India's transport sector contributes approximately 13% of the nation’s total carbon dioxide (CO₂) emissions. The increasing demand for motor vehicles, expected to grow from 60 million in 2020 to 262 million by 2050, will significantly escalate emissions.  Furthermore, the rapid urbanisation of India, with the urban population expected to reach 590 million by 2031, will increase motor vehicle demand, leading to higher carbon emissions.

• As CO₂ emissions from the transport sector are projected to grow by 6% annually, urgent measures are required to curb its environmental impact. India’s transition to cleaner energy sources, supported by policies such as the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME), has facilitated the growth of electric vehicles (EVs).
• However, for an effective decarbonisation strategy, multiple alternative fuels, including hydrogen, biofuels, and compressed biogas (CBG), must be incorporated alongside stringent regulatory measures.

The Role of Alternative Fuels in Reducing Carbon Emissions

Electric Vehicles (EVs) and Hydrogen

The Indian government has promoted EV adoption through supportive policies, including FAME, leading to increased EV sales. As energy generation transitions to cleaner sources, EVs will play a crucial role in reducing transport-related emissions.

Hydrogen, particularly green hydrogen, is emerging as a viable alternative fuel. The National Hydrogen Mission (NHM) prioritises hydrogen production, reducing reliance on fossil fuels and fostering sustainable transportation.

Biofuels: Ethanol, Biodiesel, and Compressed Biogas (CBG)

Ethanol Blending

• Biofuels, including ethanol, biodiesel, and compressed biogas, contribute significantly to emission reduction. India’s Ethanol Blending Programme aims to achieve 20% ethanol blending by October 2025. During 2022-23, India's ethanol-blending capacity of 17 billion litres reduced approximately 10.8 million metric tons of net CO₂ emissions, while also reducing petroleum import dependency, contributing to foreign exchange savings exceeding INR 243 billion.
• Between 2022-24, public sector Oil Marketing Companies (OMCs)—such as Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL)—have increased ethanol blending, leading to substantial foreign exchange savings of INR 1,086.55 billion as of 30 September 2024.
• However, the ethanol adoption framework remains under evaluation. The Bureau of Energy Efficiency (BEE) and the Institute for Industrial Productivity (IIP) are conducting an ongoing study to assess ethanol blending levels for effective decarbonisation. The derogation factor table within CAFE norms does not explicitly specify ethanol blending levels, limiting its impact in achieving emission reduction targets.

Compressed Biogas (CBG)

Despite its higher negative carbon intensity than compressed natural gas (CNG), CBG remains underutilised in regulatory frameworks. Recognising its potential, the National Biofuels Coordination Committee (NBCC) recently approved a phased blending of CBG with CNG and piped natural gas (PNG), with mandatory blending obligations beginning in Fiscal Year 2025-26. However, CBG is absent from the proposed CAFE III and IV norms, limiting its role in India’s decarbonisation strategy.

Biobutanol Blending in Diesel

The norms also fail to consider biobutanol blending in diesel, which could significantly enhance carbon reduction efforts. Hydrogen-based internal combustion engines (ICEs) remain unexplored despite their alignment with NHM’s goal to produce 5 MMT of green hydrogen annually by 2030, potentially abating 50 MMT of CO₂ emissions per annum.

Corporate Average Fuel Economy (CAFE) Norms

Overview of CAFE Norms

CAFE norms regulate original equipment manufacturers (OEMs) by imposing fleet-wide CO₂ emission limits, encouraging energy-efficient and less polluting vehicles. First introduced in 2017-18 (Stage I), stricter Stage II standards were implemented in April 2022. These norms initially applied to passenger cars but now include heavy-duty, light, and commercial vehicles.

Super Credits and CO₂ Reduction Factors

• Super credits reward manufacturers for adopting low-emission technologies:
• Fuel Cell Electric Vehicles (FCEVs) receive a multiplier of 3 (proposed to increase to 5 under CAFE III and IV).
• Battery Electric Vehicles (BEVs) receive a multiplier of 3 (proposed to increase to 4).
• Plug-in Hybrid Electric Vehicles (PHEVs) receive a multiplier of 2.5.
• Hybrid Electric Vehicles (HEVs) receive a multiplier of 2.

·        CO₂ reduction factors include a 0.98 multiplier for regenerative braking, start-stop systems, and advanced transmission technologies, encouraging cleaner transportation solutions.

Future CAFE Norms (CAFE III and IV)

• CAFE III (2027-2032) aims to reduce average CO₂ emissions to 91.7 g/km.
• CAFE IV (2033-2037) aims to further lower emissions to 70 g/km.
• However, CAFE norms prioritise BEVs and FCEVs while underestimating biofuels' role, potentially limiting their effectiveness.

India's transport sector contributes approximately 13% of the nation’s total carbon dioxide (CO₂) emissions. The increasing demand for motor vehicles, expected to grow from 60 million in 2020 to 262 million by 2050, will significantly escalate emissions.  Furthermore, the rapid urbanisation of India, with the urban population expected to reach 590 million by 2031, will increase motor vehicle demand, leading to higher carbon emissions.

As CO₂ emissions from the transport sector are projected to grow by 6% annually, urgent measures are required to curb its environmental impact. India’s transition to cleaner energy sources, supported by policies such as the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME), has facilitated the growth of electric vehicles (EVs).

However, for an effective decarbonisation strategy, multiple alternative fuels, including hydrogen, biofuels, and compressed biogas (CBG), must be incorporated alongside stringent regulatory measures.

The Role of Alternative Fuels in Reducing Carbon Emissions

Electric Vehicles (EVs) and Hydrogen

The Indian government has promoted EV adoption through supportive policies, including FAME, leading to increased EV sales. As energy generation transitions to cleaner sources, EVs will play a crucial role in reducing transport-related emissions.

Hydrogen, particularly green hydrogen, is emerging as a viable alternative fuel. The National Hydrogen Mission (NHM) prioritises hydrogen production, reducing reliance on fossil fuels and fostering sustainable transportation.

Biofuels: Ethanol, Biodiesel, and Compressed Biogas (CBG)

Ethanol Blending

• Biofuels, including ethanol, biodiesel, and compressed biogas, contribute significantly to emission reduction. India’s Ethanol Blending Programme aims to achieve 20% ethanol blending by October 2025. During 2022-23, India's ethanol-blending capacity of 17 billion litres reduced approximately 10.8 million metric tons of net CO₂ emissions, while also reducing petroleum import dependency, contributing to foreign exchange savings exceeding INR 243 billion.
• Between 2022-24, public sector Oil Marketing Companies (OMCs)—such as Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL)—have increased ethanol blending, leading to substantial foreign exchange savings of INR 1,086.55 billion as of 30 September 2024.
• However, the ethanol adoption framework remains under evaluation. The Bureau of Energy Efficiency (BEE) and the Institute for Industrial Productivity (IIP) are conducting an ongoing study to assess ethanol blending levels for effective decarbonisation. The derogation factor table within CAFE norms does not explicitly specify ethanol blending levels, limiting its impact in achieving emission reduction targets.

Compressed Biogas (CBG)

Despite its higher negative carbon intensity than compressed natural gas (CNG), CBG remains underutilised in regulatory frameworks. Recognising its potential, the National Biofuels Coordination Committee (NBCC) recently approved a phased blending of CBG with CNG and piped natural gas (PNG), with mandatory blending obligations beginning in Fiscal Year 2025-26. However, CBG is absent from the proposed CAFE III and IV norms, limiting its role in India’s decarbonisation strategy.

Biobutanol Blending in Diesel

The norms also fail to consider biobutanol blending in diesel, which could significantly enhance carbon reduction efforts. Hydrogen-based internal combustion engines (ICEs) remain unexplored despite their alignment with NHM’s goal to produce 5 MMT of green hydrogen annually by 2030, potentially abating 50 MMT of CO₂ emissions per annum.

Corporate Average Fuel Economy (CAFE) Norms

Overview of CAFE Norms

CAFE norms regulate original equipment manufacturers (OEMs) by imposing fleet-wide CO₂ emission limits, encouraging energy-efficient and less polluting vehicles. First introduced in 2017-18 (Stage I), stricter Stage II standards were implemented in April 2022. These norms initially applied to passenger cars but now include heavy-duty, light, and commercial vehicles.

Super Credits and CO₂ Reduction Factors

• Super credits reward manufacturers for adopting low-emission technologies:
• Fuel Cell Electric Vehicles (FCEVs) receive a multiplier of 3 (proposed to increase to 5 under CAFE III and IV).
• Battery Electric Vehicles (BEVs) receive a multiplier of 3 (proposed to increase to 4).
• Plug-in Hybrid Electric Vehicles (PHEVs) receive a multiplier of 2.5.
• Hybrid Electric Vehicles (HEVs) receive a multiplier of 2.

·        CO₂ reduction factors include a 0.98 multiplier for regenerative braking, start-stop systems, and advanced transmission technologies, encouraging cleaner transportation solutions.

Future CAFE Norms (CAFE III and IV)

• CAFE III (2027-2032) aims to reduce average CO₂ emissions to 91.7 g/km.
• CAFE IV (2033-2037) aims to further lower emissions to 70 g/km.
• However, CAFE norms prioritise BEVs and FCEVs while underestimating biofuels' role, potentially limiting their effectiveness.

Policy Recommendations and The Way Forward

1.   Expanding CAFE Norms Beyond EVs

o   CAFE norms must align with biofuel-related policies governed by the Ministry of Petroleum and Natural Gas (MoPNG), Ministry of Road Transport and Highways (MoRTH), and Ministry of New and Renewable Energy (MNRE).

o   A collaborative approach will enhance carbon reduction more effectively than a focus on EVs alone.

2.   Incorporating Life Cycle Assessment (LCA) for Fuel Comparisons

o   CAFE norms must implement an LCA framework to evaluate fuel types across their entire lifecycle.

o   Given the challenges of a full EV transition, hybrid vehicles, ethanol-based hybrids, and Flexible Fuel Vehicles (FFVs) must be recognised as viable alternatives.

3.   Encouraging Diversified Adoption of Green Fuels

o   A biogenic factor of 14.3% for petrol vehicles with up to 20% ethanol blending and 22.2% for FFVs should be introduced under CAFE III.

o   Policy incentives for FFV-Strong HEVs and FFV-PHEVs should be introduced, similar to BEVs and FCEVs.

4.   Recognising Alternative Hydrogen Technologies

o   Blue and green hydrogen for internal combustion engines must be included in CAFE norms.

5.   Incentivising ICE Innovations

o   Solar roof integration, cylinder deactivation, and flex-fuel engines must be incentivised.

o   The United States CAFE standards provide incentives for dual-fueled and alternative fuel vehicles—India must adopt a similar approach.

Conclusion

A rigorous analysis of CAFE norms is imperative to ensure that biofuels, hybrid technologies, and alternative fuels are given equal priority alongside EVs. A holistic approach that integrates diverse decarbonisation pathways will be crucial for India to fulfil its climate commitments while ensuring energy security, economic growth, and sustainability.

Main Question: Discuss the role of alternative fuels such as biofuels, hydrogen, and electric vehicles (EVs) in India's efforts to decarbonise the transport sector.

1.   Expanding CAFE Norms Beyond EVs

o   CAFE norms must align with biofuel-related policies governed by the Ministry of Petroleum and Natural Gas (MoPNG), Ministry of Road Transport and Highways (MoRTH), and Ministry of New and Renewable Energy (MNRE).

o   A collaborative approach will enhance carbon reduction more effectively than a focus on EVs alone.

2.   Incorporating Life Cycle Assessment (LCA) for Fuel Comparisons

o   CAFE norms must implement an LCA framework to evaluate fuel types across their entire lifecycle.

o   Given the challenges of a full EV transition, hybrid vehicles, ethanol-based hybrids, and Flexible Fuel Vehicles (FFVs) must be recognised as viable alternatives.

3.   Encouraging Diversified Adoption of Green Fuels

o   A biogenic factor of 14.3% for petrol vehicles with up to 20% ethanol blending and 22.2% for FFVs should be introduced under CAFE III.

o   Policy incentives for FFV-Strong HEVs and FFV-PHEVs should be introduced, similar to BEVs and FCEVs.

4.   Recognising Alternative Hydrogen Technologies

o   Blue and green hydrogen for internal combustion engines must be included in CAFE norms.

5.   Incentivising ICE Innovations

o   Solar roof integration, cylinder deactivation, and flex-fuel engines must be incentivised.

o   The United States CAFE standards provide incentives for dual-fueled and alternative fuel vehicles—India must adopt a similar approach.

Conclusion

A rigorous analysis of CAFE norms is imperative to ensure that biofuels, hybrid technologies, and alternative fuels are given equal priority alongside EVs. A holistic approach that integrates diverse decarbonisation pathways will be crucial for India to fulfil its climate commitments while ensuring energy security, economic growth, and sustainability.