Govt Links Green Credits for Tree Plantation to Survival, Canopy Cover

The government has replaced the system of awarding green credits immediately based on the number of trees planted with granting credits after five years of restoration of degraded forest land, once 40% canopy cover is achieved.

The environment ministry revised the methodology for calculating green credits for tree plantation, first notified on February 22, 2024, through a new notification issued on August 29. The credits are rewarded under the Green Credit Programme.

Green credits are rewards given for taking voluntary steps to protect the environment. Individuals, communities and companies can earn them through activities like planting trees, restoring mangroves, saving water, practising sustainable farming or managing waste in an eco-friendly way.

Under the new system, credits will be awarded only after a minimum of five years of restoration work and once the land achieves at least 40% canopy density. One credit will be given for each new tree that has survived beyond five years.

The 2024 notification had allowed credits immediately after the plantation was completed and certified, based simply on the number of trees planted. It had said that green credits "shall be calculated at the rate of one green credit per tree grown… subject to a minimum density of 1,100 trees per hectare".

Plantation was to be carried out by the Forest Department within two years of payment made by the applicant.

In contrast, the 2025 notification specifies that "green credits shall be calculated based on the vegetation status, including the change in the canopy density and the number of surviving trees".

This makes the methodology outcome-based, linking credits to actual ecological improvement rather than just plantation activity.

Under the 2024 framework, green credits could be exchanged for compensatory afforestation and used for reporting under corporate social responsibility and environmental, social and governance indicators.

The 2025 notification makes them non-tradable and non-transferable, except between a holding company and its subsidiaries. It allows a one-time exchange for compensatory afforestation, CSR obligations or plantation requirements linked to project approvals. Once exchanged, the credits are extinguished and cannot be reused.

The new methodology also introduces a verification system.

Applicants must pay a verification fee and submit a claim report, which will be assessed through designated agencies before credits are issued.

This contrasts with the 2024 framework, where the Forest Department itself carried out plantation and provided certification directly to the administrator -- the Indian Council of Forestry Research and Education.

The government has clarified that projects already initiated under the 2024 notification, where applicants deposited payments through the green credit portal, will continue to be governed by those provisions.

Future claims and calculations, however, will be governed by the revised methodology notified on August 29.