India's Green Credit Programme vs Carbon Credits
Are They the Same Thing? No. Here's Why
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Introduction
Since the Ministry of Environment, Forest and Climate Change notified the Green Credit Rules in 2023, one question has surfaced repeatedly in boardrooms and sustainability teams across India: are Green Credits simply a domestic version of carbon credits? The answer is no, and the distinction matters far more than it might appear.
The confusion is understandable. Both are tradeable environmental instruments linked to India's sustainability agenda. Both generate units that companies can buy and sell on designated platforms. But the regulatory foundations, the activities they reward, what they actually measure, and how they can be used are entirely different. Treating them as equivalent creates real risk in compliance, carbon accounting, and public disclosures.
This article explains what each instrument is, how each works, where they overlap, and the key distinctions every sustainability professional in India needs to understand.
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Two Instruments, Two Purposes: The Foundation
The Green Credit Programme (GCP) is a domestic voluntary market mechanism notified under the Green Credit Rules, 2023, which were issued under the Environment Protection Act, 1986. It is administered by the Indian Council of Forestry Research and Education (ICFRE) under the oversight of the Ministry of Environment, Forest and Climate Change (MoEFCC). The GCP rewards entities, including individuals, industries, local bodies, and farmers, for undertaking defined environmental activities across nine categories: tree plantation, water management, sustainable agriculture, waste management, air pollution reduction, mangrove conservation, ecomark label adoption, sustainable building, and wetland conservation. The unit generated is called a Green Credit.
A carbon credit is a fundamentally different instrument. It represents one metric tonne of carbon dioxide equivalent (CO2e) that has been reduced, avoided, or removed from the atmosphere, verified against a recognised standard. In India, the domestic framework for carbon credits is the Carbon Credit Trading Scheme (CCTS), notified under the Energy Conservation Act, 2001 as amended by the Energy Conservation (Amendment) Act, 2022. The CCTS is administered by the Bureau of Energy Efficiency (BEE) under the Ministry of Power. Indian Carbon Credits (ICCs) issued under the CCTS are distinct from voluntary carbon credits issued under international standards such as Verra's Verified Carbon Standard (VCS) or the Gold Standard.
The most important structural difference is what each instrument measures. Green Credits are activity-based: a company earns them by completing a qualifying environmental action. Carbon credits are emissions-based: a project earns them by demonstrating a verified, quantified reduction in greenhouse gas emissions against a baseline. These are not the same thing, and the same activity may or may not qualify for both.
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How Each Works: Mechanism, Measurement, and Market
How Green Credits are generated and traded?
Under the GCP, an eligible entity undertakes an approved environmental activity and submits an application with supporting documentation to the designated administrator. An empanelled verifier assesses the activity against the prescribed norms. Once verified, Green Credit units are issued and recorded in the GCP registry. These credits are then tradeable on a domestic Green Credit Market, to be hosted on a recognised exchange platform under MoEFCC oversight. Critically, the unit of measurement in the GCP is not a tonne of CO2. For tree plantation, for example, one Green Credit is issued per tree planted that meets the specified norms, not per tonne of carbon sequestered by that tree. This is the clearest illustration of why Green Credits are not carbon credits: the GCP measures completion of an activity, not the greenhouse gas outcome of that activity.
How carbon credits are generated and traded?
Carbon credit generation requires a project developer to implement a qualifying emissions-reduction activity, establish a baseline scenario representing what emissions would have been without the project, and measure actual project-scenario emissions using an approved methodology. The difference between the baseline and the project scenario, measured in CO2e, is the credit. The project undergoes third-party validation before implementation and verification after a crediting period to confirm actual emissions reductions. Under the CCTS, BEE will designate consumers in notified energy-intensive sectors, including aluminium, cement, chlor-alkali, fertilisers, iron and steel, paper, petrochemicals, petroleum refineries, and textiles. These entities will receive or be required to surrender Indian Carbon Credits (ICCs) based on their performance against sector-specific baselines. Trading will occur on recognised energy exchanges. Companies in voluntary markets may also engage international standards such as VCS or Gold Standard, which have their own methodologies and registries entirely separate from the GCP.
Where the two instruments overlap and where they do not?
Some activities could in principle generate both Green Credits and carbon credits, but only if separately verified under both frameworks using their respective methodologies. Tree plantation on degraded land, for example, could generate Green Credits under the GCP (one credit per qualifying tree) and carbon credits under an afforestation or reforestation methodology such as AMS-III.AR under the Clean Development Mechanism or VM0047 under Verra, provided the project meets both sets of criteria independently. The two schemes have separate registries, separate administrators, separate verification requirements, and separate trading platforms. Participation in one does not create eligibility under the other. It is also worth noting that the GCP's nine activity categories include several that have no straightforward carbon credit equivalent. Ecomark label adoption, for instance, rewards companies for obtaining a government-issued environmental label for consumer products. This is a regulatory compliance and product standard activity, not an emissions-reduction project, and it does not generate any greenhouse gas outcome that could underpin a carbon credit under any recognised standard.
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What This Means for Your Business?
Do not use Green Credits to meet emissions reduction targets
Green Credits cannot be used to offset or reduce greenhouse gas emissions in corporate carbon accounting under the GHG Protocol Corporate Standard (WRI/WBCSD), SBTi criteria, BRSR disclosures, or any other recognised emissions reporting framework. They are not emissions-quantified instruments. A company that purchases Green Credits and counts them as Scope 1, Scope 2, or Scope 3 reductions is making an unsupported disclosure that will not survive audit, investor scrutiny, or regulatory review.
Clarify your objective before choosing an instrument
If your objective is to demonstrate environmental stewardship through defined local actions such as tree plantation or water conservation, the GCP is the appropriate mechanism. If your objective is to offset verified greenhouse gas emissions as part of a carbon neutrality or net zero claim, you need verified carbon credits under a recognised standard, whether domestic under the CCTS or international under VCS, Gold Standard, or equivalent. These are different strategic choices with different verification requirements, and they should not be selected interchangeably.
Track CCTS implementation timelines if you are in a designated sector
BEE is in the process of operationalising the CCTS, including finalising baseline methodologies and trading infrastructure for the nine notified sectors. Companies in aluminium, cement, steel, and other designated industries should monitor BEE notifications closely, as compliance obligations under the CCTS will be mandatory, not voluntary, and will require a level of emissions measurement and verification that goes well beyond current BRSR reporting requirements.
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Conclusion
India's Green Credit Programme and the Carbon Credit Trading Scheme are both serious policy instruments, but they address different environmental problems, use different units of measurement, and serve different regulatory and commercial purposes. Conflating the two is not a minor terminology error: it leads to compliance gaps, inaccurate disclosures, and commitments that cannot be substantiated.
As both schemes develop and India's environmental market infrastructure matures, the boundaries between activity-based environmental credits and emissions-based carbon credits will be defined with increasing legal and regulatory precision. Companies that understand the difference now will be better placed to participate in both markets correctly and to make environmental claims they can actually defend.
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Frequently Asked Questions
What is India's Green Credit Programme and how does it work?
The Green Credit Programme is a voluntary domestic mechanism notified under the Green Credit Rules, 2023 (Environment Protection Act, 1986), administered by ICFRE, which issues tradeable Green Credit units to entities that complete qualifying environmental activities across nine defined categories.
Are Green Credits the same as carbon credits in India?
No: Green Credits are activity-based units that reward completing defined environmental actions, while carbon credits represent a verified metric tonne of CO2 equivalent reduced or removed, and the two operate under separate laws, registries, and trading platforms.
Can a company use Green Credits to offset its carbon emissions or meet net zero targets?
No: Green Credits are not recognised as emissions-quantified instruments under the GHG Protocol, SBTi, BRSR, or any other accepted carbon accounting framework, so using them to claim emissions reductions or offsets is an unsupported disclosure.
What is the Carbon Credit Trading Scheme (CCTS) in India?
The CCTS is India's domestic carbon market framework notified under the Energy Conservation (Amendment) Act, 2022, administered by the Bureau of Energy Efficiency, which will issue Indian Carbon Credits to designated consumers in energy-intensive sectors based on verified performance against sector emissions baselines.
Can the same activity generate both Green Credits and carbon credits?
In principle yes, but only if the activity is separately verified under both frameworks using their respective methodologies and criteria, since the two schemes have entirely independent registries, administrators, and verification requirements.
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