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CAFE norms: Simplified
Corporate Average fuel efficiency (CAFE) norms are fleet-wide fuel-efficiency and CO₂ emission standards for passenger vehicles in India. They are monitored by the Bureau of Energy Efficiency (BEE) under the Ministry of Power, in consultation with the Ministry of Road Transport and Highways (MoRTH).
How CAFE Norms Work
Scope: The rules apply to the average fuel economy and CO₂ emissions of all passenger vehicles (below 3,500 kg) that a manufacturer sells in a given period.
Fleet Average: Compliance is based on a weighted fleet average, not on the performance of any single model.
Illustrative Examples
SUVs Only: If a company sells only SUVs with high fuel consumption (e.g., 200 g/km CO₂), its fleet average is likely to exceed the CAFE limit, leading to a penalty imposed by BEE.
SUVs + Hatchbacks: Suppose SUVs emit 200 g/km CO₂ and hatchbacks emit 90 g/km CO₂. Increasing sales of efficient hatchbacks lowers the overall fleet average, helping the company meet the CAFE target.
Electric Vehicles (EVs): EVs are considered zero-emission for tailpipe CO₂. Selling EVs reduces the fleet-average emissions, making it easier to comply with CAFE standards.
Why CAFE Norms Matter
Cleaner Vehicles: Encourages manufacturers to offer more fuel-efficient and low-emission models.
Energy Security: Helps India cut oil imports by improving average fuel economy.
Climate Goals: Supports CO₂ reduction and accelerates adoption of hybrids and EVs.