Why In News?

The Ministry of Power, the Bureau of Energy Efficiency (BEE), and the Ministry of Road Transport and Highways (MoRTH) finalized the CAFE-3 regulatory framework, setting stricter fleet carbon limits for passenger vehicles starting April 2027.

What are Corporate Average Fuel Efficiency (CAFE) Norms?

CAFE norms are statutory regulatory standards that cap the total weighted average of fuel consumption and carbon dioxide (CO₂) emissions across an automaker’s entire fleet of passenger vehicles sold in a financial year, rather than focusing on individual models. 

First introduced in 2017, by the Ministry of Power, under the Energy Conservation Act, 2001, they apply to M1 category passenger vehicles (gross vehicle weight under 3,500 kg) powered by petrol, diesel, CNG, LPG, hybrid, or electricity. 

  • The Bureau of Energy Efficiency (BEE) manages compliance and data, while the Ministry of Road Transport and Highways (MoRTH) handles vehicle testing and certification. 

The Ministry of Power recently notified the final CAFE-III framework, which will remain applicable from April 1, 2027, to March 31, 2032, aiming for a 16% improvement in overall fleet fuel efficiency. 

Unlike Bharat Stage (BS) standards that regulate individual vehicles, CAFE norms allow flexibility by evaluating an automaker's overall corporate average. High-emission vehicles can be balanced out by selling low-emission alternatives like EVs or hybrids. 

Objective of CAFE-3

  • Improve Fuel Efficiency: Push the boundary of baseline thermal efficiency across internal combustion engines and hybrid drivetrains.

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  • Reduce Petrol and Diesel Consumption: Curb aggregate national consumption of imported fossil fuels across the rapidly expanding passenger vehicle segment.

  • Reduce Carbon Emissions: Cut vehicular greenhouse gas (GHG) output to align India's transport sector with its Nationally Determined Contributions (NDCs).

  • Promote Cleaner Vehicles: Create market-driven regulatory incentives for automakers to invest in strong hybrids, plug-in hybrids, battery electric vehicles, and compressed biogas systems.

  • Improve Energy Security: Limit exposure to global crude oil price shocks and high foreign exchange expenditures.

Key Features

Stricter Fuel-Efficiency Targets: Proposes tightening fleet-wide CO2 emissions below the CAFE-2 threshold of roughly 113 g/km, targeting a steeper glide path toward 91.7 g/km for CAFE-3 (2027–2032). 

Passenger Vehicle Coverage: Applies comprehensively to all four-wheel passenger vehicles (Category M1) weighing up to 3,500 kg.

Fleet Average Approach: Gives manufacturers flexibility to deploy diverse powertrain mixes provided the cumulative sales-weighted fleet average satisfies statutory caps.

Compliance by Vehicle Manufacturers: Enforces strict financial penalties under the Energy Conservation (Amendment) Act, 2022 on automakers breaching statutory fuel consumption benchmarks.

Technology-Led Efficiency Improvements: Accords regulatory super-credits and favorable weightage multipliers for pure battery electric vehicles and flex-fuel configurations.

Strategic Significance for India 

  • High Oil Import Dependence: India imports over 87% of its domestic crude oil requirements, incurring an import bill exceeding $130 billion annually.

  • Rising Vehicle Ownership: Expanding middle-class incomes are projected to push domestic passenger vehicle sales past 5 million units annually before 2030, drastically increasing urban fuel consumption. 

  • Urban Air Pollution: Road transport contributes nearly 14% to 20% of ambient urban particulate and greenhouse emissions in metropolitan airsheds. 

  • Transport-Sector Emissions: The transport sector accounts for roughly 13% of India's total energy-related greenhouse gas emissions, representing the fastest-growing end-use sector.  

  • Energy Security: Mitigates trade balance vulnerabilities and shields the domestic economy from geopolitical volatility in major petroleum corridors.

  • Climate Commitments: Essential for achieving India’s Panchamrit climate goals, specifically reducing carbon intensity of the economy by 45% by 2030 and reaching net-zero greenhouse gas emissions by 2070.

Source: THEHINDU

PRACTICE QUESTION

With reference to Corporate Average Fuel Economy (CAFE) norms in India, consider the following statements:

1. CAFE norms specify limits on carbon dioxide emissions on a sales-weighted fleet average basis for automobile manufacturers.

2. The standards are formulated and evaluated by the Bureau of Energy Efficiency under the provisions of the Energy Conservation Act, 2001.

3. CAFE regulations are strictly applicable only to heavy commercial vehicles weighing more than 12,000 kg.

Which of the statements given above is/are correct?

(a) 1 and 2 only

(b) 2 and 3 only

(c) 1 and 3 only

(d) 1, 2 and 3

Answer: (a)

Explanation:  

Statement 1 is correct: CAFE norms evaluate the sales-weighted fleet average carbon dioxide emissions and fuel consumption of an automaker across all units sold, rather than applying individual thresholds to each specific vehicle model. This aggregate mechanism promotes maximum societal efficiency by granting producers the flexibility to offset higher-emission vehicles with cleaner models. 

Statement 2 is correct: The standards are formulated, monitored, and evaluated by the Bureau of Energy Efficiency under the statutory powers provided by the Energy Conservation Act, 2001. 

Statement 3 is incorrect: CAFE regulations in India primarily target passenger vehicles under the M1 category (passenger cars with a gross vehicle weight under 3,500 kg), covering petrol, diesel, CNG, hybrid, and electric models. They are neither strictly applicable to nor designed solely for heavy commercial vehicles over 12,000 kg.