CAFE SCORE | IAS GYAN

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Context

Car companies in India will have to bear stiff penalties from April 2022, as the Energy Conservation (Amendment) Act 2022 stipulates heavy fines on a company’s annual domestic sales numbers for violation of the mandated Corporate Average Fuel Economy (CAFE) score.

What does CAFE mean?

CAFE stands for Corporate Average Fuel Economy or Efficiency. Imposed on a carmaker’s entire fleet, and not on an individual model, it is a limit set on the total emission of carbon dioxide produced.

Why a limit on CO2, when CAFE’s about fuel efficiency?

Measuring fuel efficiency and the CO2 output of a car are one and the same thing. The amount of CO2 a car emits is, in fact, directly proportionate to the amount of fuel it consumes.

How are CAFE norms and BS6 norms different?

While BS6 norms limit the emissions of pollutants like hydrocarbons, sulphur and oxides of nitrogen, CAFE norms deal with overall fuel consumption, specifically the quantity of fuel consumed.

Provisions related to CAFÉ in Energy Conservation (Amendment) Act 2022

The clause in the broader Energy Conservation (Amendment) Act 2022 says that a company, if found in violation of fleet emission scores, will have to shell out a fine of Rs 25,000 per car sold. Penalties may run into thousands of crores of rupees for large volumes.
While the average corporate CO2 emission limit for Indian carmakers has been fixed at 113gm per km, each company will have their individual limits based on number of cars sold and mix of fuel type — petrol, diesel, hybrid, CNG, or electric. The Rs 25,000 fine will kick in if the fleet CO2 emission for a company is higher by 0-4.7%.
If fleet CO2 emission is higher than 4.7gm, then penalty will be Rs 50,000 per unit sold.

Objections raised

In the case of companies that sell in volumes, penalty can run into thousands of crores of rupees, even if CO2 emissions are slightly above the limit. This is unfair as companies are investing in green technologies such as hybrids, electrics, and CNG, over and above what they spent on migrating to BS6 standards.

Significance of CAFÉ Score

These norms force manufacturers to make more efficient cars, which impacts many other things.
CAFÉ Score improves the average fuel economy of cars and light trucks (trucks, vans and sport utility vehicles) produced for sale.
CAFE neither directly offers incentives for customers to choose fuel efficient vehicles nor directly affects fuel prices. Rather, it attempts to accomplish the goals indirectly, by making it more expensive for automakers to build inefficient vehicles by introducing penalties.