Govt May Ease CAFE III Emission Targets After Industry Push

New Delhi: The government may relent and allow Indian OEMs to stick to a less stringent fleet-wide carbon dioxide emission target from 2027-28, when the new Corporate Average Fuel Efficiency (CAFE III) norms are slated to kick in.According to sources, a consensus has emerged on this, and the proposal by the Society of Indian Automobile Manufacturers (SIAM) with a target of 89.6 grams of CO2 emission by 2032 may be accepted. This is significantly easier than the proposed target of 71.5 grams set by the Bureau of Energy Efficiency (BEE) in the latest draft of the CAFE III norms.“What we understand is that there will be no fresh drafts from the BEE on CAFE III norms, only a final notification. This is likely by the end of the month. During recent consultations, the government has looked at SIAM proposals favourably, making it likely that the flatter emission graph proposed by SIAM will be accepted,” the sources said.

In its representation earlier, SIAM had pointed out that the 71.5 gram target proposed by BEE would have meant a 63 per cent (or two-thirds) reduction from current levels in CAFE II “which is unprecedented globally. Such a strict threshold may result in premature scrapping of multiple vehicles, which will cause significant distress to the automotive industry, including auto component suppliers.”

The BEE released the draft CAFE III norms in September last year, which define emission caps for OEMs’ vehicle fleets for a five-year period starting 2027-28.

Car weight to decide emissions?

One of the more contentious proposals in the latest BEE draft norms was to set emission norms based on car weight. The amended BEE draft released in September last year proposed a relaxation of 3 grams for cars weighing up to 909 kg, and this has resulted in sharp divisions among OEMs.One stakeholder said that the government may not accept the weight criterion for relaxing emission standards for lighter cars since it is looking to accept the SIAM proposal for less stringent overall emission targets from FY28.“By accepting the SIAM proposal for a flatter slope in emission tightening, the government is anyway making emission targets for lighter cars less punitive. It is possible that the weight criterion for deciding emission standards is dropped in the final notification,” this stakeholder said, requesting anonymity.A senior official at one of the ministries involved in finalising the CAFE III norms had earlier said that stakeholder consultations had been completed and that the Ministry of Power would decide on the matter soon.

He had earlier said, “The large car lobby is seeking permission to continue to pollute for longer…we will align our views with what the Ministry of Power finally agrees to. The final CAFE 3 regulations will likely be based on ‘real world’ emission targets, and ICAT is already defining those…the final norms may tighten fleet-wide emission targets by 20-25 per cent, this will not be too steep in the end.”

When asked about different OEMs lobbying for and against relaxation to small cars, he said “we cannot allow large cars to continue polluting for longer”, without elaborating further.

In the last few months, the proposed relaxation for small cars had set off a rather public tussle between OEMs like Maruti Suzuki India, Toyota Kirloskar Motors, etc – OEMs with a sizable portfolio of small cars – and some big car OEMs, including Tata Motors, Mahindra & Mahindra and JSW MG Motor India. The former group has been lobbying for relaxation in the emission cap for small cars to stay while the latter group is pushing for uniform emission standards for all vehicles, regardless of weight. A car in India weighs between 750 kg and 2500 kg, making the industry-average car weight 1170 kg.

A second stakeholder said that if the government were to accept the lower overall emissions target proposed by SIAM, it would also help small car makers. “But this is only partially useful, it does not fully compensate for the requirement of lower emission standards for small cars,” this stakeholder said.

Meanwhile, a spokesperson for Maruti Suzuki India said, “There is overwhelming global precedence of policy protection of small cars in CAFE regulations. China, USA, Korea, 27 countries in Europe, and Japan – all have this provision. We hope and trust the government of India will not come under pressure from vested interests of manufacturers of heavy gas guzzlers by defying a global norm and sacrificing a national and social interest.”

In its submission, SIAM had said in November that its members have “mixed” views “on the topic of benefit of 3g for petrol cars below 909 kg unladen mass”.

Other industry concerns

SIAM had given its views on multiple other issues included in the draft CAFE II Norms. For example, on the battery electric vehicle (BEV) emissions, SIAM had argued that their tailpipe emissions should be considered as zero since this is “in line with CAFE norms” and is “needed for India”.

The BEE proposal has pegged BEVs at 29 grams of emissions, since the electricity used to charge them comes from at least 30 per cent non-renewable sources and thus tailpipe emissions exist. On changes proposed in the revised CAFE 3 draft over super credits for electric vehicles and FCEVs, SIAM has pointed out that these are not “aligned with the government’s focus on these technologies”.

The latest proposal has reduced the super credits for BEVs from 4 to 3 in the previous draft; raised the credits for strong hybrids to 2.0 from 1.2; and introduced a new category of vehicles, called Range Extender Electric Vehicles, with three super credits. Super credits are a regulatory adjustment that allows an OEM to count the sale of one low-emission vehicle as multiple vehicles in the fleet-average carbon dioxide emission calculation, making it easier for the OEM to meet overall emission targets.

What CAFE III draft says

The draft introduces a mass-based linear formula to determine the Annual Average Fuel Consumption Standard (expressed in petrol equivalent litres per 100 kilometres) that a manufacturer must meet. The standard is directly linked to the manufacturer’s weighted-average unladen mass of its fleet, and the proposal speaks of annual tightening from 2027-28 to 3.01 litres/100 km by 2031-32.

Put simply, this means that each year, the permissible emissions for each OEM’s fleet will be lower, and each OEM must show its Annual Average of Actual Fuel Consumption to be less than or equal to the standard set for that year. The draft also proposes specific mechanisms to reward manufacturers for incorporating low-emission and alternative fuel vehicles.

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