Report finds US semiconductor giants to drive surge in fossil fuel demand despite climate commitments - Stand.earth
Report finds US semiconductor giants to drive surge in fossil fuel demand despite climate commitments
MARCH 6, 2024
SEATTLE (Traditional Puget Sound Salish and Duwamish Lands) — A new report released today by environmental advocacy group Stand.earth that examines the U.S. wave of factory expansion by the world’s four largest semiconductor manufacturers finds that despite public commitments to 100% renewable energy across the IT sector and subsidies from federal and state governments, the rapid facility expansion underway is poised to fuel an unprecedented new demand for dirty energy in states where these factories are currently under construction.
The report, titled Clean Clicks or Dirty Chips?, finds that Intel, TSMC, Samsung, and Micron rely heavily on unbundled renewable energy certificates (RECs) that do little to increase the supply of renewable electricity. Rather than following the approach used by Apple and Google to add renewable energy supply to power their fast-growing data centers, Intel and other semiconductor giants are using RECS to greenwash the massive carbon footprint of their semiconductor factories.
The IT sector – accountable for 4% of global greenhouse gas (GHG) emissions and rapidly rising – is under increasing pressure to make its reputation for innovation and leadership show up in its decarbonization strategies. Semiconductor factories are one of the most energy-intensive pieces of the IT sector supply chain, producing “chips” that are essential for powering the digital economy, which typically represent approximately 50% of the carbon footprint of many computing devices.
“The semiconductor business model has long been to outsource their manufacturing, but they don’t get to outsource their responsibility for the climate and air pollution caused by the fossil fuels powering the factories making their products. Rather than rely on false solutions like carbon offsets, Intel, TSMC, Samsung, and Micron need to follow the lead of companies like Apple and Google, which deploy new renewable energy to power their operations,” said Stand.earth Global Climate Policy Director Gary Cook.
The report surfaces several critical gaps in decarbonization efforts by the four semiconductor giants, including the following:
- New semiconductor factories currently under construction by the four largest semiconductor manufacturers – Intel, TSMC, Samsung, and Micron – are expected to generate approximately 2.1 gigawatts in new electricity demand, which is more than 200% of the annual electricity consumption of the City of Seattle.
- Unlike Apple, Google, and Meta – all companies that have met their 100% renewable energy commitments by bringing new renewable energy projects online to match their rapidly rising electricity demand – Intel, TSMC, Samsung, and Micron have thus far failed to secure additional renewable energy supply to meet their existing and future electricity demand in the U.S., relying instead on the purchase of unbundled RECs, despite strong evidence they do not meaningfully increase renewable energy deployment.
- Intel and TSMC are building four new semiconductor factories in Arizona that are expected to consume as much electricity as 260,000 homes, but have failed to sign renewable power contracts to match this expansion, enabling local utilities to justify both a significant expansion in new fracked gas-fired power plants and a delay in the retirement of coal-fired power plants, over the strong objections of local communities.
- Unless the renewable energy purchasing strategy of the semiconductor industry shifts to focus on adding new renewable energy to the local grid, their ongoing expansion threatens to increase investment and demand for fossil fuels in multiple U.S. states, and undermine federal and state targets to transition to zero-emission electricity generation.
The report also outlines recommended next steps for semiconductor companies, including aligning industrial and decarbonization policies, defining clear standards and collaboration by major customers, and strengthening reporting under the GHG Protocol.
“Consumers are tired of massive tech companies making ambitious climate promises and then dragging their feet when it comes to acting on those promises. The rapid scaling of domestic semiconductor manufacturing that has been triggered by the $53 billion U.S. CHIPS Act presents a unique opportunity to transition a critical piece of the IT sector’s supply chain to renewable energy-powered factories, supporting the ‘Net Zero’ and Carbon Neutral commitments that Apple, Google, Microsoft, and other IT giants have made,” said Stand.earth Global Climate Policy Director Gary Cook.
- Just this past week, Microsoft announced that it had selected Intel to manufacture one of its custom designed chips, a deal reportedly worth $15 billion.
- Yet as highlighted in Clean Clicks or Dirty Chips?, Intel lags far behind in taking meaningful action to transition its factories to renewable energy, relying heavily on unbundled RECs to mask over 7 million tons of CO2 pollution from its factories in the U.S., Ireland, and Israel over the past three years.
Executive Summary
As already evidenced in Arizona, where the biggest concentration of manufacturing capacity is under construction, the growing gap between new electricity demand from semiconductor factories and local renewable supply is being used to justify additional investments and continued operations of coal and fracked gas power plants.
- If these new factories are not matched with a significant scaling of locally sourced renewable electricity generation, this rapid expansion of U.S. semiconductor manufacturing threatens to trigger a new round of investment in fossil-based electricity generation across multiple states, locking in a dramatic increase in greenhouse gas emissions and saddling local communities with higher levels of pollution from the increased burning of fossil fuels.
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How much energy will new semiconductor factories burn through in the US?
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Semiconductor factories are coming back to the US, and they’re going to use a lot of energy.
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A new report warns that a boom in computer chip manufacturing in the US could fuel demand for dirty energy, despite companies’ environmental claims. The solution for manufacturers, surprisingly, might be to act more like other big tech companies chasing climate goals.
New semiconductor factories being built in the US by four of the biggest manufacturers — Intel, TSMC, Samsung, and Micron — could use more than twice as much electricity as the city of Seattle once they’re operational. These companies claim to run on renewable energy, but according to an analysis by nonprofit Stand.earth, that’s not entirely true.
Semiconductors happen to make up a big chunk of a device’s carbon footprint. And unless companies turn to clean energy, they could wind up driving up greenhouse gas emissions as domestic chip manufacturing makes a comeback.
Semiconductors happen to make up a big chunk of a device’s carbon footprint
The CHIPS and Science Act, which passed in 2022, set aside $52.7 billion in funding for domestic chip manufacturing. Now, the four companies scrutinized in the report have plans to build megafactories in Arizona, Ohio, Oregon, Idaho, Texas, and New York. Each of those megafactories alone could use as much electricity as a medium-sized town, according to the report. Cumulatively, nine facilities could eventually add 2.1 gigawatts in new electricity demand.
“We’re not slowing down on any of our sustainability commitments, even with our recently announced investments,” Intel said in an email. TSMC, Samsung, and Micron didn’t immediately respond to The Verge’s request for comment. To be sure, all four companies have made commitments to reach 100 percent renewable electricity for their US operations — but the devil is in the details.
A big culprit is a popular tactic for all kinds of companies making clean energy commitments these days: the purchase of unbundled Renewable Energy Certificates (RECs). Bear with me while I explain how companies can claim to run on renewable energy when, in reality, they don’t.
To start, there just isn’t enough renewable energy generated in the US today to power all these companies’ operations. Renewables still only make up around 20 percent of the US electricity mix. And when a solar or wind farm feeds electrons to the grid, it all gets jumbled up with electricity coming from fossil fuel power plants. If a new factory plugs into the grid, there’s really no telling where the electricity it’s using comes from.
RECs are a flawed attempt at solving those problems. A power company can essentially sell two products from generating renewable energy: the actual electricity, and an REC that represents a claim to the benefits of the renewable energy produced. In an ideal world, the REC should provide extra income to support the development of new renewable projects. And a company that matches its electricity use with an equal amount of RECs can ostensibly write in its marketing and sustainability reports that its operations are 100 percent renewable.
RECs are a flawed attempt at solving those problems
Starting to see the disconnect? A growing body of evidence shows that RECs haven’t been as effective in cleaning up power grids as some companies might hope. The popularity of RECs has made them so cheap that they aren’t necessarily incentivizing new clean energy projects. A 2022 study of 115 companies purchasing RECs found that they were grossly overestimating reductions in greenhouse gas emissions from electricity use.
To minimize damage to the environment, semiconductor manufacturers ought to follow the lead of Apple, Google, and Meta, the report says. Instead of purchasing RECs that renewable energy generators sell as separate products, tech companies can have a bigger impact by agreeing to a Power Purchase Agreement (PPA). It’s a long-term deal to pay for a certain amount of electricity from a particular renewable energy project.
PPAs have been more successful in actually getting new renewable energy projects online. Google and Meta have gone a step further with PPAs and pledged to match their electricity consumption with local clean energy generation on a 24/7 basis.
Apple’s pledge to push its suppliers to use clean energy could influence semiconductor manufacturers. The Stand.earth report cites an Apple sustainability report that shows that semiconductors account for nearly half of the greenhouse gas emissions from making its devices. The race to develop more powerful computer chips for AI only raises the stakes.
“Consumers are tired of massive tech companies making ambitious climate promises and then dragging their feet when it comes to acting on those promises,” Stand.earth global climate policy director Gary Cook said in a press release. “The rapid scaling of domestic semiconductor manufacturing that has been triggered by the $53 billion U.S. CHIPS Act presents a unique opportunity to transition a critical piece of the IT sector’s supply chain to renewable energy-powered factories.”
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