Tighter Emission Norms: Impact on Automakers

Context : The government has identified eight carmakers, including Hyundai, Kia, Mahindra, and Honda, with fleet emission levels exceeding the mandated limits for the financial year 2022-23. This could result in penalties totaling approximately ₹7,300 crore.

Background

For 2022-23, the Bureau of Energy Efficiency (BEE), under the Ministry of Power, required automakers to comply with India's stricter Corporate Average Fuel Efficiency (CAFE) norms.

Key Highlights

1. Tightened CAFE Norms:

   • The norms were tightened from April 2022 under Phase II, reducing the average fuel consumption target to less than 4.78 liters/100 km and CO₂ emissions to below 113 g/km.

2. Testing and Penalties:

   • Vehicle models from 18 manufacturers were tested under simulated real-driving conditions. Non-compliance led to penalties for the total cars sold during the year.
   • Major penalties include:
     • Hyundai: ₹2,837.8 crore
     • Mahindra: ₹1,788.4 crore
     • Kia: ₹1,346.2 crore
     • Honda: ₹457.7 crore
     • Renault: ₹438.3 crore

3. Dispute Over Penalty:

   • The auto industry has raised concerns about the calculation and quantum of penalties.

About Corporate Average Fuel Efficiency (CAFE) Norms

1. Objective:
   Introduced in 2017 under the Energy Conservation Act, 2001, CAFE norms aim to reduce fuel consumption, CO₂ emissions, air pollution, and dependency on oil.

2. Applicability:

   • Covers passenger vehicles under 3,500 kg GVW, including petrol, diesel, LPG, CNG, hybrid, and electric vehicles manufactured or imported for sale in India.
   • Applies to the corporate average fuel consumption of all vehicles sold annually, not individual models.

3. Phases:

   • Phase I (2017-2022): Target fuel consumption <5.49 liters/100 km; CO₂ emissions <130 g/km.
   • Phase II (2022 onwards): Stricter targets of <4.78 liters/100 km and CO₂ emissions <113 g/km.

4. Calculation:

   • Corporate Average Fuel Consumption (CAFC): Calculated based on the average curb weight and fuel consumption of all vehicles sold in a fiscal year.
   • CO₂ Emissions: Set at a maximum of 113 g/km post-2022.

Implications

• For Automakers: Significant financial penalties could pressure manufacturers to enhance fuel efficiency and adopt greener technologies.
• For Policy: Strengthens India's commitment to reducing emissions and transitioning towards sustainable mobility.