Toyota Making Bio-Diesel Investment in Philippines

Toyota and the Philippine government have reached a basic memorandum of understanding in regards to creating a bio-diesel production facility (see Manila Standard). This is only the first step in a very long process, but it represents an interesting investment on behalf of Toyota. Considering that Toyota is cutting costs everywhere, investing in a bio-diesel plant in this economic climate could only be justified if it was a strategic move.

Toyota invests in bio-diesel made from jatropha curcas.

First, a little background. Toyota’s bio-diesel investment will be a small scale jatropha curcas plantation and refinery. Depending on how the trial goes, Toyota may invest in a facility capable of producing 7 to 8 million gallons of bio-diesel per year. Toyota’s bio-diesel crop of choice – jatropha curcas seeds (also known as purging seeds) – are desirable number of reasons.

• Jatropha curcas seeds are 30-40% oil (depending on the species). One acre of Jatropha can produce 300 gallons of oil per year if irrigated.
• Jatropha curcas seeds aren’t a food source, so they’re not going to result in higher food prices that might impact the world’s poor. In fact, if you eat a jatropha curcas seed, you’ll end up with the human equivalent of a transmission flush (not good).
• Jatropha curcas is very hardy – it can survive frosts, droughts, and poor soils. While it’s not economically viable in these conditions, it’s not going to die and lose it’s investment value in a bad year.
• A mature jatropha curcas crop is a cash cow. Poor farmers can independently plant and maintain10-15 acres of jatropha curcas, which can serve as a long term source of revenue for some of the world’s poorest people.

In a climate where Toyota is cutting costs left and right – like canceling all executive bonuses and completely overhauling management structure – what is the long-term benefit of this investment for Toyota? Jatropha curcas is great, and helping the Philippine people create a new industry is a responsible investment, but we have to assume Toyota has something to gain as well.

Here’s our list:

Public relations. There’s no denying the environmental benefits of bio-diesel. Investing in bio-diesel production will help bolster Toyota’s reputation as a green corporation, and it’s going to help their sales in the Philippines too.

If only Toyota would make the same investment in a diesel Toyota Tundra in North America.

Carbon credits. If we assume that the world adopts some sort of carbon trading system in the near future, a large plantation of jatropha curcas trees could be a great source of carbon credits for Toyota.

Long-term support for diesel vehicles. If we look 20 years into the future, Toyota will need to build a car that’s inexpensive and fuel efficient to sell in the world’s poorest nations. Small diesel engines are the logical choice. Therefore, creating a cheap source of diesel in the Philippines (and then copying this model around the world), helps Toyota sell cars.

The bottom line: The next time someone tells you that “Toyota is going to be the next GM,” ask them if they’ve ever heard of jatropha curcas. Unlike the GM of the 80’s and 90’s that ignored out-of-control labor costs, Toyota is always thinking about the future. Why else would they be investing cash in bio-diesel?

Learn more about jatropha curcas:

• Jatropha curcas plantations news
• Wikipedia
• Blog post with “the truth” about jatropha curcas

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