Government proposes implementation rules for the first-ever fuel consumption norms for passenger cars - CSE finds gaping holes in them

• While public attention is diverted towards Bharat Stage IV emissions norms becoming the nation-wide standard from April 1 this year, the new compliance rules for fuel consumption norms for cars is escaping public scrutiny. 

• CSE says the rules – which will help enforce the fuel consumption norms -- have huge loopholes in them. The most glaring is the permission given to car manufacturers to score higher points for selling diesel mild hybrids. These are already established technologies that are enjoying incentives under electric vehicle programme and excise duty cuts. They are much less fuel efficient than real hybrids. This misplaced incentive can stoke massive dieselisation. Fuel consumption norms should not increase cancer risk as a trade-off for fuel efficiency. 

• It is also unacceptable that the new draft rules have not included any penalty for the car manufacturers for non-compliance. Other countries have stringent penalty for manufacturers if they fail to meet the fuel economy target. 

• The new standards meant to reduce energy and climate impact of motorisation are at serious risk of being diluted as the proposed implementation rules are beset with loopholes. The Ministry of Road Transport and Highways and the Bureau of Energy Efficiency must immediately step in to address the loopholes in the proposed draft.

• If not plugged immediately, these loopholes can weaken the programme at serious energy cost with severe climate change consequences and also fan massive dieselisation

New Delhi, February 9, 2017: Centre for Science and Environment (CSE) has found serious loopholes in the recently released draft rules for measuring and monitoring compliance with the new fuel consumption standards for passenger cars to be enforced for the first time in India this year. India, so far, is the only major vehicle producing region in the world that has not implemented fuel efficiency norms for vehicles. While these norms were notified way back in 2015, rules for compliance with the norms have just been proposed for implementation this year. 

Says Anumita Roychowdhury, executive director-research and advocacy, CSE: “The proposed compliance rules have allowed number of concessions for the car industry to score extra points for certain technologies for compliance with the norm. If this is not addressed immediately, it can seriously compromise and weaken the effectiveness of the programme.” 

Unlike the emissions standards of Bharat Stage IV norms, the fuel efficiency norms are technically more complex to enforce. While to comply with Bharat stage emissions standards each and every vehicle is tested in lab to check compliance with the uniform emission norm, fuel economy norms are enforced as sales weighted corporate average fuel consumption for each vehicle manufacturer based on what they sell in a year. Fuel economy level varies across car models and makes that each manufacturer produce. 

Therefore, the average fuel economy level of all models and make of each manufacturer is taken for a year to calculate sales weighted corporate average fuel consumption to check if it is within the stated limit. This demands robust data reporting by the industry, independent verification, and minimal incentives to avoid giving wrong incentives for inappropriate technologies. 

“Devil is in the detail of the calculation of the corporate average fuel consumption level of each manufacturer to assess compliance with the norm. If too many extra points or super credits are granted for inappropriate technologies for calculation of the average fuel economy level achieved by each manufacturer, this can seriously dilute and weaken the programme. Manufacturers can get away with minimal effort to improve fuel efficiency”, says Roychowdhury. 

This has serious implications given India’s dependence on imported crude oil and vulnerability of India’s economy to oil price vagaries, says CSE. According to the International Energy Agency, future energy demand in India’s transport sector will be largely driven by cars, after the heavy duty segment. It is not fair to incur enormous energy costs and suffer climate risk from the use of personal vehicles, adds Roychowdhury. 

The fuel economy norms will be introduced in two phases in India – 2017-18 and 2022-23. While these norms have been inordinately delayed these are also very weak. The corporate average fuel consumption norm to be enforced this year is 5.2 litre/100km or 134 CO2gm/km. In 2022-23 the target will be 4.77litre/100km or 113.1 gm/km, when European norm will be as stringent as 95 gm CO2/km. Carbon dioxide (CO2), a greenhouse gas, is a measure of fuel consumption. 

According to an ongoing study by the International Council on Clean Transportation the current Indian car industry has already attained the corporate fuel economy average of 5.18 litre/100km or 123 CO2g/km which is better than the norm to be enforced this year. Therefore, if parameters of enforcement are further weakened the corporate average norms will not help to bring energy efficient technology. 

Key objections to the proposed rules for compliance with fuel economy standards 

Take away super credits or extra points given as incentive to mild diesel hybrids and other inappropriate technologies: The proposed rules for compliance have allowed manufacturers to get extra points for mild hybrid electric vehicles to comply with the corporate average standards. This is a regressive step that undercuts the ongoing effort to control dieselisation. Diesel mild hybrid vehicles that are a lot less fuel efficient than plug-in-hybrids are already enjoying incentives under the FAME programme; they also get excise duty cuts. These are well established technologies and do not require incentive to create a market. Super credit for these vehicles will not only lower the effectiveness of the fuel economy regulations but also ramp up massive dieselisation that are source of highly toxic and cancer causing emissions. This is a regressive step when cities are battling toxic risk from growing dieselisation. Super credits should be given only for super efficient and zero emissions vehicles. Only plug-in-hybrid electric vehicles and pure electric vehicle should be given super credits. 

Moreover, manufacturers are being allowed to score points for adopting other ineffective technologies on the presumption that these will allow fuel savings that cannot be quantified certification testing. These include tyre pressure monitoring system, speed transmission, real time fuel economy indicator etc. These are not effective to help either innovation or mitigation.  For example, fuel economy indicators have nothing to do with real mitigation and are too dependent on driver behaviour. It is important to focus on in-built vehicle solutions and not driver behaviour dependent solutions for enforcing standards for manufacturers. Tyre pressure monitoring system depends on driver’s activation and is not automatic. These should not be incentivised under the fuel economy regulations. These are in any case required by the fitness and safety regulations. These should be removed from the rules. 

Energy savings from any technology should be evidence based that is real, quantifiable, and verifiable over the vehicle lifecycle. Studies in Brazil by International Council on Clean Transportation have shown that such extra credit points for compliance have reduced fuel consumption target by 19 per cent. This is therefore a serious matter and should be addressed in the final rule. The technologies that have been currently listed should be removed. 

Introduce stringent penalty for manufacturers for non Compliance with norms: This is the weakest section in the draft proposal. Rules have not prescribed any penalty for the defaulter. All that the proposed rules require for non-compliance is to submit a catch up plan for the reporting period following the previous default year. If manufacturers fail even in the third consecutive year designated agency will have to report to MORTH and BEE. There is nothing beyond reporting. 

This virtually means that non-compliance will be tolerated with no penal action for three years and even after that the matter will only by reported. Penalty has not been codified even though the Energy Conservation Act which is the overarching legislation for energy efficiency provides for penalty. There is a clear provision of penalty clause in Chapter VIII of the Energy Conservation Act.

Other governments enforce stringent penalty: Effective penalty for non-compliance have been enforced in the US and Europe. Penalties under US CAFE system are now being increased from USD 5.50 per tenth of a mile per gallon (mpg) that will be burnt extra due to con compliance to USD 14 per tenth of mpg from model year 2019. Penalties in EU are at EUR 95 per gCO2/km shortfall. In India too if a manufacturer's Corporate Average Fuel Consumption (CAFC) exceed its Corporate Average Fuel Consumption Target (CAFCT) in that fiscal year, then the excess fuel use for the new passenger vehicles produced or imported for sale in that fiscal year should be calculated based on the net metric ton of oil equivalent of energy in excess of the prescribed norms as well as the excess emission premium for the manufacturer in the given calendar year. The CAFÉ standards cannot work without stringent compliance and penalty system.  

Do not allow car makers producing widely different products to pool their products and credit points to achieve compliance with the corporate average target: The proposed rules allow several manufacturers to form a pool to work out the corporate average to comply with fuel consumption target. This can turn out to be a serious loophole if companies with unrelated product range come together to pool. This has serious risk where manufacturers producing large luxury cars that guzzle more fuel are allowed to pool with manufacturers producing small cars that are more fuel efficient only for the sake of compliance. Some manufacturers will meet their targets virtually by doing nothing to improve their products. If at all, pooling should be allowed and confined within only the same group of industries with one parent company. 

Need robust data reporting system and independent verification tests: The regulator needs the actual number of cars sold by model and make of each manufacturer to calculate their average CO2/fuel economy levels to verify compliance with the standards. This requires very disciplined and credible reporting of fuel economy and vehicle sales data of all car models and variants in a year. The entire system depends on self reporting by the car industry. The government will have to create independent systems to generate data and also have a system to carry out verification tests.

Act now
The Ministry of road transport and highways and Bureau of energy efficiency must immediately step in to address the loopholes and anomalies in the proposed draft rules for compliance with the fuel consumption standards for cars. It must take away the incentive for mild diesel hybrids and other inappropriate technologies and impose stringent penalty on manufacturers for non-compliance. 

For more on this, please contact Vrinda Nagar, CSE Media Resource Centre, at 9654106253/ vrinda.nagar@cseindia.org.