BEE may rewrite draft CAFE-3 rules to shift base fuel from E20 to E25

Bureau of Energy Efficiency is considering revising fuel-efficiency norms using E25 as the base fuel amid efforts to cut crude oil imports and boost ethanol blending

The Bureau of Energy Efficiency (BEE) is likely to revise the draft Corporate Average Fuel Efficiency-3 (CAFE-3) norms once again, this time adopting E25 rather than E20 as the base fuel for calculations used to frame the main compliance equation under the proposed rules, Business Standard has learnt. 

The core equation determines the final carbon dioxide emission limit for each automaker. CAFE-3 norms are scheduled to come into force from April 2027 for a five-year period. 

Israel and the US carried out military strikes against Iran on February 28, triggering a conflict that has disrupted oil supplies from the Gulf and driven global crude prices sharply higher. Since then, several government departments have been discussing with automakers a faster transition from mandatory E20 fuel to E25. E20 fuel, containing 20 per cent ethanol blended with petrol, is currently mandatory at fuel stations across India. 

Ethanol is produced domestically from sugarcane and grain, and raising the ethanol content in petrol is seen as a way to curb India’s growing crude oil import bill. E20 fuel, containing 20 per cent ethanol blended with petrol, is currently mandatory at fuel stations across India. 

Draft CAFE-3 norms have been under discussion for several years, with automobile industry executives repeatedly urging the government to notify the final rules so companies can begin product planning and investment decisions. 

“The BEE is likely to revise the draft once again, keeping E25 as the base fuel. Cars over the next five years will most likely run on E25, so there is little point preparing a CAFE-3 equation based on tests conducted using E20 fuel,” said a source familiar with the matter. 

Another source said the revised draft could soon be circulated among government departments for consultation. 

The BEE did not respond to Business Standard’s queries on the matter. 

The energy-efficiency body has so far issued or circulated at least four iterations of the proposed CAFE-3 norms. 

The first draft, released publicly in June 2024, set out the initial framework for the third phase of the standards. 

A second revised draft was released publicly in September 2025 after consultations with automakers and other stakeholders. That version included changes relating to flex-fuel vehicles, the treatment of small cars, manufacturer pooling, and revised compliance calculations. 

Since then, the BEE has privately circulated at least two further revised versions to automakers and industry bodies instead of releasing them publicly. One proposal was discussed with the industry in February 2026, followed by another consultation draft shared with automakers in April 2026. 

India’s CAFE norms determine emission limits for each automaker through a mathematical formula linking vehicle weight to permitted carbon dioxide emissions. The BEE develops the formula using vehicle sales data, weight profiles, technology assumptions and laboratory emission test results. 

The fuel used during testing is critical because fuel properties directly affect measured carbon dioxide emissions. Ethanol-blended petrol such as E20 and E25 has a different carbon content and combustion profile from conventional petrol. 

As ethanol contains less carbon than petrol, any increase in the blending ratio would alter tailpipe carbon dioxide readings during vehicle certification tests.