Taiwan’s Tech Giant TSMC’s Net Zero Pathway Falls Short


Taiwan’s Tech Giant TSMC’s Net Zero Pathway Falls Short

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Giant chipmaker TSMC is facing a backlash over its enormous fossil fuel usage and carbon emissions, even as much of the global tech sector cleans up its carbon footprint.

23 April 2023 – by Tim Daiss   Comments (0)

Is TSMC sustainable? The tech giant Taiwan Semiconductor Manufacturing Company Limited (TSMC), the world’s largest manufacturer by revenue in the semiconductor industry, is falling short when it comes to climate change mitigation.

The Hsinchu-based company is listed on the Taiwan Stock Exchange (TSE). It also boasts a market capitalisation of around USD 471 billion on the New York Stock Exchange (NYSE).

TSMC holds 53.4% of the global semiconductor production market and provides 92% of the advanced chips used in modern electronics. It manufactures chips for iPhones, electric vehicles (EVs) and servers in data centres.

More than 90% of the world’s manufacturing capacity for the most advanced semiconductors is located in Taiwan.

An Enormous Energy Appetite

TSMC consumed some 18.08 billion kilowatt hours (kWh) of electricity in 2021, up 13% over the previous year. If that growth rate continues, the company will end up using around 54.31 billion kWh a year by 2030. This means that it would need 21.7 billion kWh from green energy sources to meet its target of 40% renewable energy use company-wide by 2030.

Is TSMC Sustainable?

TSMC’s emissions from its vast power consumption, however, are a cause for concern. Its 2021 Scope 1 emissions came in at 2.15 million metric tonnes. Meanwhile, Scope 2 emissions came in at 8.15 metric tonnes, according to TSMC’s 2021 sustainability report.

As such, TSMC emits more emissions than any other chipmaker. Furthermore, its missions even exceed that of Taipei, Taiwan’s capital, which contains some 2.5 million people.

The emissions from TSMC and other Taiwanese manufacturers are also blocking the RE100 in its climate change mitigation goals. The RE100 is a global initiative that brings together the world’s most influential businesses committed to 100% renewable electricity.

Adding to the quandary, TSMC still relies largely on fossil fuels in its electricity mix. In 2021, much of TSMC’s energy came from Taiwan’s electricity grid. According to data from Taipower, coal accounted for 35.5% of Taiwan’s electricity grid, while natural gas contributed 42.5%.

As TSMC continues to expand, its emissions will increase and are projected to peak in 2025 due to the company’s slow energy transition progress, Greenpeace East Asia’s Tracy Cheng told Energy Tracker Asia. “This situation is harming the credibility of their main customers’ climate goals,” she added.

TSMC’s main customers include Apple, which represents around 20% of sales, followed by MediaTek, AMD, Qualcomm, Sony and others. These large tech companies, for their parts, have made greater strides in emissions reduction than TSMC. Meanwhile, Apple calls for the global tech supply chain to be carbon neutral as early as 2030.

Local Pushback

TSMC’s emissions are raising eyebrows and prompting calls for immediate action at home and abroad.

Environmental campaigners in Taiwan recently asked the municipal government for quicker action to help the chipmaker reach a more pragmatic renewable energy goal.

They pressed the Central Taiwan Science Park Administration to raise the proportion of renewable energy use at the TSMC facility by 10% each year to reach 100% by 2030, far exceeding TSMC’s current 2040 goal of 60% renewable energy. To date, TSMC has remained quiet over the campaigners’ calls to speed up its carbon-neutral goals.

A Call To Action

TSMC needs to produce more renewable energy, not less, and to discontinue relying on coal for its power needs. It also needs to build out renewable energy sources quickly, says Greenpeace’s Cheng.

“According to our investigation, the key pathway for TSMC to increase renewable energy is a CPPA (corporate power purchase agreement) from offshore wind, which mainly relies on the progress of offshore wind developers such as Orsted,” she said.

Greenpeace offers a pathway for TSMC to follow, including accelerating the company’s RE100 goal to 2030 and including other renewable types in its mix. Besides the CPPA, Greenpeace also advises that TSMC increase its self-generated renewable energy and investment in renewable projects proactively, especially rooftop solar.

Governmental Direction Needed

Although TSMC is responsible for its own emissions, part of the problem lies with the government in Taipei. Taiwan needs to clean up its energy sector since it depends heavily on fossil fuels for power production. The problem is even more acute, as coal and gas are the country’s power generation fuels of choice.

However, it appears that the government is comfortable building more natural gas-fired power plants to help TSMC’s increased power needs. The switch from one fossil fuel to another is tantamount to environmental greenwashing.

Adding yet another layer of complexity, Taiwan’s industry is responsible for more than half of the country’s emissions. However, the government’s new climate policies have “no specific plan to tackle them”, a new Climate Home News report finds.

“Taiwan’s government has made two big moves on climate recently, but these might not guarantee success unless the country cleans up its biggest source of emissions: industry,” the report said.

Cheng said that, in general, the Taiwanese government should accelerate a net-zero roadmap and energy transition progress. “In 2021, renewables accounted for only 6.3% of the electricity supply in Taiwan. The figure will slightly increase to around 8% in 2022,” she said.

She added that the government should “encourage the development of a trading market, increase available renewable energy supply for corporates to purchase, rather than wholesale to FIT contracts.”

“It should also propose new measurements to aggregate and develop rooftop solar PV power plants for TSMC, actively assist in obviating problems frequently faced in developing renewable energy projects, such as policy constraints, local stakeholder communication, and motivate industrial symbiosis.”

She added that it should also “develop resilient power grid and progressive dispatching/storage technologies, to build the confidence of corporations in adopting a higher renewable energy mix.” 

by Tim Daiss

Tim has been working in energy markets in the Asia-Pacific region for more than ten years. He was trained as an LNG and oil markets analyst and writer then switched to working in sustainable energy, including solar and wind power project financing and due diligence. He’s performed regulatory, geopolitical and market due diligence for energy projects in Vietnam, Thailand and Indonesia. He’s also worked as a consultant/advisor for US, UK and Singapore-based energy consultancies including Wood Mackenzie, Enerdata, S&P Global, KBR, Critical Resource, and others. He is the Chief Marketing Officer (CMO) for US-based lithium-sulfur EV battery start-up Bemp Research Corp.

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