One fuel won’t fit all. India’s policies need to agree on that

For ten years, India’s argument about clean mobility has worked like a knockout tournament, with every fuel and every policy backing a favourite. A new study from The Energy and Resources Institute (TERI), “Comparative Assessment of Vehicular Fuels in India’s Energy Transition”, should end that contest. The study compares petrol, diesel, CNG, LNG and electric vehicles across six vehicle segments, nine locations and four time horizons up to 2050. It finds that no fuel comes out on top everywhere.

The details are what matter. On cost of ownership, electric scooters, motorcycles and autorickshaws already win. High daily use, cheap electricity and low maintenance quickly pay back their higher purchase price. That advantage shrinks as vehicles get bigger. For cars, taxis, buses and light commercial vehicles, the study finds that CNG currently gives the best balance of running cost, environmental impact and practicality. For heavy trucks, the problem is weight. A 55-tonne electric truck weighs about 1.7 tonnes more empty than an LNG truck, and every extra kilogram of battery is a kilogram of cargo it cannot carry.

The environmental findings are the most uncomfortable. The study measures emissions over a vehicle’s whole life. On that basis, CNG has the lowest overall impact in most categories while India’s power grid still runs mostly on coal. Electric vehicles clearly help local air quality because they produce no exhaust. But a zero at the tailpipe does not mean zero emissions overall.

Now look at the two big policy moves of the past few days.

The first is CAFE 3, the new fuel-efficiency rules for carmakers, which the Ministry of Power notified on September 29. They apply from April 2027 to March 2032. Over that period, the average CO2 allowed across a carmaker’s fleet will fall from 94.76 g/km to 78.90 g/km, a cut of 16.7 per cent. The rules also give “super credits”, which count cleaner cars more than once. Each battery-electric or range-extender car counts as three cars in the fleet average, a plug-in hybrid counts as 2.5 and a strong hybrid as 1.6. CNG cars get no multiplier. Instead, their emissions are discounted by 5 per cent, or by whatever share of biogas the government requires in CNG, whichever is higher.

This is the gap. TERI’s full-life analysis favours CNG for cars today. CAFE 3 measures emissions only at the tailpipe, so it gives battery cars a threefold reward and treats their electricity as if it came free of carbon. That is a reasonable way to grow a young industry, but it is not the technology-neutral policy TERI recommends.

The link between CNG’s discount and biogas blending is the most interesting part of the rules. It means CNG gets more credit as the gas gets greener. That makes the second policy move important.

The second move is GOBARdhan, the government’s Rs 23,731-crore National Circular Bioenergy Scheme. It aims to raise production of compressed biogas (CBG), which is made from cattle dung, crop residue and food waste, by roughly ten times. It also requires city gas companies to include a rising share of biogas in the CNG and household piped gas they sell: 3 per cent this year, 4 per cent next year and 5 per cent from 2028-29.

The scheme is better designed than the ones before it. Producers are guaranteed a buyer and a fixed price of Rs 2,110 per MMBTU, roughly `98 per kg, until 2036. New plants get capital support of Rs 1.25 crore for every tonne of daily capacity, and small businesses get loan guarantees. There is a strong strategic case too. India imports almost half its natural gas, and 55-60 per cent of its LNG passes through the Strait of Hormuz. Gas made from Indian farm waste cannot be blocked at a sea route in the Gulf. TERI estimates that blending 20 per cent biogas into CNG could make the fuel carbon-neutral over its full life cycle.

Some scepticism is fair. The earlier biogas scheme, SATAT, promised 5,000 plants. According to government figures reported in January, only about 133 were running. Collecting enough dung and crop residue reliably, getting farmers to buy the leftover organic manure, and connecting plants to pipelines are hard problems that money alone won’t solve. A 5 per cent blend is also well short of TERI’s 20 per cent.

What should happen next? CAFE 3 should become a living framework. Its CNG discount should rise automatically as the biogas blend rises. Future versions should move towards full-life accounting as India’s grid gets cleaner. That would reward the cleanest overall option, not just the one that looks cleanest at the tailpipe. GOBARdhan should be judged by plants actually running and gas actually delivered, not by money announced. And support for EVs should go where the economics already work: two-wheelers, three-wheelers, last-mile delivery and city fleets.

TERI puts it simply: the question is no longer “which fuel replaces all others?” but “which fuel suits which vehicle, where and when?” For the first time, India has policies that could answer that. They now need to work in the same direction.

The writer is Director and the Printer & Publisher of The Pioneer; Views presented are personal.