Carbon Neutral Strategy
Reimagining Decarbonization for All
By Madhur Boloor, Michael Machala
Toyota is committed to achieving carbon neutrality globally by 2050. This transition involves a great deal of certainty and uncertainty — certainty that rapid decarbonization is needed and uncertainty in how to best achieve that goal. It is imperative that, as a society, we work together and do not allow uncertainty to lead to inaction. Instead, we must make decarbonization decisions today that will be resilient to future disruptions.
Recognizing the scale of the decarbonization challenge, the Toyota Research Institute (TRI) created the Carbon Neutral Strategy (CNS) department within the Energy and Materials division in 2021. The CNS team aims to understand and chart a path to decarbonization for all — closely evaluating technology progress, evolving policies, and current and proposed strategies to ensure that no one is left behind on the transition to a cleaner future. CNS evaluates the many decarbonization tools at our disposal today and co-develops those needed to address the uncertainties of tomorrow.
To understand how Toyota navigates this uncertainty, we can think of Toyota’s 2050 goal with the analogy of climbing a mountain shrouded in clouds. How do we reach the 2050 summit of carbon neutrality? As society pursues diverse approaches, many paths may lead to fruitless ends. We may find solutions that have compelling benefits but would ultimately hit significant technological barriers that are unsolvable. Another path may have great technologies, but the system economics won’t work. We can’t definitively know which future paths will be unsuccessful and why, but the likelihood of success increases when we explore multiple routes instead of focusing on just one direction.
Fortunately, a roadmap of promising solutions can begin to be assembled through multidisciplinary systems analysis. This “systems thinking” is central to developing resilient decarbonization strategies. We must pursue robust solutions to unexpected disruptions across complex energy systems that consider the interdependence between technology, policy, economics, consumer behavior, and the interaction between separate industries, like the power and mobility sectors. As a global company, Toyota has a responsibility to ensure that everyone has access to clean mobility solutions; therefore, we must factor in the unique consumer preferences and policy landscapes across the world to identify local solutions. Together, these variables make up the multifaceted mountain terrain that we must navigate to reach carbon neutrality.
To better evaluate and co-develop these roadmaps, the team has grown to encompass diverse backgrounds, including energy systems modeling, materials science, public policy, entrepreneurship, and chemical engineering. CNS’s expertise spans machine learning, logistics optimization, techno-economic modeling, and energy systems optimization. This multifaceted skill set positions TRI to tackle many complex research questions around carbon neutrality, but no team can reach sufficient conclusions alone. For this reason, CNS collaborates closely with external experts through university/industry consortia, and CNS sponsors projects with universities, national labs, and research firms. Insights generated from these partnerships are more impactful and trustworthy when made public, which is why the team supports publication, presentation, and discussions across broad audiences. The necessity of collaboration holds true internally as well — CNS engages with global Toyota organizations by need-finding to better understand their decarbonization opportunities and challenges and matches insights to address these needs.
Through the following activities, CNS provides strategic insights:
- Energy systems modeling
CNS builds and uses tools such as techno-economic models, life cycle analysis, and machine learning with energy system optimization models to determine the impact of various technologies and policies on the climate and on consumers. Key collaborators include Carnegie Mellon University, Stanford, MIT, the National Renewable Energy Laboratory, and many more. - Technology scouting
CNS works closely with Toyota Ventures and energy accelerator programs to monitor promising clean mobility startup companies and connect them with Toyota partners. - Coordinating and communicating
CNS serves a two-fold role in communication: Bringing new ideas to Toyota and bringing ideas from Toyota out into the world. This involves engaging with the climate community at conferences and multi-stakeholder meetings such as TED Countdown and NY Climate Week. CNS convenes Toyota entities and coordinates strategic discussions through global summits on topics such as hydrogen production, transport, and utilization.
One of the CNS team’s key focus areas is battery supply chains and the diverse requirements to ensure resilience.
Supply Chains
According to the Minerals Education Coalition, the average U.S. resident today will use over one million kilograms of new minerals, metals, and fuels extracted from the earth in their lifetime. In comparison, a 250-mile range battery electric vehicle (BEV) like the Toyota BZ4X requires a relatively small amount of lithium, ~10 kg, which can be reused and recycled¹. However, lithium is one of many government-designated critical materials that are in tight supply and under increasing demand in the global electric mobility transition. Less well-known critical materials for EVs include dysprosium (used in motor magnets for heat tolerance) and the seemingly ubiquitous aluminum (used in transmission line extensions, battery packs for structural support, and battery cells as current collectors). For lithium alone, global supply requirements are estimated to be 13–43 times higher in 2040 relative to 2020. The vast majority of supply chains to meet future critical material demand do not yet exist, nor are they localized. Today, critical materials may travel more than 50,000 mi from extraction until manufactured into batteries that arrive at an auto manufacturer. International logistics can account for one-third of cathode precursor greenhouse gas emissions for traditional mining practices.
¹ Benchmark Mineral Intelligence — Lithium Forecast, Q4 2023
These supply chains are complex, with multiple links to consider and oscillating supply-demand balances susceptible to latencies, geopolitics, demand changes, and the bullwhip effect. As shown in the figure, there is a forecasted Li supply-demand deficit starting in 2029 based on announced supply projects. Opening new lithium mining operations can take 4–7 years. In order to address potential deficits, investment decisions will need to be made today amid a period of global Li oversupply, which carries inherent risk and uncertainty. But, this complexity must not limit Toyota’s ability to reach its carbon-neutral goals. That’s why the team is researching how to increase the resilience of battery supply chains and how a multi-pathway strategy that strategically deploys hybrids, plug-in hybrids, fuel cell electric vehicles, and battery electric vehicles can minimize CO2 emissions given the material constraints of today.
While studying material flows, CNS also researches emergent challenges related to skilled workforce development along growing supply chains. For example, increased domestic localization of mining or refining in the USA requires more investment in mining engineering programs. In contrast, the China University of Mining and Technology enrolls more students than all programs in the USA combined. Retraining the existing workforce further downstream from mining, from battery manufacturing engineers to auto mechanics unfamiliar with electric drivetrains, is also necessary. CNS is assessing these skill gaps in collaboration with Carnegie Mellon University to support better educational offerings and worker access (re)training.
New opportunities are also growing in emergent circular supply chains that reuse critical materials found in end-of-life (EOL) batteries. For decades, the majority of the increase in EV battery demand will need to be met with expanded natural mining. Due to the long lifetime of batteries, the supply of EOL recycled material will only be a small fraction of demand (<10% in 2040 for lithium, with some estimates just over 20%). However, it’s necessary to establish a robust circular supply chain before the volume of EOL batteries increases substantially. From collection to repurposing and remanufacturing to recycling, CNS is working with a broad network to help design a thoughtful circular economy of batteries and beyond that tracks environmental and social metrics of materials in (re)circulation for the long-term sustainability of electric mobility.
It has been encouraging to see global commitment to achieving carbon neutrality has strengthened in recent years. TRI is excited to actively engage in and contribute to the worldwide discussion on how to successfully reach our shared goal. Stay tuned for future blogs where we will share more results from the analysis work across our priority areas.
