Source: ET
Subject: Miscellaneous
Context: The Indian government and the automobile industry reached a broad consensus on the upcoming CAFE-III (Corporate Average Fuel Efficiency Phase III).
About CAFE-III norms:
What are CAFE-III Norms?
- CAFE (Corporate Average Fuel Efficiency) norms are government-mandated standards that regulate the weighted average fuel consumption and CO₂ emissions of an automaker’s entire fleet, rather than individual models.
Established By: The Bureau of Energy Efficiency (BEE) under the Ministry of Power.
Application: These norms apply to M1 category passenger vehicles (those designed to seat up to nine persons and weighing under 3,500kg).
Timeline: The third phase (CAFE-III) is scheduled to be implemented from April 1, 2027, and will run through March 31, 2032.
Aim of CAFE-III:
- To reduce India’s heavy reliance on crude oil imports, especially critical during geopolitical uncertainties like the West Asia crisis.
- To nudge manufacturers toward producing energy-efficient and less-polluting vehicles in line with India’s climate goals.
- To force the adoption of advanced technologies such as hybrids, electric vehicles (EVs), and flex-fuel systems.
Key Features:
- Stricter Targets: Automakers must reduce their average fleet CO₂ emissions from approximately 113 g/km (at the end of CAFE-II in FY27) to 78.9 g/km by FY32.
- Removal of Small Car Carve-out: An earlier proposal to give a specific 3g/km relief to petrol cars under 909kg has been scrapped in favor of the flatter curve to ensure a fairer playing field.
- Super Credit Scheme: To encourage green technology, manufacturers earn multipliers for every clean vehicle sold:
- Battery EVs (BEV): 3.0 multiplier (each sale counts as 3 for fleet average).
- Plug-in Hybrids (PHEV): 2.5 multiplier.
- Strong Hybrids: 1.6 multiplier.
- Incentives for Efficiency Tech: Discounts on emission scores can be earned by using any of the 12 specified energy-efficient technologies, such as start-stop systems, 6-speed transmissions, and high-efficiency AC.
- Compliance Flexibility: Allows for credit trading between manufacturers, carry-forward of excess compliance, and lower penalties to facilitate a practical transition.
Implications:
- Vehicles may become costlier as manufacturers add advanced tech (hybrid systems, lightweight materials) to meet stricter norms.
- Firms will shift from petrol to CNG, hybrids, and EVs, with CNG expected to gain significant market share by 2032.
