Context: The Ministry of Power, alongside the Bureau of Energy Efficiency (BEE), officially released the Draft Corporate Average Fuel Economy-III (CAFE-III) norms for public and industry consultation.
About The Draft CAFE-III Norms:
What It Is?
- Corporate Average Fuel Efficiency (CAFE) norms are regulatory mandates that require automakers to meet a predefined average level of fuel economy and carbon dioxide (CO2) emissions across their entire annual fleet of vehicles sold, rather than scoring individual car models.
History:
- Phase I (CAFE-I): Implemented in FY2017-18, establishing the entry baseline for structured fleet-efficiency tracking.
- Phase II (CAFE-II): Rolled out in FY2022-23, tightening emission parameters further based on an average vehicle weight constant.
- Phase III (CAFE-III): Circulated in July 2026, scheduled to take formal effect on April 1, 2027, running through FY2031-32.
Aim: Administered under the Energy Conservation Act, these regulations aim to reduce greenhouse gas emissions, improve air quality, and cut oil imports by promoting cleaner vehicles.
Key Features of the CAFE-III Norms:
- Progressively Tightened Carbon Targets: Fleet-average targets will shrink from 3.996 liters/100 km (94.76 gCO₂/km) in FY2027-28 to a strict 3.327 liters/100 km (78.90 gCO₂/km) by FY2031-32.
- Shift to the Global WLTP Testing Cycle: The draft formalizes India’s migration away from the laboratory-confined Modified Indian Driving Cycle (MIDC) to the globally synchronized Worldwide Harmonised Light Vehicles Test Procedure (WLTP), reflecting real-world on-road driving conditions.
- Flexible Multi-Year Compliance Blocks: Rather than enforcing rigid annual penalties, compliance will be calculated over two larger blocks: a three-year block (FY28-30) followed by a two-year block (FY30-32), giving automakers room to back-load their EV launches.
- First-Ever Carbon Neutrality Factors (CNFs): E20 (20% ethanol-blended petrol) receives an 8% reduction benefit, which jumps up to 22.3% for flex-fuel ethanol vehicles and flex-fuel strong hybrids.
- Revised Super-Credit Multipliers: Battery Electric Vehicles (BEVs) and Range-Extended EVs receive a 3.0x multiplier, Plug-in Hybrids get 2.5x, and Strong Hybrids are scaled back to 1.6x.
- Market-Based Credit Trading System: Introduces an emission permit ecosystem. Manufacturers exceeding their targets earn compliance credits they can bank or sell.
- Expanded Technology Derogation Credits: Automakers can claim up to 9 gCO₂/km in compliance benefits by embedding 12 approved fuel-saving technologies, including automatic engine start-stop devices, regenerative braking setups, smart alternators, and tire pressure monitoring systems (TPMS).
