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European Union's CO2 targets of 120g/100km onaverage by 2015, having achieved a considerableimprovement, most of it through technologicalimprovements rather than simply selling more smallcars. We are preparing to commercially launch arechargeable version of our Prius hybrid, the PriusPlug-In Hybrid, from 2012 in all European countries,the United States and Japan and will continue toexpand the offering of hybrid powertrains in the othervehicles of our range. THE RIGHT VEHICLE IN THE RIGHTPLACE AND AT THE RIGHT TIMEAt this time, we believe that plug-in hybrid electricvehicles, which can operate as electric vehiclesduring normal operation and as hybrid vehicles whenthe battery is discharged, are the most feasible andaffordable means of utilising electricity. But we arealso developing other solutions adapted to differentuses, such as pure electric vehicles that are ideal forshort-distance travel and fuel cell vehicles as vehicleswith a wide range of applicationsBEYOND AUTOMOBILESTackling the mobility of the future is also leading us to think beyond our original competency of makingautomobiles. Partnering with other stakeholders andcompanies in various parts of the world, we areadvancing our research and development into so-calledSmart Grids. The Smart Grid refers to a new electricitynetwork where power supply and demand is effectivelycontrolled using information technology to ensurestable power supply and energy saving. The first triggerfor our involvement in Smart Grid is our launch of Plug-In Hybrid Electric and Electric Vehicles (PHEV and EV).The amount of electricity these vehicles will consumedaily would account for over 30 per cent of an ordinaryhousehold's total power consumption. If all these carsstarted charging at the same time, there would be apeak time in societal power consumption. It is thereforecrucial to optimally control this charging time. The second trigger is Toyota Home's Smart House. Asmart home is equipped with a mechanism to efficientlycontrol solar power generation and electricityconsumption, enabling self-supply of power and optimalcontrol of car charging at home. Tapping into sources ofrenewable energy like solar or wind is also an importantpart of creating our future sustainable lifestyle. Startingwith an environment-friendly vehicle connected to asmart house - itself connected to renewable energy -Toyota plans to gradually develop a large eco-city. Ourresearch is also taking us into many areas beyond theautomobile, such as personal mobility to accomplish"the last mile", biotechnologies for producing eco-friendly materials, artificial intelligence, etc.360-DEGREE APPROACHToyota's environmental policy aims at environmentalsustainability not just for our vehicles but throughout thewhole vehicle life cycle. All our employees are committedto leading by example to reduce the environmentalimpact of our operations, from design and development,to manufacturing, distribution, use on the road, aftersales and service, and end-of-life recycling. You haveour full commitment that we will continue to contributeour passion and energy to solving one of the world'smost challenging issues, climate change. nABOUT THE AUTHORDidier Leroy is currently President and Chief ExecutiveOfficer of Toyota Motor Europe and Chief RegionalOfficer for Europe of Toyota Motor Corporation. MrLeroy began his career in the automotive industry in1982 with Renault, where he held a number of seniorpositions at their production plants over a 16-yearterm. He joined Toyota Motor Manufacturing France(TMMF) in September 1998 as Vice-President incharge of Manufacturing. In this role, Mr Leroy tookan active part in setting up the company andconstructing the plant, which began operations inJanuary 2001. In January 2005, Mr Leroy wasappointed President of Toyota Motor ManufacturingFrance. In June 2007, he became a ManagingOfficer of Toyota Motor Corporation in Japan andwent on to become Executive Vice-President of theEuropean headquarters, Toyota Motor Europe,overseeing manufacturing improvements, beforebeing assigned to the new responsibility of ExecutiveVice-President of Sales in 2009. In 2010, Mr Leroybecame President of Toyota Motor Europe and inApril 2011, Chief Regional Officer of Toyota MotorCorporation for Europe.TRANSPORT & MOBILITY107Below: The president andCEO of Toyota MotorEurope, Didier Leroy

viation has a very good story to tell onenvironmental responsibility. We are the only global industry that hasset targets to reduce its carbon footprint.Airlines, airports, air navigation service providers andmanufacturers are committed to:n Improving fuel efficiency by 1.5 per cent annuallyto 2020;n Capping net carbon emissions from 2020 withcarbon neutral growth;n And cutting net emissions in half by 2050,compared to 2005.To understand the ambitious nature of these targets, itis important to put them into context. Aviationrepresents 2 per cent of global man-made carbonemissions. In 2011 airlines will emit about 650million tonnes of carbon. We will do that while carrying2.8 billion passengers and 46 million tonnes of freight.This activity supports 33 million jobs and facilitatesUS$3.5 trillion of global business.In 2050, we expect to carry 16 billion passengers and300 million tonnes of cargo. The global economy willrequire us to accommodate this growth in order tofunction. And we aspire to do that while cutting ourcarbon footprint in half to some 320 million tonnes.Green business is good business. If we can reduce our2012 fuel cost by 1 per cent, that is US$2 billion. Foran industry that is only expecting to make a profit ofabout US$5 billion, that constitutes a very significantsaving. But to be successful, we need to tap resourcesoutside the industry. There are some things that onlygovernments can do. They must be committedpartners in achieving our aspirations. For example, the International Civil AviationOrganization (ICAO), under Kyoto, was given theresponsibility to manage aviation's internationalemissions. It has shown great leadership. At the lastassembly (2010), governments agreed that aviationshould improve fuel efficiency by 2 per cent annually.At the intergovernmental level, this is a majorachievement. It is the only agreement amonggovernments on managing the emissions of anindustrial sector. But there is a gap between theindustry commitment of a 1.5 per cent annual fuelefficiency improvement, and the ICAO goal of 2 percent. The 0.5 per cent difference is dependant ongovernments coming to the table with improvements ininfrastructure. As important as the targets, is theindustry's plan to achieve them. The entire valuechain -airlines, airports, air navigation serviceproviders and manufacturers -are working on a fourpillar strategy to reduce emissions: (1) improvedtechnology, (2) more efficient infrastructure, (3) betteroperations and (4) positive economic measures.ECONOMIC MEASURESOne area of ICAO leadership is on the development ofa global framework for economic or market-basedmeasures to help limit carbon emissions. Aviationsupports the development of a global emissionstrading or compensation scheme -the fourth pillar ofour strategy. The principles for such a globalmechanism have already been agreed through ICAO.And the industry is fully supporting its efforts todevelop a global framework by its 2013 Assembly -less than 24 months away. In the interim, we cannotafford to get distracted by regional schemes which, nomatter how cleverly conceived, cannot be a solution toa global problem. By nature uncoordinated regionalschemes will undermine ICAO's agreed principles. OneAVIATION:COMMITTED TOITS AMBITIOUS GOALS108TRANSPORT & MOBILITYTONY TYLER, DIRECTOR GENERAL AND CEO, IATAA