Environmental Pragmatism:The Key to “Moving Forward” Bob Wade

Corporate ManagerEnvironmental, Hazmat &

Safety

1. Continuing regulatory, political and public pressures to reduce emissions and carbon footprint

2. Toyota’s environmental program – going beyond compliance

3. How to “Move Forward” and achieve results in today’s reality

Presentation Overview

Public Opinion Context

Continuing public concern and pressure to address global climate change . . .

despite lack of major progress at Copenhagen.

Personal Stakes are High

Regulatory Context

• Continued focus at the Federal and state levels on addressing emissions and GHG reductions

• EPA decision to grant California waiver for GHG emission standards for motor vehicles . . . soon 2016 and beyond

• Possible Federal climate change legislation• CARB diesel emission reduction programs, spanning:

– On-road vehicles (trucks, buses, etc.)– Off-road vehicles and equipment (locomotives,

tractors, cargo handling equipment, etc.)– Marine vessels (harbor craft, ocean vessels, shore

power)– Stationary engines & portable equipment

Toyota’s Global 5 Year Environmental Action

Plan

TMS Environmental Action Plan

North American Environmental Report

Global Environmental Report

TMS Environmental

Policy

Toyota’s Global Earth Charter

Toyota Environmental Program

TMS Environmental Action Plan

Environmental Action Plan

1. Energy & Climate Change

2. Recycling & Reduce Resources

3. Substances of Concern

4. Air Quality

5. Environmental Management

6. Cooperation with Society

• Set goals & targets

• Report annual results

2009 NA Report Results

• Exceeded CAFE

• 25% less energy use - TMS

• 90% recycling rate at TLS

• Logistics GHG reduction

Today’s Challenge

How do we achieve further environmental gains in today’s

regulatory and economic climate- and –

at the same time, avoid undue burden and cost impacts on shipping?

Answer

“Environmental Pragmatism”

“Environmental Pragmatism”

Recipe

“Short-Term Small” + “Long-Term Large” + Common Sense

“Short-Term Small”

• Identify small investments and process changes that have short-term ROI and achieve environmental goals

• String them together to maximize return

Example #1 – Fuel Efficiency Initiative

Toyota Transport TQPE TEMA

• Post MPG• 18 trailers w/skirts• Governed Speed

• Driver Incentive (Post MPG)• Governed Speed• 2 trailers w/skirts• 2 trailers w/Nose cone

• MPG target for fuel surcharge calculation (6.3 mpg 6.53 in FY10)

$274,658 $ 188,764 $2.3M

A cross-affiliate team from service parts, completed vehicle logistics and manufacturing parts logistics developed some 19 separate initiatives to reduce fuel costs

Annualized Savings = $2.76M + GHG & Emissions Reductions

Toyota Transport - Governed Speed

Speed reduction of 5mph 68mph to 63 mph

Unit cost: $15 – labor

Launch date: July 08

MPG gain: 2.97%

ROI: < 1 week

Savings/Yr.: $1,258/truck

44 trucks: $55,352/yr.

Service Parts - Driver Incentive

Driver Incentive Program .5mpg Increase

Unit cost: $7,000 max

Launch date: April 09

MPG gain: .575mpg Q2

ROI: 2 weeks

Savings/Yr.: $138K/yr.

Example #2 – Service Parts Truck Efficiency Kaizen

• Through route kaizen & increased cube efficiency, TMS reduced miles traveled to deliver service parts and accessories by 2.5M miles over the previous year.

“Long-Term Large”

• Patient investment – facilities, equipment and process changes

• Longer-term plans and expectations• No instant ROI – but perhaps greater

long-term return

Energy Use – U.S. Sales & Distribution

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

FY01 FY05 FY06 FY07 FY08 FY09

BTU/ Square Foot

25%

Energy Savings

“Long-Term Large”NAPCC Rooftop Solar

“Long-Term Large” BenefitsNAPCC Rooftop Solar

• 2.3 megawatt solar roof array – second largest in North America

• No upfront capital costs• Generates 58% of NAPCC

electricity requirements• Prevents 2.4 million

pounds of CO2 annually• Annual utility cost

savings of $360K annually

Application to Port Operations

• Led by the Ports of LA and Long Beach – greater emphasis on environment

• Some requirements – like cold-ironing, stack sock, vessel retrofits – are very costly and sometimes impractical

• There may well be better, more practical and more cost-effective solutions!!

Conclusion

• These are challenging times on the economic and regulatory fronts

• The key to “Moving Forward” in achieving environmental goals without creating undue financial burdens on shipping will require . . .

“Environmental Pragmatism”

“Short-Term Small” + “Long-Term Large” + Common Sense