Taiwan’s Tech Companies Can Lead The Energy Transition

Taiwan’s tech companies are struggling to decarbonise. But the opportunity to lead the island nation’s transition to renewable energy is right in front of them.

In April 2021, Taiwanese President Tsai Ing-wen declared the country’s climate goal in the form of the “2050 Net-Zero Transition”. A year later, the government began walking the talk by laying out the pathway toward this declaration in its Taiwan’s Pathway to Net-Zero Emissions in 2050. Then, in early 2023, the Legislative Yuan passed the Climate Change Response Act, enacting into law a system of carbon fees for big emitters and tariffs on carbon-intensive imports. Although the country’s energy sector still overwhelmingly relies on fossil fuels, it increased its renewable energy generation capacity by nearly 110% between 2016 and 2023. The country also has ambitions to become a regional leader in offshore wind.

But one area that helped Taiwan leapfrog from an agrarian economy into the ranks of industrialised nations is lagging in the clean energy transition: the information and communications technology (ICT) industry.

Consumer Electronics and ICT Taiwanese Companies

ICT companies, especially electronics and semiconductor manufacturers, are the most important firms in Taiwan. Not only that, these largest Taiwanese companies also provide critical components for the global technological supply chain. Yet, compared to some tech giants in the West, Taiwan’s ICT companies have been slow in the decarbonisation race. In particular, they’ve been sluggish in shifting to renewable energy to power their operations. Given their size, dominant status in the global supply chain and large electricity consumption, their shift to 100% renewable energy would accelerate Taiwan’s clean energy transition.

Taiwan’s Tech Industry

From a predominantly agricultural society in the 1950s reliant on US aid, Taiwan quickly industrialised in the 1960s and 1970s, owing to a combination of protectionist policies. A strategic shift from import substitution to export-oriented growth and a concerted push to develop heavy industry, including steel, chemicals and shipbuilding, and the electronics and information sectors propelled the second phase of economic growth starting in the 1980s.

Taiwan went from having no semiconductor industry in 1990 to holding the largest market share in the world in 2022, ahead of South Korea, Japan, China and the US. An instance of this dominance is in our pockets: the most valuable components of Apple’s iPhone — “including core processors, 5G modems, Wi-Fi chips and premium camera lenses” as the Financial Times points out — are made in Taiwan.

Electricity Consumption and Greenhouse Gas Emissions

It goes without saying that a world-leading and integrated manufacturing sector consumes a tremendous amount of energy. Taiwan’s ICT industry is no exception. According to the Yearly Energy Balance data from the Taiwan Ministry of Economic Affairs, the electronic products and electrical equipment sector consumed 63.2 million megawatt-hours in 2023, accounting for 25% of the country’s total electricity consumption. That makes the sector the top electricity consumer in Taiwan.

Along with its prodigious energy consumption, the ICT industry is also a heavy greenhouse gas (GHG) emitter. Despite recent gains in renewable energy, fossil fuels still account for over 90% of Taiwan’s overall energy mix. This reality matters for the ICT industry because it draws on grid electricity for much of its operations. When combining direct and indirect (from electricity generation) GHG emissions, the ICT sector emitted 64.268 metric tons of CO2-equivalent (MtCO2e) in 2021. This comes out to about 22% of Taiwan’s total GHG emissions that year (which amounted to 297.201 MtCO2e, according to its National Greenhouse Gas Emissions Inventory). The ICT industry was the top emitting manufacturing sector, followed by chemicals at 42.937 MtCO2e and metal processing at 32.979 MtCO2e.

Benefits of Shifting to Renewables for Largest Companies of Taiwan

As leading companies in Taiwan’s economy, the electronics firms have the opportunity to move away from being large emitters to becoming the country’s renewable energy leaders. They can do this by committing to an early shift to 100% renewable energy and investing in renewable energy project development.

The benefits of doing so are manifold and profound. First, transitioning to 100% renewables would be a win for the companies’ bottom lines. As Lena Chang, climate and energy campaigner at Greenpeace East Asia told Energy Tracker Asia, “It’s a myth that more ambitious climate targets conflict with profits. Renewable energy targets and more ambitious greenhouse gas reduction targets should be viewed as investments instead of costs.”

They Can Save A Huge Amount of Money

A recent Greenpeace report showed that the largest East Asian electronics manufacturers could save between USD 87.42 million and USD 12.45 billion per company by transitioning to 100% renewables by 2030. This is because the cost of electricity from renewable sources — especially solar — is now considerably lower in most markets than fossil fuel-based electricity. Companies failing to shift to renewables will also face rising carbon taxes, both in Taiwan and their export markets. The Taiwanese government is expected to start collecting its new carbon fees from large emitters in 2025.

Renewable Energy Industry

The second benefit will be for the Taiwanese renewable energy industry. When large players with significant market cap like Taiwan’s electronics companies invest in developing onsite or offsite renewable energy projects, they can accelerate the buildout of clean energy generation capacity throughout the country. A recent example is Google’s investment in New Green Power — a Taiwan energy developer — to build a 1-gigawatt solar power plant. Not only is Google planning to power its own operations with solar, but it will also offer some of the clean energy to its suppliers and manufacturers. That, in turn, will lower the emissions throughout Google’s supply chain.

The positive ripple effects won’t stop at the water’s edge. Taiwan’s electronics companies are predominantly upstream components manufacturers, which means they are responsible for most of the Scope 3 emissions of downstream tech companies like Apple and Samsung. An ambitious renewables transition would help to decarbonise a large swathe of the global technology supply chain.

The Taiwanese government has started taking steps to reduce the island’s greenhouse gas emissions. But to truly decarbonise its electronics industry and jump-start Taiwan’s renewable energy buildout, ICT companies like Chunghwa telecom themselves must commit to shifting to 100% renewable energy as soon as possible.