Financing Global Transition Through Green Bonds

Green bonds were first issued by the World Bank in 2008 to push for private sector participation in projects contributing to a better environment and mitigating the risks of climate change. The Intergovernmental Panel on Climate Change (IPCC), which includes more than 1,300 scientists from the United States and other countries, forecasts a temperature rise of 2.5 to 10 degrees Fahrenheit over the next century.

Hence, it was essential to have an alternative mode of financing that would attract investors and global institutions’ attention towards projects, specifically catering to environment friendly projects thereby also ensuring that governments globally achieve their commitments in the reduction of emissions of CO2 and greenhouse gases.

The Indian government, in particular, has introduced measures and brought out amendments to regulations to encourage the construction of renewable energy projects. However, the evolution and growth of environment focused projects is mostly dependent on the modes of financing available in the market. In this article, we shall review primarily the laws applicable to green financing.

Types of Green Bonds

Green bonds are regular bonds with the distinction that the money raised from the investors must only be used to finance projects that are environmentally friendly. More precisely, green bonds finance projects that are aimed at renewable energy infrastructure, energy-efficient buildings, clean transportation, and waste management.

There are primarily four types of green bonds, mainly distinguished based on the collateral or security being provided in the issuance of green bonds:[1]

  • Green ‘Use of Proceeds’ Revenue Bond: These types of green bonds are secured by the projects producing income.
  • Green ‘Use of Proceeds’ Bond: These types of bonds are secured by assets.
  • Green Securitized Bond: These types of green bonds are secured by large pools of assets.
  • Green Project Bond: These types of green bonds are secured by the balance sheet and assets of the project.

 

Green Bond Principles

The voluntary best practice guidelines called the Green Bond Principles (GBP) were established in 2014 by a consortium of global investment banks.[2]

The GBP accentuates the required transparency, accuracy and integrity of information that will be disclosed and reported by issuers to stakeholders. The GBP has four core components, which include:

  1. Proceeds must be used for green projects;
  2. Process adoption for project evaluation and selection;
  3. Maintaining transparency in the management of proceeds; and
  4. Reporting of information pertaining to the use of the proceeds.

The GBP is a framework devised with the goal of accentuating the role that global debt capital markets can play with respect to environmental and social sustainability.

In India, the Securities and Exchange Board of India (SEBI) notified a circular dated May 30, 2017, which provides for the Disclosure Requirements for Issuance and Listing of Green Debt Securities in India, and the definition of a green bond has been given under the circular, which is within the outline of the International Capital Market Association’s GBPs with certain deviations.

Evolution of  Green Bonds in India

India’s first green bond was issued in 2015 for renewable energy projects such as solar, wind, hydro, biomass and power by Yes Bank. In the same year, another leading banking institution, Exim Bank of India, issued a five-year, $500 million green bond, which is India’s first dollar-denominated green bond.

Subsequently, Axis Bank[3] launched India’s first internationally listed and certified green bond and raised $500 million to finance climate change projects and solutions around the globe and use the bond proceeds to promote green energy in urban and rural areas, transportation and what is called ‘green-blue infrastructure’ projects in India and abroad. KPMG provided third-party independent assurance as per the requirements of the GBP (established by the International Capital Market Association). [4]

Regulatory Framework Governing Green Bonds in India

In 2017, the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021 (NCS) defined a “green debt security” (GDS) as debt securities used for funding project(s) or asset(s) falling under any of the following broad categories:

Renewable Energy, Clean Transportation, Sustainable Water Management Systems, Climate Change Adaptation, Energy Efficient and Green Buildings, Sustainable Waste Management, Sustainable Land Use, including Sustainable Forestry and Agriculture, Afforestation, Biodiversity Conservation; and any other categories specified by SEBI.

Issuance of listed green debt securities in India must be in compliance with all the following regulations:

  1. Chapter IX of the SEBI operational circular covers the issue and listing of Non-Convertible Securities (SEBI Operational Circular).
  2. The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR Regulations).
  3. The SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021.

However, there are no specific guidelines mentioned for unlisted green debt securities other than the general requirements for the issuance of unlisted green debt securities.

In the month of February 2022, Finance Minister Nirmala Sitharaman announced in her budget speech that India will issue sovereign green bonds to fund green projects. In FY23, the government will issue sovereign green bonds as part of its borrowing programme. The funds will be used to fund public-sector projects.

In addition to the above, on August 4, 2022, SEBI issued a consultation paper on Green and Blue Bonds as a mode of Sustainable Finance aiming to align with the updated GBP by ICMA and seek public comments on the proposed regulatory framework.

The Ministry of Finance rolled out the Sovereign Green Bonds framework (“Framework”) [5] that has been rated “Medium Green”, with a “Good” governance score by a Norway-based independent second opinion provider, the Center for International Climate Research (CICERO). The issuance of sovereign green bonds will help the Government of India with much needed capital and deploy funds from investors in public sector projects. The investors shall not bear any project related risks. The Government of India shall use the proceeds to finance/refinance projects falling under eligible green projects.

The Framework has provided a list of excluded projects, which include nuclear power generation, landfill projects, hydropower plants larger than 25 MW etc. Any expenditure relating to fossil fuels is excluded. The Green Finance Working Committee, constituted by the Ministry of Finance, will assist in the selection and evaluation of projects. The Framework’s publication will provide much-needed clarity and direction to the government’s initiatives aimed at transforming India into a green economy.

Benefits of Investment in Green Bonds

Green bond investments may lead to sustainable development and achieve the climate change goal, benefitting the environment in the future. Green Bonds will lead to increased funding for emerging sectors such as renewable energy since the Reserve Bank of India has included the renewable energy sector as part of its priority sectors. As a result, banks will have to dedicate a specific portion of their lending book to the priority sector. This will help the credit flow in this sector.

As far as commercial viability is concerned, green bonds typically have a lower interest rate than the loans offered by a commercial bank, which helps to reduce the cost for the issuer or promoter.

Challenges Pertaining to Green Bonds

  1. Green Bonds, especially in the Indian context, are still not very popular as there is a lack of structure and framework and uncertainty about the return on investment.
  2. There are no proper rating guidelines for green bonds or green projects to help investors make their investment decisions and to verify companies’ improvements, which directly impacts the development of the green bond market.
  3. The funds that have diversified investments in various sectors may not find investments in the green sector valuable compared to returns in other non-green projects. There have also been instances where, during the running of the Project, the issuer or promoters have faced queries from the authorities about whether the project falls under the green category or not.

Green Finance

India announced at the COP26 Climate Summit that it will increase its efforts to achieve the goal of net zero carbon emissions by 2070, including doubling its non-fossil energy capacity to 500 gigatonnes. [6] However, there has been growth in green financing in India over the last few years in both the public and private sectors.

It appears that the banks and financial institutions in India are not ready for the green transition as the experience in factoring climate change as a risk factor is not there when undertaking credit appraisals.[7] Even the bond market in India is still evolving, which is confirmed by the fact that green bonds have constituted only 0.7% of the overall bond issuance in India since 2018. More initiatives will be needed from a regulatory perspective to make green bond issuance more attractive by bringing measures that make investments in green bonds attractive as compared to other debt securities in India and in international markets.

Furthermore, as the world’s nations, including the developed world, look to India to lead the global transition, India should take the lead in attracting investments in green finance, which will not only benefit individual investors looking for safe instruments with attractive returns, but will also benefit the country in generating investment.

Leveraging a Healthy Green Bond Market in India

To build a healthy green bond market, one of the most important criteria is to achieve international norms, rules and regulations for green bonds along with a reasonable return on investment. Green financing, as an additional source of funding, must be used by companies and investors to establish projects that reduce the risk of climate change. There is an unprecedented demand for green energy globally, and investments through green financing will become inevitable in the long run.

References:

[1] https://efinancemanagement.com/sources-of-finance/green-bonds

[2] https://www.climatebonds.net/market/best-practice-guidelines

[3] https://cdkn.org/story/feature-india-strengthens-credentials-green-bond-issue#:~:text=The%20Axis%20Bank%20bond%20issue,base%20being%20%27green%27%20investors.

[4] https://home.kpmg/xx/en/home/services/advisory/risk-consulting/internal-audit-risk/sustainability-services/first-green-bond-in-india.html

[5] https://dea.gov.in/sites/default/files/Framework%20for%20Sovereign%20Green%20Bonds.pdf

[6] https://www.outlookindia.com/website/story/india-will-achieve-net-zero-carbon-emissions-by-2070-pm-modis-bold-pledge-at-glasgow-un-climate-summit-cop26/399507

[7] https://www.financialexpress.com/opinion/how-to-get-green-financing-to-take-off/2753083/

 

Image Credits: 

Photo by Towfiqu barbhuiya on Unsplash

Green bonds are regular bonds with the distinction that the money raised from the investors must only be used to finance projects that are environmentally friendly. More precisely, green bonds finance projects that are aimed at renewable energy infrastructure, energy-efficient buildings, clean transportation, and waste management.

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Can Environment Protection and Economic Development Go Hand-In-Hand?

Sustainable development is an organising principle for meeting human development goals while also sustaining the ability of natural systems to provide natural resources and preserve the ecosystem services on which the economy and society depend. It is the duty of the State to implement a coherent and coordinated program in which economic development should not be allowed to take place at the expense of our natural resources.

With the principle of sustainable development in mind, the Hon’ble Supreme Court (“Hon’ble SC”) issued a decision on 03.06.2022 in the case In Re: T.N. Godavaraman Thirumulpad vs. UOI & Others[1] to categorically lay down the extent of Eco-Sensitive Zones (“ESZ”) that surround protected forest lands. Strict rules have been laid down with the intention of ensuring that development and preservation of the environment go hand in hand.

What is Eco-Sensitive Zone (ESZ)?

Fragile areas surrounding protected forest lands are known as eco-sensitive-zones (“ESZ”), otherwise known as “shock-absorber” or “transition zones,” and the extent of the ESZ for each protected forest land is declared by the Ministry of Environment, Forestry and Climate Change (“MoEF&CC”). The ESZ for each protected forest is a vital element for preserving and protecting the environment from hazardous activities.

In the year 2002, a ‘Wildlife Conservation Strategy-2002’ was adopted in the meeting of the National Board for Wildlife, wherein lands falling within 10 kms of the boundary of each protected forest land were to be declared ESZ and the Chief Wildlife Wardens of every State were requested to list out areas that fall within 10 kms of the boundaries of the protected forest lands. However, in response, several State Governments raised issues over the applicability of the 10 km rule as certain protected forest lands were located in urban areas, which had an uninterrupted flow of development.

Guidelines For Eco-Sensitive Zone (ESZ)

 

Taking into account the concerns raised by the state governments, the MoEF and CC issued a guideline on February 9, 2011 to ensure that development does not come at the expense of the environment and vice versa.

 

In a nutshell, the rules laid down in the Guidelines specifying the extent of each ESZ are as follows:

  • As provided in the Wildlife Conservation Strategy, 2002, the extent of an ESZ can go up to 10 kms.
  • In areas with delicate ecosystems and connecting habitats that suit the needs of a full suite of native animals and plants and are beyond 10 km in width, these shall be included in the ESZ.
  • In the context of a particular Protected Area that is specifically designated by the State Government, the area of the ESZ could be of variable width and extent.

Irrespective of the above guidelines, issues were still being raised before the Hon’ble Supreme Court, seeking modification of the restrictions pertinent to ESZ.  

Observations of Hon’ble Supreme Court

To put the question of ESZ to rest once and for all, the Hon’ble SC in the case In Re: T. N. Godavaraman Thirumulpad vs. UOI & Other, passed an order (“June Order”) that extensively dealt with ESZ and the activities permitted therein. The relevant directions that were laid down in the June Order are as follows:

  1. Each protected forest land must have an ESZ of at least 1 km measured from the protected forest land’s demarcated boundary.
  2. When the ESZ that is already prescribed by law goes beyond 1 km, the wider margin of the ESZ shall prevail.
  3. The minimum width of the ESZ may be diluted with the approval of the Central Empowered Committee, MoEFF & CC, and the Hon’ble SC.
  4. A 10 km buffer zone (ESZ) is to be implemented for any sanctuary or national park for which no proposal has been submitted.

It is noteworthy to mention that the Hon’ble Supreme Court had also observed that the above-mentioned directions may not be feasible for all sites, such as Sanjay Gandhi National Park in Mumbai (“SGNP”), Gandhi National Park in Mumbai (“GNP Mumbai”), and Gandhi National Park in Chennai (“GNP Chennai”), as these sites have gone through tremendous development in close vicinity and are located in urban areas.

However, because the Hon’ble Supreme Court’s observations on special cases were left vague, causing uncertainty, the aforementioned order had a disastrous effect on the Mumbai real estate industry, halting construction in areas surrounding the SGNP and directing local authorities to cancel Commencement Certificates issued to builders.

Subsequently, the CREDAI-Maharashtra of the Housing Industry had filed an Interim Application[1] before the Hon’ble SC, seeking clarification on the applicability of the 1 km rule in special cases such as SGNP. The Hon’ble SC had clearly set forth in the Interim Order that the directions laid down in the June Order are not applicable to special cases as a 1 km wide “no development zone” may not be feasible in all cases. Further, the Hon’ble SC mentioned that specific exceptions with regard to SGNP and GNP Mumbai had already been made in the June Order.

 

Present Situation of Guindy National Park, Chennai

GNP, Chennai, is a habitat for faunal species and the city’s vital lung, with a land area of 270.57 hectares (ha) and was designated as a Forest Reserve land in 1978, when it was known as the “Guindy Deer Park.” Right from the begining, GNP has been a tourism attraction point surrounded by numerous buildings such as the Gandhi Mandapam, IIT, Cancer Institute, Rajaji Memorial Historical Monument, etc. All of this being a source of pride, GNP has recently become a source of contention in discussions about sustainable development.

On application of the aforementioned Interim Order of the Hon’ble SC, it can be presumed that the ‘1km rule’ laid down in the June Order is inapplicable to GNP Chennai as it has been carved out as a “Special Case”. The relevant portion of the June Order is extracted hereinbelow, for ease of reference.

“We have considered CEC’s recommendation that the ESZ should be relatable to the area covered by a protected forest but the Standing Committee’s view that the area of a protected forest may not always be a reasonable criterion also merits consideration. It was argued before us that the 1 km wide “no development zone” may not be feasible in all cases and specific instances were given for Sanjay Gandhi National Park and Guindy National Park in Mumbai and Chennai metropolis respectively which have urban activities in very close proximity. These sanctuaries shall form special cases.”

However, in pursuance of the June Order, a PIL[2] has been filed by a Social Activist before the Hon’ble High Court, Madras seeking to demolish the headquarters of the Tamil Nadu Forest Department that has been constructed close to GNP Chennai with the alleged intention to protect and preserve the habitat.

An affirmation of the June Order by the Hon’ble High Court, Madras, would therefore dispel all ambiguity with regards to the rules applicable to GNP Chennai and provide the necessary clarification on what path the real estate industry in Chennai could embark on.

References: 

[1] W.P. (Civil) No. 202 of 1995 dated 03.06.2022

[1] I.A. No. 110348 of 2022 dated 23.09.2022.

[2] W. P. No. 27372 of 2022

Image Credits: Photo by Amit Jain on Unsplash

The Hon’ble Supreme Court’s observations on special cases were left vague, causing uncertainty and it had a disastrous effect on the Mumbai real estate industry, halting construction in areas surrounding the Sanjay Gandhi National Park in Mumbai (“SGNP”) and directing local authorities to cancel Commencement Certificates issued to builders.

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Green Intellectual Property

The damage to the environment has over the last decade or so been a topic of paramount importance. Changes to the same can now be felt closer to home rather than in some remote corner of the globe. The Intergovernmental Panel on Climate Change (IPCC) released a report in 2021 stating that climate change is “widespread, rapid, and intensifying”. We are at the precipice of an important stage in the history of our planet. Never before has technology reached the levels that we have now. It is time to optimally harness technology to protect the environment to sustain future generations. With the literature currently in the media, there is definitely awareness of the damage being caused.

Green technology and innovation thereof will be of paramount importance, and Intellectual Property (IP) rights play a major role. The term ‘Green Intellectual Property’ refers to the protection of innovations in the field of green technology. The UN Rio Declaration on Environment and Development of 1992 stated that Green Technology means “environmentally sound technologies that protect the environment, are less polluting, use all resources in a more sustainable manner, recycle more of their wastes and products, and handle residual wastes in a more acceptable manner than the technologies for which they were substitutes“.

WIPO is playing a huge role in the acceleration of Green IP through WIPO Green (https://www3.wipo.int/wipogreen/en/). “WIPO GREEN is an online platform for technology exchange. It supports global efforts to address climate change by connecting providers and seekers of environmentally friendly technologies.”

India, with a huge focus on agriculture, could see smart agriculture come to the forefront. We could also see the rise of water and soil conservation mechanisms, soil re-carbonization and carbon sequestration, etc. In fact, since 2016, over half of the patents granted in India were related to green technologies. In sheer numbers, 61.186 patents were granted in this field, and over 90% of these technologies addressed waste management and alternative energy production methods.[1]

Green IP is likely to lead to the rise of a huge amount of innovation. With innovation comes patent protection. Secrecy may be maintained to maximise market position for innovative technologies that will result in the rise of trade secrets. The aesthetic appearance of new innovations will come under the ambit of protection of design rights. Design rights may also be a valuable right as the use of 3D printing grows as a potentially more sustainable manufacturing technique. The rise of Green IP will also result in the rise of certified trademarks. Software and data evaluation will also play a decisive role in improving existing technologies in an environmentally friendly way. We will also see the rise of technology transfer licensing agreements as companies look to leverage technology developed by others to their advantage. Thus, the importance of Green IP will percolate to an increase in IP protection as well.

For those who are trailblazers in the field, having an IP checklist and an IP strategy will be of importance. Apart from this, the Indian government may also need to look at more subsidies and rebates for the development of Green IP. In a recently published report, Green Future Index 2022, India was ranked among a contingent labelled as “climate laggards”. The country’s COVID-19 recovery plan favours traditional industries, which is hampering the move to greener policies.

Nevertheless, subsidies in official fees for start-ups and MSME’s have pushed these industries to protect their intellectual property. Such a change can also be effected with rebates for the filings for Green IP. With the problems brought about by damage to the environment being closer to home, it is time for India to be at the forefront of the development of Green IP.

References:

[1] https://timesofindia.indiatimes.com/india/every-2nd-patent-granted-since-2016-relates-to-green-tech-most-linked-to-waste-alternative-energy/articleshow/89420047.cms

Image Credits: Photo by JudaM from Pixabay 

For those who are trailblazers in the field, having an IP checklist and an IP strategy will be of importance. Apart from this, the Indian government may also need to look at more subsidies and rebates for the development of Green IP.

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The draft EIA notification, 2020: what went wrong?

India has witnessed consistent and rapid environmental degradation since the past 50 years which can be attributed to the depletion of forests, vehicular emissions, use of hazardous chemicals, improper disposal methods and various other undesirable human activities.  Incidents such as the Bhopal gas tragedy and the LG Polymers gas leak incident have accentuated the seriousness of the matter and the need for introspection and rectification as well as timely action. Implementation of regulatory norms to curb pollution may seem plausible, but it is even more crucial to check whether industrial units and other polluting entities are complying with the safety norms and standards laid down to check the adverse impact of their operations. In that light, The draft Environment Impact Assessment (EIA) Notification is bound to suffer implementational challenges and demands thorough revision to meet the environmental, developmental and sustainability parameters.

 

Concatenation of EIA in India

The current environmental laws seek to strike a balance between ‘ecology’ and ‘economy.’ The EIA framework is the practical aspect that guides towards striking this balance. Environmental Clearance (EC) is one of the most important features of an EIA framework. It refers to the process of assessing the impact of planned projects on the environment and people with an aim to abate/minimize the consequent environmental pollution. The clearance is mandatory of areas that are ecologically fragile, regardless of the type of project. 

The first EIA notification was notified in the year 1994, however, it covered only a few industries, leaving many out of the scope of impact assessment. In order to reflect upon the shortcomings of the 1994 framework, it was updated as EIA notification 2006[1].

However, the system curated by the EIA notification 2006 has been a far cry from perfect. Over the 15 odd years of its implementation, there have been quality issues with respect to the EIA reports,[2] and poor track record of post environmental clearance monitoring and compliance[3]. Over these years, it has also undergone numerous changes. In 2017, the Expert Appraisal Committee of the Environment Ministry exempted public hearings for coal mining projects which were undergoing capacity enhancements of up to 40 percent. However, the relaxation was subjected to due diligence of the EAC[4]. In 2015, the Ministry extended the validity of environmental clearance from 5 years to 7 years[5]. In March 2020, a draft notification[6] to replace the 2006 notification was issued for public comments. Since then, there have been many protests seeking a revaluation of the draft proposal.

In the meanwhile, vide an Office Memorandum dated 18th November 2020, the government proposed new set of rules to streamline the process to reduce the number of days taken by the authorities in granting EC.[7] This was in line with the government’s efforts to ensure the country’s growth trajectory in not blocked. Post that, another Office Memorandum was issued on 15th March 2021 that sought to streamline the process of granting environmental clearances with regard to essential details demanded.[8]

Very recently, another Notification dated 18th March 2021 was issued where the center exempted all projects from public hearing whose environmental clearance had expired and therefore had to apply afresh.[9]According to the notification, the prior environmental clearance for a project was granted for a maximum period of ten years, and in some cases five years. The projects which failed to complete within the granted time period had to undergo all the processes of scoping afresh, including conducting a public hearing. However, as per the new amendment, the compulsory step of conducting public hearing has been done away with if minimum 50% of the physical form of the project has been implemented. This was essential to remit further delay in such projects.

The notification has been introduced amidst the countrywide opposition to the contentious EIA Draft Notification 2020[10], that seeks to overhaul the environmental clearance process for large infrastructures and projects like dams, roads, mines townships, etc. The prepared draft proposes three major changes:

  1. Exemption from public consultation for certain construction projects.
  2. Powers to regularise projects retrospectively.
  3. Exemptions for process with strategic consultation.[11]

 

Contentious Issues in the Draft EIA Notification

Environmentalists across the country took an abhorrent view of the proposed Draft EIA Notification 2020, since it provided time and liberty to project proponents while strategically keeping the public uninvolved.

  1. Ex post facto environmental clearance

This rule allows any industry working in violation of the Environment (Protection) Act to apply for clearance. This seemed quite arbitrary since India has already witnessed severe disasters caused due to the lack of compliance to environmental clearances. Recently, in addition to the LG Polymers gas leakage at Vishakhapatnam, a natural gas well of Oil India Ltd. blew up and caught fire in Tinsukia, Assam.  Assam’s State Pollution Board reported that Oil India Ltd. was operating without any consent from the Board for more than 15 years!

  1. Defeats the purpose of public consultation

Generally, the interested stakeholders are given a period of 30 days to raise any concerns regarding the preliminary report of the assessment. The draft EIA 2020 seeks to reduce this period to a mere 20 days. Very often, the concerned stakeholders belong to poor communities residing in and around the project sites. The news of such a report usually reaches late, by the time consultations are considered, clearances are granted. This provision is in violation of Principle 10 of Rio Declaration which states that “Environmental issues are best handled with the participation of all concerned citizens”.

  1. Reducing the Number of Compliance Reports

The Compliance Report contains all the norms and regulations which are being followed by industries on a regular basis. It is an essential aspect of EIA since it helps the concerned authorities to put a system of checks and balance. However, as per the draft EIA 2020, this period has been increased to one year, granting unwarranted freedom to industrial units to grossly violate the environmental norms and cover it up with ease.

  1. Empowering the central govt. to declare certain projects as ‘strategic’ may have adverse outcomes

It is the Technical Expert Committee that has been endorsed with the power to categorize new projects rather than the Ministry of Environment, Climate and Forest Change. Once a particular project has been labelled/categorised as ‘strategic’ by the central government, information regarding it shall be removed from the public domain. Any information regarding environmental violations thus remain a privy to the government. Not being able to report violations except by the government or regulatory authority goes against the principles of natural justice. Diluting the norms with regards to detailed scrutiny by the Expert Committee, EIA studies, or public consultation leaves many projects and polluters out of the regulatory net.

  1. Exclusion of projects

Clause 26 of the Draft EIA Notification 2020 excludes a long list of projects from the purview of EIA. Further, Clause 14 of the said Notification excludes a number of projects from public consultation. Further, public consultation has also been exempted for the projects falling under Category B2.

 

Judicial Approach on the Draft EIA Notification

Since the issuance of the draft notification, various petitions have been filed in courts across the country demanding judicial scrutiny over specific controversial aspects as discussed above.

The notification allowing for grant of ex post facto environmental clearance for project proponents who have already commenced or completed projects without obtaining a prior EC was challenged in the case of Alembic Pharmaceuticals Ltd. v. Rohit Prajapati & Ors.[12], the Supreme Court held that the concept of ex post facto clearance as opposed to the fundamental principles of environmental jurisprudence and is violative of the previous EIA Notifications. It was further held in this case that such a clearance would lead to irreparable degradation of the environment. The grant of such problematic environmental clearances violates the precautionary principle and sustainable development. Furthermore, such clearances overturn the ‘polluter pays principle’ to make it ‘pay and pollute’ principle.

The court placed reliance on its previous ruling in the matter of Common Cause v. Union of India.[13] In this case, the Supreme Court held that “the concept of an ex post facto or a retrospective EC is completely alien to environmental jurisprudence including EIA 1994 and EIA 2006.” Therefore, relying on the verdict of the Hon’ble Supreme Court in the above two cases, it can be stated that ex post facto clearances are unsustainable is law and void.

In the case of Puducherry Environment Protection Association v. The Union of India.[14], the Madras HC addressed the issue in a different light. The question of whether an establishment providing livelihood to hundreds of people must be closed down on the grounds of non-compliance with prior EC, was addressed. After much deliberation, the HC arrived at the conclusion that violation of environmental norms can conveniently and effectively be checked. It also stressed on the fact that an ex post facto clearance takes away the scope of EIA.

Previously, the National Green Tribunal in S. P. Muthuraman v. Union of India[15], remarked that the law does not recognise any such examination which is made post-commencement and upon completion of a project. The Tribunal further went to acknowledge that the practice of conducting an EIA is internationally recognised. It also stated that granting post facto approvals could legalise and legitimise illegal and irregular projects which are in contravention of environmental norms and thus would defeat the purpose of the Environment Protection Act, 1986.

Another contention raised by the stakeholders was that the draft notification dilutes the EIA process making it easier for industries to escape accountability. Various courts also took stock of these concerns and the Delhi High Court granted an extension in the time allowed to the general public for giving suggestions to the Draft EIA Notification till August 11, 2020. It also suggested that the notification must be translated into other languages so that it can reach to even the remotest groups and seek recommendations.[16] However, the centre responded by saying that it was giving ‘thoughtful consideration’ to the HC’s views on translating the EIA Notification 2020 in twenty-two languages of the eighth schedule of the constitution.[17]The Karnataka High Court also took a similar approach and restrained the Ministry of Environment, Forest, and Climate Change from releasing the final notification till September 7, 2020, on the grounds of the ongoing pandemic.[18]

 

Giving Voice to the Voiceless

EIA is a part of participatory justice which gives voice to the voiceless[19].

The present EIA draft notification appears to be an attempt to promote the growth of industries and the corporate community at the cost of biodiversity, human rights and the environment. The draft is bound to suffer implementational challenges and demands thorough revision to meet the environmental, developmental and sustainability parameters. However, the final notification is not out yet and the judicial bent towards scrapping the post-commencement sanctions and increasing the period for public consultation period would most likely lead to a revision of those aspects. Moreover, provisions such as discretionary powers for the determination of strategic projects as well as a reduction in key compliance norms dilute the very essence of environmental assessments. Ease of doing business was ideally implemented to subvert bureaucratic dawdle but it should not become a veil for corporate subterfuge. Then again, too many compliance burdens deter participants in a sector from undertaking developmental projects. Some fine-tuning keeping the regulatory pressures minimal while balancing environmental repercussions would be the ideal course of action.

References 

1 GOVERNMENT OF INDIA – THE ENVIRONMENTAL IMPACT ASSESSMENT NOTIFICATION 2006,
http://www.environmentwb.gov.in/pdf/EIA%20Notification,%202006.pdf (last visited Aug. 29, 2020).

2 http://moef.gov.in/wp-content/uploads/2017/09/OM_IA_ownershipEIA.pdf

3 https://cag.gov.in/en/audit-report/details/27540

4 http://environmentclearance.nic.in/writereaddata/Form1A/Minutes/010820176ABWO9WXApprovedMOM15thEACheldon25July2017Coal.pdf

5 https://economictimes.indiatimes.com/news/economy/policy/government-extends-validity-of-environmentclearance-to-7-years/articleshow/49452693.cms?from=mdr


6 http://parivesh.nic.in/writereaddata/Draft_EIA_2020.pdf


7 http://dghindia.gov.in/assets/downloads/5fbb4c3cc3135moefccom.pdf

8 https://ficci-web.com/link/OMStreamlining.pdf


9 http://environmentclearance.nic.in/writereaddata/EIA_Notifications/52_SO1240E_12032021.pdf


10 http://parivesh.nic.in/writereaddata/Draft_EIA_2020.pdf

11 https://www.bloombergquint.com/law-and-policy/environment-law-proposed-norms-dilute-the-processrigours-experts-say

12 Alembic Pharmaceuticals Ltd. v. Rohit Prajapati & Ors., 2020 SCC OnLine SC 347

13 Common Cause v. Union of India, (2017) 9 SCC 499.


14 Puducherry Environment Protection Association v. The Union of India, (2017) 8 MLJ 513.


15 S.P. Muthuraman v. Union of India, 2018 (8) FLT 498.


16 Vikrant Tongad v. Union of India, W.P. (C) 3747/2020 & CM APPL. 13426/2020.


17 https://www.newindianexpress.com/nation/2021/mar/26/giving-thoughtful-considerationto-hc-view-totranslate-draft-eia-in-22-languages-centre-2281924.html

18 United Conservation Movement Charitable and Welfare Trust v. Union of India, W.P. No. 8632/2020.


19 Samarth Trust and Anr. v. Union of India and Ors., Writ Petition (Civil) No 9317 of 2009

 

 

Image Credits: Photo by Alan Rodriguez on Unsplash

The present EIA draft notification appears to be an attempt to promote the growth of industries and corporate community at the cost of biodiversity, human rights and environment. The draft is bound to suffer implementational challenges and demands thorough revision to meet the environmental, developmental and sustainability parameters. However, the final notification is not out yet and the judicial bent towards scrapping the post commencement sanctions and increasing the period for public consultation period would most likely lead to revision of those aspects

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