Corporate Average Fuel Efficiency (CAFE) Latest News
- India has released draft Corporate Average Fuel Efficiency (CAFE) 3 norms through the Bureau of Energy Efficiency (BEE).
- These norms aim to tighten fuel efficiency and emission standards while addressing industry demands for flexibility, especially for small cars and electric vehicles (EVs).
Current CAFE Framework in India
- CAFE:
- Introduced in 2017 by BEE, Ministry of Power, to regulate fuel consumption and carbon emissions from passenger vehicles.
- These norms apply to vehicles running on petrol, diesel, liquefied petroleum gas (LPG), compressed natural gas (CNG), hybrids, and electric vehicles (EVs) weighing less than 3,500 kg.
- Designed to reduce oil dependency and curb air pollution, pushing automakers to lower carbon dioxide emissions while incentivising the production of EVs, hybrids, and CNG vehicles.
- CAFE 2: In 2022-23, the norms were tightened (fuel consumption capped at 4.78 litres/100 km, and CO₂ emissions capped at 113 g/km) with increased penalties for non-compliance.
- Need for CAFE 3:
- In the USA, EU, China, Japan, smaller lightweight cars receive relaxed CO₂ norms.
- However, India’s current framework is inverted, giving SUVs more relaxed limits and burdening small cars.
- So, CAFE 3 seeks to align with global best practices.
Key Features of Proposed CAFE 3 Norms
- Applicability:
- Covers M1 category passenger vehicles with a seating capacity of 9 people (including the driver) and a maximum weight of 3,500 kilogram.
- Non-compliance will attract penalties under the Energy Conservation Act, 2001.
- Efficiency targets:
- Under CAFE 3, the efficiency formula is: [0.002 x (W – 1170) + c]. It is measured in petrol-equivalent litres per 100 kilometre.
- Here, W is the average fleet weight, 1,170kg is the fixed constant for weight, 0.002 is a fixed constant multiplier, and ‘c’ is a constant that changes every year.
- Since ‘c’ continues to decrease from FY28 to FY32, the rules will become stricter over time. This constant starts at 3.7264 in FY28, then subsequently drops to 3.0139 in FY32.
- Lighter vehicles have easier compliance compared to heavier SUVs or premium cars.
- Incentives for small cars:
- Additional relaxation of 3.0 g CO₂/km (capped at 9.0 g/km) for compact petrol cars (unladen mass up to 909 kg, engine capacity not exceeding 1200 cc and length not exceeding 4000 mm).
- This is designed to revive the small car segment, which saw a 71% sales decline in six years.
- Complementary policy: GST 2.0 reforms lowered GST on small cars from 28% to 18%.
- Boost for EVs and alternate fuels:
- Super credits multipliers:
- Companies could potentially obtain relaxation in their overall efficiency target as the norms propose to offer companies “super credits” based on the type of vehicle they sell.
- Each EV sold will be counted three times while calculating a company’s average.
- Plug-in hybrids will be counted 2.5 times, and strong hybrids twice.
- Flex-fuel ethanol cars are given a smaller multiplier of 1.5.
- Carbon Neutrality Factor (CNF) introduced:
- CNF offers further relaxation on the targets based on the type of fuel used in a car.
- For example, for petrol vehicles (E20 to E30) 8% CNF on tailpipe CO2; for flex fuel ethanol vehicles and strong hybrid electric vehicles 22.3% CNF on tailpipe CO2; etc.
- Super credits multipliers:
- Emissions pooling:
- Up to three carmakers can form a pool (to meet the targets jointly) and be treated as a single manufacturer.
- Pool manager legally responsible for compliance and penalties.
- Reduces compliance costs and encourages strategic alliances.
Conclusion
- The proposed CAFE 3 norms mark a critical shift in India’s emission strategy—reviving small cars, incentivising EVs, and tightening long-term efficiency goals.
- If implemented effectively, they could reduce India’s oil import dependency, accelerate green mobility adoption, and align India’s policies with global climate commitments under the Paris Agreement.
- However, challenges remain in industry adaptation, consumer acceptance, and infrastructure readiness for alternative fuel vehicles.
Source: IE
Corporate Average Fuel Efficiency (CAFE) FAQs
Q1: What are the key features of the proposed Corporate Average Fuel Efficiency (CAFE) 3 norms in India?
Ans: CAFE 3 norms introduce stricter efficiency targets, incentives for small cars, super credits for EVs/hybrids, provisions for emissions pooling among carmakers, etc.
Q2: How do the proposed CAFE 3 norms aim to revive the small car segment in India?
Ans: By offering 3.0 g CO₂/km relaxation (capped at 9.0 g/km) for compact cars and reducing GST from 28% to 18%.
Q3: What is the concept of “super credits” under the proposed CAFE 3 framework?
Ans: Super credits assign higher weightage to EVs and hybrids in fleet average calculations, easing compliance.
Q4: What is emissions pooling under the draft CAFE 3 norms and why is it significant?
Ans: Emissions pooling allows up to three carmakers to jointly meet efficiency targets.
Q5: What is India’s current CAFE framework?
Ans: Unlike global practices (in the USA, EU, China, and Japan) that relax norms for lightweight cars, India’s framework currently favors heavier vehicles like SUVs.
