Oct. 13 (Bloomberg) -- Toyota Motor Corp., the world’s largest seller of hybrid vehicles, said potentially valuable emissions credits that California plans to give to utilities for supporting rechargeable cars should go to automakers instead.

Carmakers absorbed the costs to develop advanced vehicles to meet state requirements, Kevin Webber, Toyota’s U.S. general manager for regulation and certification engineering, said in comments filed last week with the California Public Utilities Commission. “Any societal benefit from the low-carbon-fuel aspect of these vehicles, especially the generation of credits, must accrue to the auto manufacturer,” he said.

The most populous U.S. state begins a program next year to cut carbon intensity of transportation fuels 10 percent by 2020 to pare emissions of gases linked to climate change. To entice utilities to accommodate demand growth spurred by charging of electric cars, the state plans to give credits that can be sold to fuel makers that need to offset carbon in their products.

Toyota, General Motors Co., Nissan Motor Co. and other carmakers are preparing to sell models powered wholly or in part by rechargeable batteries. California requires the biggest carmakers to sell such vehicles, which are still costly because of the lithium-ion batteries that propel them.

The value of the credits hasn’t been set, and trading isn’t likely to begin until at least 2011. State regulators also are reviewing whether utility rates may need to be increased to cover the cost of charging infrastructure for electric cars.

Cases for Credits

Toyota rose 1.7 percent to 3,580 yen as of 9:16 a.m. in Tokyo trading, compared with a 0.7 percent gain in the Topix index. The company’s shares have climbed 23 percent this year.

Carmakers have an argument as to why credits should go to them, said Daniel Kammen, director of the Renewable and Appropriate Energy Laboratory at the University of California, Berkeley, and a designer of the low-carbon fuel standards.

“The utilities also have an argument: while they may have a new revenue stream from the credits, they also have costs to upgrade infrastructure,” Kammen said.

Edison International’s Southern California Edison Co., PG&E Corp.’s Pacific Gas & Electric Co. and Sempra Energy’s San Diego Gas & Electric Co. said in state filings that clean-fuel credits will help them pay for projects needed to service a growing electric-vehicle fleet and prevent increases in customer bills.

“While the electricity sector is the key to reducing the carbon intensity of the transportation sector, doing so will impose additional economic burdens on investor-owned utility ratepayers,” Rosemead, California-based Edison said in comments filed last week with the Utilities Commission.

Sales Mandates

From model years 2012 through 2014, the largest carmakers by volume in California must sell about 60,000 plug-in hybrids and electric cars combined, according to the state Air Resources Board. As the top car seller in the state, Toyota City, Japan- based Toyota has the biggest share of that total.

Toyota sold 22.4 percent of new autos in the state in 2009’s first half, ahead of Tokyo-based Honda Motor Co.’s 13.9 percent, according to the California New Car Dealers Association. Dearborn, Michigan-based Ford Motor Co. was third with a 12.6 percent share, followed by Detroit-based GM at 11.6 percent and Nissan of Yokohama, Japan, at 8.7 percent.

Toyota’s California market share means it may need to sell more than 16,000 plug-in hybrids and all-electric models over the three-year period, based on a Bloomberg calculation. A company failing to meet California rules can potentially be barred from selling any vehicles in the state, the biggest U.S. auto market.

Emissions credits shouldn’t go to utilities, Webber said in Toyota’s filing. Any credits not given to carmakers selling electric vehicles in California should go into a publicly held trust to offset increases in power rates for low-income families, he said.

To contact the reporters on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net; Mark Chediak in San Francisco at mchediak@bloomberg.net

Last Updated: October 12, 2009 20:20 EDT