MoLJ were duly considered and fully addressed.” The ministry did not expand further.

It added that “the Rules were notified in line with MoEF&CC’s mandate to plan and implement national programs for preventing, controlling, and reducing environmental pollution”.

Regarding concerns over the creation of a market-based mechanism under the EPA, it said, “In so far as market-based mechanisms are concerned, these already exist, such as the Extended Producer Responsibility (EPR) framework under waste management rules where EPR certificates generated by recyclers are purchased by producers to meet their EPR obligations. This incentivises environmental actions in the field of waste management.”

The Ministry of Law and Justice did not respond to detailed queries by The Indian Express.

Officers in the Law Ministry, who did not wish to be named, told The Indian Express that irrespective of what mechanism was operational for the waste sector under EPA, the Environment Ministry ought to have addressed concerns regarding the legal examination of the Green Credit Rules.

Why the Law Ministry’s concerns are important

Prakriti Srivastava, a retired Indian Forest Service officer and former Principal Chief Conservator of Forest, Kerala, said that “the Environment Protection Act (under which the Rules were notified) in no way provides for a business model for exchange of green credits for compensatory afforestation”.

“This seems to have been clearly pointed out by the Law Ministry. If EPA had to be used, it should have been amended following all due process, including parliamentary approval, and subsequently, preparing Rules to enable the business model for GCP as authorised now,” Srivastava said.

On the ministry’s comparison of Green Credit Rules with the EPR framework, senior advocate Sanjay Upadhyay said, “The comparison of extended producer responsibility framework and green credit is an unfair comparison and almost amounts to comparing apples with oranges. This is because EPR is not voluntary but obligatory and the green credit program is a voluntary program.”

(With inputs from Damini Nath)