CAFE minus Biogenic CO₂: Will this gap put India’s biofuel future on the back foot?

India’s biofuel revolution has moved far beyond the pilot stage — ethanol blending is cutting crude oil imports, lowering emissions, and boosting rural incomes. Automakers are investing in E20-ready engines, and policymakers see biofuels as a strategic pillar for energy security.

But a critical policy gap threatens this momentum: how Corporate Average Fuel Economy (CAFE) norms account for carbon emissions in ethanol blended cars. Current rules make no distinction between fossil CO₂ and biogenic CO₂ — the latter released when ethanol, made from crops like sugarcane, is burned. Globally recognised as part of a short-term carbon cycle, biogenic CO₂ has a far smaller climate footprint than fossil CO₂.

If this difference is ignored, automakers using ethanol blends risk inflated emission figures, steeper penalties, and reduced incentive to innovate. Correct accounting isn’t just fair — it’s essential to keep India’s biofuel ambitions on track and aligned with its clean energy targets.

India’s biofuel economy is no longer a niche experiment — it has become a vibrant, multifaceted ecosystem that touches farmers, fuel producers, vehicle manufacturers, policymakers, and even everyday consumers at the petrol pump. From E10 to E20 and beyond, ethanol blending is helping the country reduce crude oil imports, cut emissions, and create new income streams for the rural economy.

But as this sector grows, so do the responsibilities that come with it. For the biofuel industry to progress sustainably and gain global credibility, certain issues must be addressed head-on. One such critical area is adherence to Corporate Average Fuel Economy (CAFE) norms — the regulatory benchmarks that set fuel efficiency and carbon emission limits for automakers. And incidentally, the industry, which has spent years in reverse engineering its vehicles for E20, has been making a major demand in this context.

Think of CAFE norms as the class report card for a carmaker’s entire fleet. Every automaker sells many different car models — some are fuel efficient, some are gas guzzlers. They don’t judge each car individually; they look at the average fuel efficiency and carbon emissions across all cars a company sells in a year.

The government sets a target for that average — for example, “Your fleet must not emit more than X grams of CO₂ per kilometre on average.”

This means if an automaker sells one model that burns more fuel, they need to balance it by selling others that consume less. It’s like a cricket team balancing big hitters with consistent singles scorers — the total runs matter more than each player’s score.

Now to understand the issue which has caused friction between the industry and the government, we need to bring in another, seemingly technical but hugely important concept into play: biogenic CO₂. It sounds like jargon, but it’s at the heart of how we measure the real environmental impact of biofuel-powered vehicles. Whether a car is running on E10, E20, or higher blends, how we account for the CO₂ it emits — and whether we recognise its biological origins — can make the difference between fair compliance and flawed reporting.

Are all forms of carbon emissions alike? Be prepared for some further confusion, because they are apparently not! When you burn petrol, the CO₂ released comes from fossil carbon — carbon that’s been locked underground for millions of years. Once it’s released, it’s an extra load on today’s atmosphere. It is new carbon being added.

But with biofuels like ethanol, the CO₂ emitted when you burn them is called biogenic CO₂ because it comes from plants (like sugarcane or maize) that absorbed CO₂ from the air just months ago while growing. When that ethanol is burned, the CO₂ goes back into the air — but it’s basically part of a short-term cycle between plants and the atmosphere.

So logically, over its lifecycle, biogenic CO₂ doesn’t increase atmospheric carbon in the same way fossil CO₂ does — provided the crops are grown sustainably.

In short, fossil CO₂ is like taking money out of an ancient savings account and spending it now (permanent withdrawal), while biogenic CO₂ is like using money from your monthly salary (it goes out, but also comes back in regularly).

This biogenic CO₂ impact has been scientifically calculated and accepted globally. The Ministry of Petroleum and Natural Gas (MoPNG) tasked Indian Oil Corporation Limited (IOCL) with experimentally assessing the biogenic content in various ethanol–petrol blends.

During the tests, the presence of two carbon isotopes was analysed: C14 isotope – indicative of bio-based carbon and C12 isotope – indicative of fossil-based carbon.

The results aligned with the auto industry’s recommendations to the Ministry of Power (MoP). For instance, E20 was found to have a bio-based carbon component of 15%, while  E25 and E30 had biogenic CO₂ components of 19% and 25% respectively. Based on these findings, the Ministry of Petroleum and Natural Gas (MoPNG) has also requested the Ministry of Power, which has the Bureau of Energy Efficiency (BEE) within its ambit, to factor in biogenic CO₂ when evaluating compliance with CAFE norms.  However, this matter has not yet been resolved satisfactorily.

The industry has been making this demand, for ‘correct accounting of carbon emissions’, since 2022. And this becomes even more critical as the BEE plans to introduce tougher CAFÉ 3 norms (2027-23).

If biogenic CO₂ from ethanol blends like E10 or E20 is ignored in CAFE calculations, automakers’ reported fleet emissions will appear higher than they truly are, making it harder to meet the mandated CO₂ limits under progressively stricter regulations. Under current rules, non-compliance can attract steep fines — ₹25,000 per car for the first km/l shortfall in fuel economy and ₹50,000 for each km/l beyond that, in addition to a base fine of Rs 10 lakh — meaning manufacturers that have actually invested in ethanol-compatible vehicles could still be penalised as if they were selling only fossil-fuel cars.

This will be a serious disincentive for automakers as they plan their strategy towards higher ethanol blends and flex fuel vehicles as per the objectives of the government. In the interest of keeping India’s biofuel progress on track, it is imperative that this serious gap be addressed on priority.