CAFE III On The Horizon: Understanding Emission Standards And Their Calculations

The upcoming CAFE III emission norms, set to take effect in 2027, have sparked a big debate within the automotive industry. These discussions have revealed divisions, with Maruti Suzuki pushing for relaxed standards for smaller vehicles, while manufacturers collectively express concerns about the stringent proposed targets. 

Despite the frequent mention of 'CAFE norms' in media and industry circles, their meaning remains unclear to many. This article aims to clarify the concept and provide insight into these regulations.

CAFE Basics

Corporate Average Fuel Efficiency (CAFE) norms in India are regulations aimed at reducing fuel consumption and carbon dioxide (CO₂) emissions from passenger vehicles. 

These norms set average fuel efficiency and CO₂ emission targets for the entire fleet of vehicles sold by a manufacturer in a fiscal year, rather than individual models. The objective is to encourage manufacturers to produce more fuel-efficient vehicles, including electric and hybrid vehicles, to reduce dependence on fossil fuels and mitigate air pollution. 

The norms apply to petrol, diesel, liquefied petroleum gas (LPG), and compressed natural gas (CNG) passenger vehicles.

CAFE norms were introduced in India under the Energy Conservation Act, 2001, by the Bureau of Energy Efficiency (BEE) under the Union Ministry of Power. They were first notified in 2017 and implemented in two phases:

• CAFE I (2017–2022): Mandated an average corporate CO₂ emission of less than 130 grams per kilometre (g/km).
• CAFE II (2022–2027): Reduced the target to below 113 g/km, representing a 13 per cent reduction in CO₂ emissions despite an increase in average industry kerb weight from 1,037 kg to 1,145 kg.

Calculation of CAFE Norms

The CAFE norms are calculated based on the sales-weighted average CO₂ emissions and fuel consumption of a manufacturer’s fleet, measured under standard conditions in nationally accredited laboratories, such as those certified by the International Centre for Automotive Technology (ICAT). 

The process involves the following steps:

Determine Corporate Average Kerb Weight

• The kerb weight of each vehicle model sold by a manufacturer is recorded.
• A sales-weighted average kerb weight is calculated by factoring in the number of units sold for each model.
• For example, if a manufacturer sells lighter variants of a model in higher volumes, it reduces the average kerb weight, aiding compliance.

Set CO₂ Emission Target

• The industry-wide average kerb weight is established (e.g., 1,145 kg for CAFE II).
• A baseline CO₂ emission target is set for this average kerb weight (e.g., 113 g/km for CAFE II).
• The target is scaled linearly to the manufacturer’s specific average kerb weight. For instance, if a manufacturer’s fleet has an average kerb weight of 1,712 kg (as in the case of BMW), the CO₂ target is adjusted to 140 g/km.

Measure Actual CO₂ Emissions

• The actual CO₂ emissions of each vehicle model are measured in grams per kilometre under standard test conditions.
• The sales-weighted average CO₂ emissions of the manufacturer’s fleet are calculated.
• Compliance is achieved if the actual average CO₂ emissions are less than or equal to the scaled target.

Super Credits for Cleaner Vehicles

• Manufacturers can earn super credits by selling battery electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs), and hybrid electric vehicles (HEVs).
• Credits are awarded as follows: 3 for BEVs, 2.5 for PHEVs, and 2 for HEVs. These credits count multiple times in the sales-weighted average, reducing the overall CO₂ emissions figure.

Penalties and Credits

• Non-compliance results in penalties, such as ₹25,000 per vehicle for minor deviations and ₹50,000 per vehicle for significant violations.
• Manufacturers exceeding targets can bank and trade credits, incentivising over-compliance.

CAFE III Norms (Proposed, 2027–2032)

The proposed CAFE III norms, set to take effect from April 1, 2027 are a part of a 10-year roadmap: 2027–2037, including CAFE IV.

These aim for a CO₂ emission target of 91.7 g/km under the stringent Worldwide Harmonised Light Vehicle Test Procedure (WLTP), compared to a slightly relaxed 92.9 g/km proposed by automakers under the Modified Indian Driving Cycle (MIDC). 

The India Energy & Climate Center (IECC) recommends tougher standards and reducing electric vehicle super credits from 4 to 3 under CAFE IV (2032–2037) to account for actual grid emission intensity. 

However, automakers, including SIAM, argue that the 91.7 g/km target is overly ambitious, potentially leading to penalties, job losses, and reduced investments, with proposals for separate norms for vehicles under 1,000 kg (favouring companies like Maruti Suzuki) causing industry debate. 

These stricter norms are expected to boost electric vehicle adoption, aligning with India’s goal of 30 per cent EV sales by 2030 and enhancing export competitiveness with Euro-7 standards.

Also read: India’s Automakers Resist Strict 2027 Emission Rules