Centre Releases Draft CAFE-III Fuel Efficiency Norms, Invites Public Feedback Till Aug 6

New Delhi, Jul 16: The Ministry of Power on Thursday released the draft Corporate Average Fuel Economy (CAFE-III) norms for stakeholder consultation, proposing stricter fuel efficiency standards for passenger vehicles from 2027-28 to 2031-32. For the first time, the draft introduces Carbon Neutrality Factors (CNFs), recognising the carbon-neutral benefits of ethanol, biofuels and Compressed Bio-Gas (CBG) by allowing reductions in declared tailpipe carbon dioxide emissions during compliance assessment. Under the proposal, an 8% carbon neutrality factor has been suggested for current ethanol blending levels, while reductions for CBG and other biofuels will depend on prevailing blending percentages. The Ministry has invited suggestions and comments from stakeholders and the public until August 6, 2026, after which the final norms will be notified. The proposed CAFE-III standards will replace the existing CAFE-II norms from April 1, 2027, and remain effective for five years. Fuel consumption targets are proposed to become progressively stricter, reducing from 3.996 litres/100 km (94.76 gCO₂/km) in 2027-28 to 3.3273 litres/100 km (78.90 gCO₂/km) by 2031-32. The draft also offers compliance incentives for fuel-saving technologies and cleaner vehicles, including battery electric, hybrid and flex-fuel vehicles, through super credits and a credit-trading mechanism. Manufacturers failing to meet targets may purchase compliance credits or face penalties under the Energy Conservation Act, while companies selling fewer than 1,000 passenger vehicles annually will remain exempt from the proposed norms.