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Toyota's Green Future Not That Far-Fetched

Summary

Toyota's intent to capture more of the future market for greener, fuel-efficient cars is a smart, strategic decision.

The world view of Toyota about energy trends and future policies is not irrational.

Recent oil price declines may not have materially altered renewables path as the immediate renewables thrust is in power generation (also a thoroughfare to powering passenger vehicles).

In a first reaction, the recent announcement by Toyota (NYSE:TM) concerning its green agenda seemed bold. Toyota anticipates selling more than 30,000 fuel-cell vehicles around or after 2020. They expect to sell 1.5 million hybrid gasoline-electric vehicles annually starting that year. Toyota intends to reduce its own carbon emissions to zero by 2050. Currently, gasoline- and diesel-engine cars are 85% of global sales. The strategic marketing value of the sentiment and plan are impressive. They are staking a larger claim in the sustainability space that is tangible, measurable and business savvy.

The announcement also is timely as countries around the world prepare for the climate change meetings in Paris in late November through December. Toyota offered the following conclusion, according to a Reuters article:

"Toyota said that cars running on conventional engines will have virtually disappeared by 2050."

Could this statement be true? And if so, what does it mean for oil demand? How do we get from here to there in 35 years? Below is a series of charts from a recent Greenpeace report, in conjunction with the Global Wind Energy Council and Solar Power Europe. But before discounting a report that could be deemed a green outlier, a reasonable knee-jerk assumption, note the following from a Huffington Post article:

"Their forecasts (Greenpeace) over the last 15 years have been shown in an independent analysis to have been the most reliable - the ones to have most accurately...


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