Why in News?

The Centre has identified eight automakers, including Hyundai, Kia, Mahindra, and Honda, for exceeding mandated fleet emission levels during the financial year 2022-23.

Non-compliance with Corporate Average Fuel Efficiency (CAFE) norms has led to an estimated penalty of ₹7,300 crore, with Hyundai alone facing over ₹2,800 crore in fines.

What’s in Today’s Article?

• What are CAFE Norms?
• Penalty on Automakers for Violating CAFE Norms
• Conclusion

What are CAFE Norms?

• Introduced by: The Bureau of Energy Efficiency (BEE) in 2017 under the Energy Conservation Act, 2001, to regulate fuel consumption and carbon emissions for passenger vehicles.
• Objective: Reduce oil dependency and curb air pollution.
• Scope: Vehicles under 3,500 kg, including those powered by petrol, diesel, LPG, CNG, hybrids, and EVs.
• 
• Implementation: These standards were introduced in two phases - the first CAFÉ norms stage I fuel consumption standards were introduced effective 2017-18, and the CAFÉ norms stage II standards came into force in 2022-23.
• Compliance Criteria for FY23:
  • Fuel consumption: ≤ 4.78 litres per 100 km.
  • Carbon emissions: ≤ 113 grams of CO2 per km.
• Penalties for non-compliance: The financial year 2022-23 saw tighter CAFE norms come into effect, resulting in significant penalties for non-compliance.
• Significance of CAFE norms:
  • The CAFE framework incentivises automakers to produce EVs, hybrids, and CNG vehicles while penalising reliance on fossil fuel-driven cars.
  • Stricter norms align with India’s broader goals to reduce emissions and promote sustainable transportation.

Penalty on Automakers for Violating CAFE Norms:

• Breakdown of penalty: The penalties represent a substantial proportion of some automakers' profits, with Hyundai's fine equating to nearly 60% of its FY23 earnings.
  • 
• Stricter penalty norms:
  • In December 2022, the Energy Conservation Act was amended to enforce stricter penalties:
    • ₹25,000 per vehicle for a shortfall below 0.2 litres per 100 km.
    • ₹50,000 per vehicle for exceeding the threshold.
  • Base penalty: ₹10 lakh.
• Carmakers’ contentions: Automakers argue that the stricter penalty norms took effect only from January 1, 2023, making it unfair to apply them retroactively to cars sold throughout FY23.
• Government’s counter:
  • In FY23, 18 manufacturers’ models were tested in accredited laboratories to simulate real-world driving conditions.
  • While all 19 automakers complied in FY22, data for FY23 indicates non-compliance for eight carmakers.

Conclusion:

• The penalties for non-compliance with CAFE norms underscore the government's commitment to enforcing stricter emission standards.
• However, ongoing discussions and delayed compliance reports highlight the challenges in balancing regulatory enforcement with industry concerns.