Indian Automakers Disagree Over Carbon Credit Calculation

Major differences have emerged among Indian automobile manufacturers over calculating carbon credits between Tata Motors, Mahindra & Mahindra, Hyundai Motor India, and Kia India on the one side and Maruti Suzuki India (MSIL) and Toyota Kirloskar Motor (TKM) on the other.

Owing to these disagreements, consensus eluded the meeting held recently between original equipment manufacturers (OEMs) and the Bureau of Energy Efficiency (BEE) about carbon credit calculation. According to the Corporate Average Fuel Efficiency (CAFE) regulations, the government aims to reduce the overall carbon dioxide from a vehicle’s exhaust.

The first CAFE norms kicked off in April 2017 with BS4 exhaust emission norms, and the second became effective in January last year, under which limits are set on the total carbon dioxide emission. These are computed by considering the weight of individual vehicle models and the number sold. It aims to increase the fuel efficiency of vehicles by 35 percent by 2030.

It was decided that the highest carbon footprint to be allowed was 130 g per km till 2022, and after that, it will be reduced to 113 g per km. CAFE regulations are for all engines in passenger vehicles, including petrol, diesel, and CNG/LPG.

“The first group wants the previous years’ credits to be allowed to be compensated in the current year. However, Maruti Suzuki has strongly opposed this move. The industry body SIAM (Society of Indian Automobile Manufacturers) is also unable to build a consensus among the OEMs,” said a person privy to the discussions in the meeting.

At the same time, the OEMs want the CAFE penalties to be in sync when India puts a formal structure for carbon credit mechanisms in place. The sources said there is also no clarity on whether the Centre or the state regulators should impose the CAFE penalties.

The discussions were inconclusive because Hyundai, Kia, and a few others, like Tata Motors and M&M, argued that the points should be carried forward to the next fiscal (as they haven’t met the target), as opposed to MSIL and TKM, which have achieved their targets for the financial year.

The next meeting is expected in the middle of April for further discussion to reach a consensus.

Nations, economies, and companies must prioritise sustainability. India has committed to the target of Net Zero emissions by 2070 and generating 50 percent of its energy from renewable sources by 2030. India is the fourth-largest carbon dioxide emitter globally, after China, the United States, and the European Union.