Beyond compliance, India’s road to cleaner mobility, Pg8

Key Highlights:

• India is currently debating the proposed Corporate Average Fuel Efficiency (CAFE) III norms for its automobile industry.
• The Power Ministry issued a draft notification on July 16, outlining the third iteration of these norms.
• The new norms aim to reduce average emissions from approximately 113 gCO2/km to 77 gCO2/km by FY2031-32.
• The framework introduces several flexibility mechanisms, including the Carbon Neutrality Factor and Super Credits.
• The implementation of these norms is critical for India's transition to cleaner mobility and enhancing energy security.

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Detailed Insights:

• CAFE norms establish sales-weighted average fuel-efficiency targets for a manufacturer's entire passenger vehicle fleet.
• The concept originated in the United States in 1975 following the 1973 Arab oil embargo to reduce oil dependence.
• China's Dual Credit System, introduced in 2018, mandates manufacturers to meet both Corporate Average Fuel Consumption (CAFC) and New Energy Vehicle (NEV) credit requirements.
• The Carbon Neutrality Factor in India's proposed norms offers compliance benefits for vehicles compatible with higher ethanol blends, despite policy uncertainties beyond E20 blending.
• Super Credits provide additional weight to Battery EVs, plug-in hybrids, strong hybrids, and flex-fuel vehicles in fleet calculations.
• Manufacturers can bank, trade, or purchase compliance credits from the Bureau of Energy Efficiency (BEE), potentially allowing some to meet targets without significant technological upgrades.
• Compliance is assessed over three-year blocks, later shifting to two-year blocks, allowing manufacturers to average performance over multiple years.
• Strengthening fuel-efficiency standards is considered an energy-security strategy, an industrial policy, and a macroeconomic imperative for India.
• These revised norms offer an opportunity to address India's macroeconomic vulnerability and contribute to its Glasgow commitment on energy efficiency.

Key Concepts Involved:

• Corporate Average Fuel Efficiency (CAFE) Norms: Regulations that set average fuel efficiency targets for an automaker's entire fleet of vehicles sold in a given year.
• Dual Credit System: A regulatory framework, notably in China, requiring automakers to meet both fuel consumption and new energy vehicle production targets.
• Carbon Neutrality Factor: A mechanism in India's proposed CAFE III norms that awards compliance benefits for vehicles compatible with higher ethanol blends and other alternative fuels.
• Super Credits: Additional weight given to low-emission vehicles (like EVs, hybrids) in fleet calculations to help manufacturers meet overall fuel efficiency targets more easily.
• Bureau of Energy Efficiency (BEE): A statutory body under the Ministry of Power, responsible for promoting energy efficiency and conservation in India.