Toyota urges feds to tread carefully on carbon

TOYOTA Australia president Max Yasuda this week urged the federal government to provide “significantly more detail” on its plans to introduce a price on carbon and to consider the difficult trading conditions under which the company is already operating.

Mr Yasuda, who is a member of the Australian Business Roundtable on Climate Change and vice-president of the Federal Chamber of Automotive Industries (FCAI), said he supported “discussion” of a carbon price but urged policy settings take into account a range of issues.

These include considering emissions-reduction work already undertaken by the company, the impact of providing offshore competitors with “an unfair advantage” and the link with other proposed policy directions, such as mandatory CO2 tailpipe emissions targets.

Mr Yasuda’s position is in contrast to GM Holden chairman – and FCAI president – Mike Devereux, who recently said he “didn’t have any trepidation about policies” the federal government was pursuing on carbon, and that Holden would support a carbon tax.

Mr Yasuda, on the other hand, said there were many questions still to be answered before the Australian car industry was provided with the certainty it needed before the proposed introduction of a price on carbon next year.

Left: Camry Hybrid. Below: Toyota Australia president Max Yasuda with industry minister Kim Carr.

He also highlighted the work already undertaken by Toyota to reduce greenhouse gas emissions at its Altona assembly plant in Melbourne, including reducing manufacturing emissions by 28 per cent, and emissions per vehicle by 22 per cent, over the past four years.

“To do more, Toyota Australia needs to know what the price of carbon will be, when emissions trading will commence and what transitional assistance will be provided to industry to protect important export markets and Australian manufacturing jobs,” Mr Yasuda said.

“In Toyota’s case, the carbon footprint of a locally built Camry is 8.7 tonnes. Multiply that by last year’s production volume of 119,455 units and a carbon price of $25 per tonne and the total cost to the business would be approximately $25 million each year.

“This number increases as the output of GM Holden and Ford are taken into account.

“The business is already under competitive pressure from overseas vehicle importers and Toyota Australia’s capacity to invest in low-emission technology relies on the profit the company makes.

“If the business is trade-exposed under a carbon price and it cuts into our profit, we could struggle to find the capital to invest.”

Toyota posted an operating loss of $107.9 million for its 2009/10 financial year, ending March 31, 2010. This compared to a profit of $123.3 million the previous financial year, and a record $242.2 million profit in the 2007/08 fiscal year.

The company is preparing to introduce a new-generation Camry in the second half of this year, with the hybrid version to follow in 2012. The current Camry Hybrid has been in production at Altona since early last year, and received $35 million in federal funding under the now-defunct Green Car Innovation Fund.

Among the specific concerns raised by Mr Yasuda this week was the inclusion of air-conditioning gases in the carbon tax scheme.

“Steps have already been taken to eliminate environmentally negative gases as a part of the Montreal Protocol outcomes,” he said.

“It would be inappropriate to place a cost on gases that currently have no commercially available alternative and where there is a global agreement to phase them out over the medium term.”

Mr Yasuda also called on the government to consider its position on forthcoming emissions regulations, which include a new mandatory CO2 target for 2015 and Euro 5 and Euro 6 emissions regulations.

GoAuto understands a discussion paper on the new CO2 target is due for release soon, while the Euro 5/6 agenda has not been raised after the industry last year railed against the proposed 2012 (Euro 5) and 2016 (Euro 6) introduction dates.

As we have reported, federal transport minister Anthony Albanese has since agreed to “discuss adjustments to the timeframe” for the tougher Euro 5/6 standards.

This week, Mr Yasuda said Toyota “recognise that change is necessary and that it comes at a price, but the full impact of this price-setting and its impact on related policy directions must be considered”.

“The Australian automotive industry is regaining its footing after a challenging three years and the last thing we need now is to be put in a corner with nowhere to go,” he said.

“If it is not planned and managed effectively, the yet-to-be-defined carbon tax has the potential to heavily impact local automotive manufacturing, which employs 47,000 people.”

The federal opposition has seized on Mr Yasuda's comments, highlighting the conflict of providing government funding for car manufacturers on the one hand, and, on the other, the prospect of making the industry uncompetitive through “Julia Gillard’s industry-destroying carbon tax”.

Shadow industry minister Sophie Mirabella said: “Why would the government give multiple billions of dollars in assistance to the car industry through its so-called New Car Plan if it is then going to push it to the wall by making it uncompetitive with importers?“I was at the Toyota plant earlier this week at Altona, and I can completely understand the company's reservations.

“Last week, Ms Gillard glibly dismissed concerns about the havoc her job-destroying carbon tax will wreak on manufacturers across Australia, saying, ‘They will keep up, they will innovate’.

“It’s time that she woke up to the devastating reality of a go-it-alone carbon tax.”