Taiwanese tech reporters look forward to nothing more that the two to three times a year they tune in to Apple events in the early hours of the morning, holding their breath waiting for the company to stun the world with an amazing new product. 

At the Apple Spring Event 2016, Apple pulled a surprise when it introduced “Liam,” an environmental robot with several mechanical arms that could quickly take apart an iPhone and break it down into small parts. It left this reporter mesmerized, to the point where I took little notice of Apple’s new environmental czar who was attending her first event.

That executive, Lisa Jackson, Apple’s vice president of Environment, Policy and Social Initiatives, was launching a paradigm shift in the company’s approach to sustainability that would have Taiwan’s electronics sector under pressure only a few years later.

Apple pushes TSMC to step up on green energy

In its 2021 Sustainability Report released in June, TSMC divulged that it had increased its target for the percentage of renewable energy used company-wide by 2030 to 40 percent, from 25 percent previously.

That was no small commitment, especially given TSMC’s growing reliance on advanced processes that consume massive amounts of power. Many have even wondered if the arrival in the coming years of TSMC’s 3-nanometer and 2-nanometer processes would exacerbate Taiwan’s electricity supply woes.

Yet, TSMC still took the plunge.

“They [TSMC] did it because Apple was pushing for it,” explained a senior executive of a major vendor in the Apply supply chain.

He worried about Apple requiring all of its Taiwanese suppliers to hit the 40 percent renewable energy target, because “it simply can’t be done,” he said.

Apple, which is TSMC’s biggest client, set the most ambitious sustainability target in the industry in 2019 – that it become carbon neutral across its entire business and manufacturing supply chain by 2030.

That it has gone from a prime target of environmental groups to a pioneer of carbon reduction in just a few short years is a credit to Jackson, who joined Apple in 2013.

Jackson was the first African-American woman to head the U.S. Environmental Protection Agency, serving as its administrator from 2009 to 2013 under President Barack Obama. She was responsible for nearly 20,000 employees and a budget exceeding US$8 billion, and earned the recognition of Time magazine in 2011 as one of its 100 most influential people.

Jackson, who holds a master’s in chemical engineering from Princeton University, promoted carbon reduction legislation during her time in office, earning her the antipathy of carbon-intensive industries and Republican Party members of Congress. After leaving the EPA, she was snapped up by Apple CEO Tim Cook.

In a podcast with Jane Goodall last year, Jackson said Apple’s own operations ran entirely on green energy and that Apple was now helping other companies with the transition, “starting with suppliers,” because 75 percent of the company’s carbon footprint comes from its supply chain. 

Apple launched a “Supplier Clean Energy Program” in 2013 that committed its suppliers to make Apple products exclusively with green energy. Most Taiwanese vendors in its supply chain, including TSMC, Hon Hai Precision Industry (Foxconn), Largan, ASE, and Quanta, signed on. 

An executive at one Taiwanese supplier admitted, however, that because the commitment did not come with a concrete deadline, “everybody has been putting off change,” except for TSMC. 

In eight years, will Taiwan have enough green energy for TSMC to meet its pledge of 40 percent of its power coming from green energy? Some simple calculations indicate it should be possible, at least on paper.

Does Taiwan have enough green energy?

In 2021, TSMC consumed 18.08 billion kilowatt-hours of electricity, up 13 percent from a year earlier. If that rate of growth is sustained, TSMC will be using 54.31 billion kWh a year by 2030, which means it would need 21.7 billion kWh from green energy sources to meet the 40 percent target. 

So how much green energy will be available by then? The government has pledged that Taiwan will have 30 GW of solar power capacity and 13 GW of wind power capacity installed by 2030, which means it could generate an estimated 77 billion kWh of green energy (not including biomass and geothermal power).

TSMC would only need about 30 percent of that total to meet its 2030 target, seemingly very doable.

But that scenario relies on highly optimistic estimates. As TSMC installs electricity-guzzling EUV (extreme ultraviolet) lithography machines for its 3nm and 2nm processes in the future, its power consumption will almost certainly rise at a faster pace than at present. At the same time, few people believe the government will meet its green energy targets on schedule.

In recent years, TSMC has been worried that installing solar panel arrays in wetlands and woodlands would trigger environmental disputes, resulting in delays, and decided to prioritize the purchase of offshore wind power instead.

“Wind power alone would get us to 25 percent,” said TSMC Vice President of Operations/Facility Arthur Chuang (莊子壽), referring to TSMC’s previous goal of getting 25 percent of its power from renewable sources by 2030.

Once the goal was pushed to 40 percent, TSMC had to reverse course and buy solar power as well, substantially increasing uncertainty. Why was it seemingly asking for trouble by pushing for a higher standard?

Lora Ho (何麗梅), a TSMC senior vice president who heads the company’s ESG Committee, said the goal was a by-product of TSMC’s move in 2021 to set a net-zero emissions target for 2050. TSMC felt that if could not meet the 40 percent green energy target by 2030, it would be nearly impossible to achieve the “net-zero” goal, a goal that implies that all electricity comes from renewable sources.

But can it be achieved? 

“I’ve told a lot of people that [carbon reduction] goals should not be set because they can be easily achieved,” Ho said. “You have to be aggressive and set ambitious goals. Even if you don’t reach them, you have to try as hard as you can to give yourself a chance at succeeding.”

Just as Apple has put pressure on its suppliers to act more sustainably, TSMC is doing the same with its suppliers.

Ho said, for example, that TSMC has asked ASML, the Dutch company that produces the EUV lithography machines, to cut the machines’ power consumption by 20 percent.

The latest incentive for going to America

When discussing TSMC’s carbon reduction goals, Ho turned the question on me, and asked if there was a company whose carbon reduction pledge would be easy to accomplish.

“Intel,” I responded immediately. TSMC’s biggest rival announced in April that all of the electricity it uses will come from renewables by 2030.

Lo thought about that, and admitted “their environment is better than ours.” 

According to the website Our World in Data, each kilowatt-hour of electricity generated by Taiwan produced 567 grams of carbon emissions, compared to 357 grams per kWh in the United States. A key reason for that is that renewable energy accounts for more than 20 percent of the American electricity mix, compared to only 6 percent in Taiwan.

Intel’s main production hub is in Arizona, a sparsely populated state that is one of the biggest generators of solar power in the United States. 

That’s why many in the industry believe that TSMC’s new foundry outside of Phoenix, scheduled to begin commercial production in 2024, will be run completely on green energy, a feature offering the company a new incentive to expand to the U.S.

Such a shift in strategy could not have been foreseen.

TSMC’s expansion overseas and how much it should invest have been hot topics in Taiwan and even in the U.S. Congress, involving several considerations including geopolitics, production costs and talent acquisition. 

But now another factor can be added to the list – abundant renewable energy. That just happens to be one of Taiwan’s biggest weaknesses and could eventually become one of the biggest advantages to TSMC of investing in America as it pursues its renewable energy goals.

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Translated by  Luke Sabatier
Uploaded by Ian Huang