Norms for Tighter Fuel Efficiency Standards for Passenger Vehicles Drafted
As per the Union power ministry’s statement, draft CAFE-III norms has been floated for stakeholder consultation
New Delhi: Amid the mileage drop row over petrol-blended with 20 percent ethanol (E20), the government is likely to implement some tougher fuel efficiency norms for passenger vehicles soon. The Centre has proposed tighter fuel efficiency standards for passenger vehicles in this regard and floated draft norms as well, seeking opinions from all the stakeholders and the public on it until August 6.
The government on Thursday said that fuel efficiency norms for passenger vehicles are under the third phase of the corporate average fuel efficiency (CAFE) regulations, including stricter carbon dioxide emission targets, incentives for cleaner technologies, and a market-based compliance mechanism.
As per the Union power ministry’s statement, draft CAFE-III norms has been floated for stakeholder consultation, proposing the new norms to take effect from April 1, 2027, after the current CAFE-II regime expires on March 31, 2027. "These will remain in force for five years. Compliance would be assessed over two blocks -- an initial three-year period followed by a two-year period,” the ministry said.
The proposed regulations would apply to M1 category passenger vehicles having not more than eight seats in addition to the driver's seat that are manufactured or imported for sale in India during the 2027-28 to 2031-32 period. Category M1 refers to motor vehicles designed and built for the carriage of passengers that have no more than eight seats in addition to the driver’s seat. That means, they are all standard passenger cars, sedans, hatchbacks, SUVs, and MPVs.
The draft, however, proposes progressively tighter fleet-average fuel consumption targets, reducing the benchmark from 3.996 litres per 100 km (94.76 grams of carbon dioxide per km) in 2027-28 to 3.3273 litres per 100 km (78.90 grams of CO2 per km) by 2031-32. “The phased approach is intended to provide automakers with greater regulatory certainty while allowing time to develop and introduce more fuel-efficient models,” the ministry said.
For the first time, the proposal introduces carbon neutrality factors (CNFs), allowing specific reductions in declared tailpipe CO2 emissions for vehicles using ethanol, biofuels and compressed biogas (CBG). An 8 per cent CNF has been proposed for current ethanol blending levels, while reductions for CBG and other biofuels would be linked to prevailing blending levels.
The draft also proposes compliance incentives of up to 9 grams of CO2 per km for approved fuel-saving technologies, subject to a cap of 1 gram per technology, and retains volume-based 'super credits' for battery electric vehicles, range-extended electric vehicles, plug-in hybrids, strong hybrids and flex-fuel vehicles while calculating fleet-average fuel consumption.
The ministry also said that a credit-and-debit mechanism has also been proposed under which manufacturers exceeding their prescribed targets would earn compliance credits that can be carried forward within a compliance block. “Automakers falling short of their targets could meet their obligations through carry-forward provisions, voluntary pooling arrangements with other manufacturers or by purchasing compliance credits from the Bureau of Energy Efficiency (BEE),” it said.
The proposal sets an initial buyout price of Rs 2,500 for each compliance credit, with the price rising by Rs 500 annually. Credits would lapse if left unused at the end of a compliance block. Manufacturers failing to comply with the norms would be liable for penalties under the Energy Conservation Act, while passenger vehicle makers with annual sales of fewer than 1,000 units would remain exempt.
