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Govt forms committee to address passenger car industry's concerns over penalties under CAFE II norms

Govt forms committee to address passenger car industry's concerns over penalties under CAFE II norms

Govt forms committee to address passenger car industry's concerns over penalties under CAFE II norms
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By Parikshit Luthra  Jan 23, 2023 10:01:42 PM IST (Updated)

The CAFEII norms, which are set to take effect on April 1, 2023, require manufacturers to meet certain fuel efficiency standards for their vehicles or face penalties. The passenger car industry has expressed concerns about the penalties, which would be Rs 25,000 per car sold by the manufacturer.

The Indian government has formed a technical committee to address concerns raised by the passenger car industry over penalty provisions under the Corporate Average Fuel Efficiency (CAFE) II norms, sources told CNBC TV18. The Director General Bureau of Energy Abhay Bakre will chair the committee, with its first meeting set to take place on Tuesday, at 4PM.

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The CAFE II norms, which are set to take effect on April 1, 2023, require manufacturers to meet certain fuel efficiency standards for their vehicles or face penalties.
The Energy Conservation Bill requires carmakers to pay Rs 25,000 per unit if their fleet CO2 emissions exceed the intended CAFE score by 0-4.7 grammes per kilometre, and Rs 50,000 per unit if they exceed by more than 4.7 grammes per km.
According to a report by the Economics Times, most companies' actual CAFE score is likely to exceed the planned score. The passenger car industry has expressed concerns about the steep penalties.
The implementation of these norms will require manufacturers to considerably upgrade the cars from their present level, and this would mean rise in costs as well.
The committee will discuss the concerns of the industry for CO2 equivalent for ethanol blends and credit/debit mechanisms for CAFE credits.
The larger objective of the new CAFE II norms is to reduce pollution levels through lower emissions of not just CO2, but also sulphur dioxide and nitrous oxide, besides bringing down the country's dependence on foreign oil.
It is expected that the committee will come up with a solution that balances the industry's concerns with the government's goal of promoting fuel efficiency and reducing emissions.
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