Top passenger vehicle manufacturers like Mahindra & Mahindra, Maruti Suzuki and Tata Motors are confident of staying within the prescribed CO2 emission limits this year defined under the corporate average fuel efficiency (CAFÉ) norms which came into effect at the beginning of FY23.
While Maruti has improved overall fuel efficiency partly because of the introduction of hybrid technology, Tata Motors has also improved because of multiple offerings in the EV segment.
Even Korean carmakers like Hyundai and Kia are understood to be above the specified limits during the January-March quarter of this year though neither companies have officially spoken on the matter since the latest emission data has not yet been made public. As per data shared by Bureau of Energy Efficiency (BEE), all carmakers met CAFÉ norms in FY22.
The government and automakers are expected to hold talks soon to discuss modalities of the norms, the method of calculation of carbon credits and penalties for violation of the norms.
The auto industry has to comply with norms that prohibits emissions above the given limits failing which they will have to fork out penalties.
Rajesh Jejurikar, executive director and CEO, auto and farm sectors, Mahindra & Mahindra said, “Our interpretation is that there are two acts under the common governing law. One act ended in December 2022 and another started in January 2023. Specifically, assuming that the act is applicable only from January onwards, from our standpoint, we completely meet it because we did start our electric vehicle sale from January. We believe we are in compliance with the CAFÉ norms”.
The Bureau of Energy Efficiency (BEE), the statutory body under the Ministry of Power, was to hold stakeholder consultations in October-November, said industry sources.
The CAFÉ norms, which should not be confused with the Bharat Stage 6 (BS-6) emission norms, are aimed at improving the fuel efficiency of a vehicle powered by an internal combustion engine, resulting in lower carbon-dioxide (CO2) footprint.
Emission ceilings under the CAFÉ targets are based on the average kerb weight of a manufacturer. The computation not only takes into account the weight of the individual models but it factors in the number of models sold also.
Companies failing to meet the norms will invite penalties of Rs 25,000-50,000 on every car sold by them, as per the clause in the Energy Conservation (Amendment) Bill 2022 introduced in December last year.
Having fully electric vehicles or partially electric vehicles like hybrids help in improving the overall fuel efficiency figures while keeping the CO2 emissions under check. While CO2 emission data for FY24 is not made available by BEE, several companies claim to be within the compliance norms.
The government will likely clarify the concept of carbon credit trading system for the automotive sector in the upcoming meet.
“Government is working on a carbon trading mechanism and it is being discussed/examined. Many carmakers have positive points from previous year, which is being requested to be adjusted for this year,” said a source from one of the top three carmakers.
“The process of the new law from January will have an element of carbon trading. But the calculation of carbon trading is not yet defined and all of that has to happen now,” Jejurikar added.
