Green Credits and Carbon Credits

On June 27th and 28th this year Government has released gazette notifications announcing Carbon Credits Trading System and the Green Credit Program respectively. These are steps in the right direction.

Certain activities are listed in the notification which can earn Green Credits. These are tree plantation, water conservation, sustainable agricultural practices, waste management, air pollution reduction, eco marking of products, mangrove conservation and green building construction. Additionally, these activities can also earn carbon credits. Green Credits can be traded like Carbon Credits. The proposed Steering Committee and the Administrator will develop the details.

This is a wonderful initiative. ?The Green Credits program is being introduced to leverage a competitive market-based approach to incentivize voluntary environmental actions of various stakeholders. As the notification says "apart from incentivizing individual/community behavior, the Green Credit Program will encourage private sector industries and companies as well as other entities to meet their existing obligations stemming from other legal framework, by taking actions which are able to converge with activities relevant for generating or buying Green Credits".

The stated objectives of the program are two. Creating a market-based mechanism for providing incentives in the form of Green Credits to individuals, FPOs, Cooperatives, forestry enterprises, sustainable agriculture enterprises, urban and rural local bodies, private sectors, industries and organizations for environment positive actions.

The program is a very big one which can have a huge impact and create incentives to farmers, communities, villages and others to follow sustainable agricultural practices.? The notification gives 60 days time for stakeholders to give their comments.

Here are a few suggestions from my side.

1. The notification says that each entity has to register itself to accumulate and trade in carbon credits. It is not clear if each farmer has to register himself/herself in the system. Only farm owners can register or the tenant farmers and sharecroppers can also register? This can happen only if there is a simple way for the farmer to register himself on an electronic platform. It is very important to create electronic records of each farm through geotagging and geo fencing. Integrity of farm level data is to be ensured. Blockchain technology may be of help in this. Although the notification says that electronic platforms will be developed let us not underestimate the complexity of this task. Digitization of land records, including the tenant farmers and sharecroppers in this program are essential for the success of this program at farmer level.
2. The list of eligible activities to generate green credits needs a lot of detailing, especially the one related to sustainable agriculture. How do we incentivize positive behavior? If a farmer switches from water guzzling transplanted rice to growing Soybean, for example, he should get green credits just like a farmer switching from transplanted rice to Direct Sown Rice since both are saving water, even if the cultivation uses chemical inputs. Reduction of water use and chemical use should be incentivized separately.? Such nuances have to be developed. Obviously non-chemical cultivation might generate more green credits so that the farmers find it more beneficial.
3. Farm energy is a huge area for attention. This is missing in the list. There is a thought prevailing that Carbon Credits system would not succeed unless burning of fossil fuel is stopped. The same applies to agriculture too. With increasing trend of mechanization of farms consumption of diesel and petrol on the farms to run machines, pump sets and others will keep going up. We have to support introduction of renewable energy-based machines on the farm through financial incentives, the green credits being one. ??A farmer who switches from using fossil fuel to renewable energy to run his machines should be able to generate green credits.
4. If private sector makes investments in developing technologies, products, agronomic practices and farmer education services that promote climate resilient agriculture they should be able to get Green Credits. ?Investment in such building blocks by private sector which will help in scaling up quick adoption. The eco marking system for product should also include seed varieties and biotech traits that reduce environmental footprint of agriculture.
5. Price of Green Credits will determine the benefit for the farmer. Price is a function of demand and supply. While initially the price may be rewarding due to limited supply once the supply steps up the price may fall as happened with Carbon Credits in the global markets. Sufficient attention has to be paid to generate demand for Green Credits within the country as it seems from the notification that they will be traded within India.
6. Waste management is listed as one of the activities that can generate Green Credits. Agricultural Waste Management has to be included in this. There is a good opportunity to convert agricultural waste (Farm waste) into valuable materials and such enterprises in rural areas should be able to generate Green Credits. This will help the farmers in turn to capture some value from the waste generated on the farms and at the same time contribute to the improvement of environment.
7. It is very heartwarming to see the presence of private industry in the Steering Committee composition, it is also important to facilitate private sector investments in this space through specific policy support, all of which may not be within the purview of the Steering Committee. There might be a need for a dialogue with the private industry in agricultural inputs, machinery and output businesses to understand their needs and address them.
8. A certain amount of fund must be allocated under this program towards outreach and education of farmers and other stakeholders who are expected to generate Green Credits.

Obviously benchmarking will be done in each of the areas. Verifiers and Auditors proposed in the notification will play a very key role. I presume their cost will be borne by the farmers and FPOs. It is important to keep such services affordable for the farmer.

This program can benefit farmers, communities, villages and FPOs and at the same time improve the environmental impact of our agriculture. It is very important to make it a success.

Farmer Centric approach

Whatever we want to do should have farmer at the center. Life must be made easier for him/her and any new introduction we made should be simple enough for him/her to understand and implement easily. Additionally, it should be profitable for him/her.

Easily accessible and easy to handle electronic platforms for managing and trading in carbon credits and green credits by individual farmers are to be created at scale. Coupled with massive education and awareness creation among farmers this could be a game changer.

Farmer profitability is key to scaling up sustainable agriculture. Economics of CRA must be favorable to the farmer and improve his profitability. ?A farmer is an entrepreneur. He / She has to make higher profits from the small piece of land he has got. Let us not think that it is his/her responsibility to follow sustainable practices just for the sake of environment. It is our responsibility to make it work for his / her benefit which will ensure quick adoption by him/her.

Efficient markets are essential to scale up adoption of CRA. ?Markets for his/her output and markets for green and carbon credits must be efficient, free and linked directly, with the farmer without interventions by middlemen and Govt. ?

We need a national level strategy with full agreement by each state and political party to promote and scale up CRA. ??This is the time to come together and take actions as we are battling extremities like floods and droughts. Lest it should be too late.