ICCK

Major dissensions have emerged among Indian automobile manufacturers over calculation of carbon credits. On one side of this divide are Tata Motors, Mahindra & Mahindra (M&M) along with Korean companies including Hyundai Motor India (HMIL) and Kia India while includes Maruti Suzuki India (MSIL) and Toyota Kirloskar Motor (TKM) are arguing from the other side.

Owing to these differences, no consensus could be reached in a meeting held recently (first week of February) between original equipment manufacturers (OEMs) and Bureau of Energy Efficiency (BEE) about carbon credit calculation, sources in the government and the industry told businessline.

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 were kicked off in April 2017 with BS4 exhaust emission norms and the second was rolled out in January, last year under which limits are set on the total emission of carbon dioxide. These are computed by taking into account the weight of individual models of a vehicle and the number sold. It aims to increase fuel efficiency of vehicles by 35 per cent by 2030.

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

“The first group wants that the previous years’ credits must 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 not able 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 in place a formal structure for carbon credits mechanism. There is also no clarity whether the CAFE penalties should be imposed by the Centre or by the State regulators, the sources said.

“The industry basically wanted to understand a number of issues. It wasn’t exactly a confrontation but more of an outstanding issue which the industry wanted to resolve and have some clarity. The discussion also revolved around certain things that can be done to operationalise the entire process in a more flexible way,” said another source who was part of the meeting.

“For example, you look at accounting every year and then you decide what’s to be done. The other option is that you allow people to count previous points of CAFE and do better next year which is nothing but like provisions of banking,” he added.

“There was no closure on the discussion because Hyundai, Kia and a few others like Tata Motors and M&M had a different view and said the points should be carried forward in the next fiscal (as they haven’t met the target) where as MSIL and TKM were against it because they have already achieved their targets for the financial year,” sources said.

The next meeting can be called in the middle of April, for further discussion to get a consensus, the sources added.

Queries sent by businessline to MSIL, Hyundai Motor India, Tata Motors and M&M to seek their version did not elicit any response.

This is the missive from BEE: “The fuel consumption notifies that this is measured under the standard conditions at the nationally accredited labs where the fuel consumption is measured over the nationally driven cycle. It is expected that these standards would lead to a reduction of 22.97 million tonnes of fuel consumption by 2025.”

This is top in the priority list of nations, economies and companies that aim to be sustainable. India has set a target of achieving Net Zero by 2070 and to meet half of its energy needs from renewable sources by 2030. Currently, the country ranks fourth in the world in terms of carbon dioxide emissions, after China, the United States and the European Union.

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