TSMC Pioneers Joint Procurement of Renewable Energy to Strengthen Suppliers' Carbon Reduction Capabilities

[Daniel Nenni]

In line with its commitment to net zero emissions by 2050, TSMC is committed to practicing climate risk control and mitigation. In addition to being the world's first semiconductor company to join the RE100, TSMC is also actively developing a green and sustainable supply chain, promoting suppliers to implement low-carbon management in five directions, and setting long-term goals to regularly review the results and disclose them in the sustainability report. In April 2023, TSMC announced the first joint procurement renewable energy program in Taiwan, and signed a long-term renewable energy PPA (Power Purchase Agreement) with ARK Power with a total 1 TWh annually or a total of 20 TWh for 20 years, of which 500GWh was subscribed by TSMC every year, and another 500 GWh was invited to jointly subscribe by TSMC local supply chains. It is expected that 500,000 metric tons of CO2 emissions will be reduced annually in the future, strengthening the carbon reduction action of local supply chains.

Five Approaches to Promote a Low-carbon Supply Chain​

Matchmaking Suppliers + Renewable Energy Developers to Create a Green Win-win Situation​

Promoting a green and low-carbon supply chain is an important strategy for TSMC to implement a responsible supply chain. In order to encourage suppliers to cultivate sustainable development, TSMC not only played a leading role by expanding the use of renewable energy, but also further launched the supply chain renewable energy procurement program. Suppliers who intend to purchase renewable energy, will be provided complete services from electricity consumption assessment to power transfer through the joint procurement model. They are also promised a long-term procurement of 20 years to strive for stable electricity prices, which not only lowers the threshold for suppliers to adopt renewable energy, but also improves business matching opportunities for renewable energy developers to promote the development of the domestic renewable energy industry.

TSMC’s Joint Procurement Renewable Energy Program Process​

Adhering to the belief of co-existing and co-prospering with the environment, TSMC implements low-carbon manufacturing and using renewable energy. Through this innovative joint procurement model for renewable energy, TSMC joins hands with industry partners to promote a sustainable low-carbon semiconductor supply chain, in order to fulfill our commitment to reach the goal of net zero emissions by 2050.
- J.K. Lin, Senior Vice President of Information Technology and Materials Management & Risk Management at TSMC

TSMC considers improving the sustainability of the semiconductor industry as a key part of ESG. Through the joint procurement program, it helps suppliers expand their renewable energy sources, deepen their sustainable operation management capabilities, and jointly continue to move towards the goal of a low-carbon semiconductor supply chain.

TSMC Renewable Energy Development Timeline​

https://esg.tsmc.com/en/update/greenManufacturing/caseStudy/69/index.html

 

[Scotten Jones]

All the big semiconductor companies are talking about moving to renewable energy, unfortunately a lot of it is green washing. Renewable energy is not the same as carbon free, burning biomass is considered renewable but emits carbon like crazy.

Secondly as reported by Greenpeace:

“Renewable Energy Certificates (RECs) accounted for 84% of all renewable energy sourced by the semiconductor manufacturing industry in 2021.

RECs are financial instruments that represent existing renewable energy projects. The purchase of RECs does not add any new renewable energy to the grid. For this reason, RECs are one of the least impactful forms of renewable energy procurement.
Instead of purchasing RECs, semiconductor manufacturers should purchase renewable energy with addictionality though Power Purchase Agreements (PPAs), Onsite generation and investment.”

Even SEMI recognizes this:

“Carbon offsets – It’s something to look at but it cannot become a cover for lack of actual decarbonization. This is greenwashing. We will need to start looking specifically at the accounting for offsetting non-CO2 GHG emissions, which have significantly higher GWP and live in our atmosphere much longer than CO2.”

TSMC is located in Taiwan where power generation has some of the highest carbon emissions in the world.

Its good they are working on this but 100% renewable energy isn't enough, it needs to be 100% carbon free achieved by new clean free generating capacity.

 

[hist78]

All the big semiconductor companies are talking about moving to renewable energy, unfortunately a lot of it is green washing. Renewable energy is not the same as carbon free, burning biomass is considered renewable but emits carbon like crazy.

Secondly as reported by Greenpeace:

“Renewable Energy Certificates (RECs) accounted for 84% of all renewable energy sourced by the semiconductor manufacturing industry in 2021.

RECs are financial instruments that represent existing renewable energy projects. The purchase of RECs does not add any new renewable energy to the grid. For this reason, RECs are one of the least impactful forms of renewable energy procurement.
Instead of purchasing RECs, semiconductor manufacturers should purchase renewable energy with addictionality though Power Purchase Agreements (PPAs), Onsite generation and investment.”

Even SEMI recognizes this:

“Carbon offsets – It’s something to look at but it cannot become a cover for lack of actual decarbonization. This is greenwashing. We will need to start looking specifically at the accounting for offsetting non-CO2 GHG emissions, which have significantly higher GWP and live in our atmosphere much longer than CO2.”

TSMC is located in Taiwan where power generation has some of the highest carbon emissions in the world.

Its good they are working on this but 100% renewable energy isn't enough, it needs to be 100% carbon free achieved by new clean free generating capacity.

"Renewable energy is not the same as carbon free, burning biomass is considered renewable but emits carbon like crazy. "

"It's good they are working on this but 100% renewable energy isn't enough, it needs to be 100% carbon free achieved by new clean free generating capacity."

Do you know the amount/percentage of TSMC usage on renewable energy is coming from burning biomass or non carbon free sources?

 

[Scotten Jones]

In Taiwan TSMC hardly uses any renewable energy, they primarily use the Taiwan power grid and that has some of the highest carbon emissions in gCO2e/KWh in the world. They do have the Ark power agreement that may be an important improvement but I haven't dug into that enough to know yet.

Overseas they say they are 100% renewable but I would bet that is mostly RECs.

 

[blueone]

In Taiwan TSMC hardly uses any renewable energy, they primarily use the Taiwan power grid and that has some of the highest carbon emissions in gCO2e/KWh in the world. They do have the Ark power agreement that may be an important improvement but I haven't dug into that enough to know yet.

Overseas they say they are 100% renewable but I would bet that is mostly RECs.

My opinion is that this controversy is more about emotion than real effect on the environment. China's electrical consumption, for example, rounds to 9,000 terawatt hours per year, and in 2022 63% of that power was generated by coal plants. I agree that Taiwan could have a more environmentally friendly power mix, and they should, but I think hanging this on TSMC is fighting the wrong fight, and using CO2 emissions per KWH is a contrived metric intended to make small issues look like big ones.

 

[Scotten Jones]

My opinion is that this controversy is more about emotion than real effect on the environment. China's electrical consumption, for example, rounds to 9,000 terawatt hours per year, and in 2022 63% of that power was generated by coal plants. I agree that Taiwan could have a more environmentally friendly power mix, and they should, but I think hanging this on TSMC is fighting the wrong fight, and using CO2 emissions per KWH is a contrived metric intended to make small issues looks like big ones.

Of course China as a country uses more electricity than TSMC and their electricity has a high carbon footprint, but per KWh Taiwan is now even worse.

In order to prevent catastrophic climate change real improvement is needed in every country and every industry. This is a site about semiconductors and my point is that as an industry we are often claiming improvements that aren't real and need to be focused on real reductions. I am not "hanging" this on TSMC, I talked about the whole industry and then talked about TSMC because they are who this thread is about.

By 2030 it is estimated the semiconductor industry will have the same carbon footprint as the country of Portugal, it is a real issue and that is why there are so many industry effort to address it. Even SEMI has called out some of the industry announcements as Greenwashing.

 

[hist78]

In Taiwan TSMC hardly uses any renewable energy, they primarily use the Taiwan power grid and that has some of the highest carbon emissions in gCO2e/KWh in the world. They do have the Ark power agreement that may be an important improvement but I haven't dug into that enough to know yet.

Overseas they say they are 100% renewable but I would bet that is mostly RECs.

You mentioned burn biomass is a concern. Is that something to do with TSMC or Taiwan?

 

[blueone]

Of course China as a country uses more electricity than TSMC and their electricity has a high carbon footprint, but per KWh Taiwan is now even worse.

I know. But only the big picture is important to me, because carbon emissions are a decidedly global problem. The little pictures like Taiwan look like trivia.

In order to prevent catastrophic climate change real improvement is needed in every country and every industry.

I think the chance of that happening is near zero.

This is a site about semiconductors and my point is that as an industry we are often claiming improvements that aren't real and need to be focused on real reductions. I am not "hanging" this on TSMC, I talked about the whole industry and then talked about TSMC because they are who this thread is about.

By 2030 it is estimated the semiconductor industry will have the same carbon footprint as the country of Portugal, it is a real issue and that is why there are so many industry effort to address it. Even SEMI has called out some of the industry announcements as Greenwashing.

Portugal produced substantially less than 1% of global carbon emissions. I think it's a fact that we don't know what the true global carbon emissions are to within a 1% accuracy. So realistically Portugal is a non-factor, mathematically, and that means the 2030 semiconductor industry will be too. I know we don't agree, and I'm comfortable with that. I continue to think we're wasting resources on little stuff that doesn't matter, and I dislike spending a lot on actions that in the end don't make a difference.

 

[Scotten Jones]

You mentioned burn biomass is a concern. Is that something to do with TSMC or Taiwa

I know. But only the big picture is important to me, because carbon emissions are a decidedly global problem. The little pictures like Taiwan look like trivia.

I think the chance of that happening is near zero.

Portugal produced substantially less than 1% of global carbon emissions. I think it's a fact that we don't know what the true global carbon emissions are to within a 1% accuracy. So realistically Portugal is a non-factor, mathematically, and that means the 2030 semiconductor industry will be too. I know we don't agree, and I'm comfortable with that. I continue to think we're wasting resources on little stuff that doesn't matter, and I dislike spending a lot on actions that in the end don't make a difference.

So what is your position, the problem is China and nothing else matters? What do you think should be worked on?

The other point here is even if you don't think semiconductors matter, TSMC does or they wouldn't have published this statement. I can also tell you I interact with a who's who of electronic system and automotive companies and they are looking at carbon footprint of their suppliers and ultimately will make purchasing decisions based on it. This issue matters to semiconductor companies and matters to their customers. You are certainly entitled to believe it is a waste of time but the decision makers clearly don't agree with you.

 

[blueone]

So what is your position, the problem is China and nothing else matters?

I didn't say that. I was putting Taiwan's GHG emissions from electrical generation into perspective. Consistent and recent data is difficult to find even from government sources, but it appears China only accounts for 22-24% of global GHG emissions. So obviously while China does matter, it is not the only factor. The US appears to contribute about 11% of global GHG emissions and falling, mostly as coal power plants are taken offline.

What do you think should be worked on?

This is a huge topic. Is this really the place for it?

The other point here is even if you don't think semiconductors matter, TSMC does or they wouldn't have published this statement. I can also tell you I interact with a who's who of electronic system and automotive companies and they are looking at carbon footprint of their suppliers and ultimately will make purchasing decisions based on it. This issue matters to semiconductor companies and matters to their customers. You are certainly entitled to believe it is a waste of time but the decision makers clearly don't agree with you.

Of course all of these corporate people are looking at carbon-related matters. The US SEC is about to issue regulations requiring disclosure, that will likely force companies to spend a lot on supply chain analysis, and it's also mixed up in public perception.

SEC.gov | SEC Proposes Rules to Enhance and Standardize Climate-Related Disclosures for Investors

www.sec.gov

And, yes, I believe it is a colossal and misleading waste of time and money.

 

[Scotten Jones]

O

I didn't say that. I was putting Taiwan's GHG emissions from electrical generation into perspective. Consistent and recent data is difficult to find even from government sources, but it appears China only accounts for 22-24% of global GHG emissions. So obviously while China does matter, it is not the only factor. The US appears to contribute about 11% of global GHG emissions and falling, mostly as coal power plants are taken offline.

This is a huge topic. Is this really the place for it?

Of course all of these corporate people are looking at carbon-related matters. The US SEC is about to issue regulations requiring disclosure, that will likely force companies to spend a lot on supply chain analysis, and it's also mixed up in public perception.

SEC.gov | SEC Proposes Rules to Enhance and Standardize Climate-Related Disclosures for Investors

www.sec.gov

And, yes, I believe it is a colossal and misleading waste of time and money.

I didn't say that. I was putting Taiwan's GHG emissions from electrical generation into perspective. Consistent and recent data is difficult to find even from government sources, but it appears China only accounts for 22-24% of global GHG emissions. So obviously while China does matter, it is not the only factor. The US appears to contribute about 11% of global GHG emissions and falling, mostly as coal power plants are taken offline.

This is a huge topic. Is this really the place for it?

Of course all of these corporate people are looking at carbon-related matters. The US SEC is about to issue regulations requiring disclosure, that will likely force companies to spend a lot on supply chain analysis, and it's also mixed up in public perception.

SEC.gov | SEC Proposes Rules to Enhance and Standardize Climate-Related Disclosures for Investors

www.sec.gov

And, yes, I believe it is a colossal and misleading waste of time and money.

OK, I guess we will have to agree to disagree.