What the Chips Act doesn’t say: The environmental challenge of producing semiconductors

The semiconductor industry is one of the most resource-intensive in the world with every generation of chips increasing the environmental cost. [BLKstudio/Shutterstock]

This article is part of our special report Chips Act unveiled: The (real) cost of making semiconductors.

The dire environmental cost of semiconductor manufacturing, which is getting more problematic with every new generation of microchips, has been largely overlooked in the European Commission’s semiconductor package.

The Chips Act, presented earlier this month, is part of an overall effort towards digital sovereignty, as the Commission strives to make Europe an independent technological power. Nevertheless, the proposal failed to address how this initiative will reconcile with the EU’s other top priority, the green transition.

“Digital technologies, both when manufactured and used, have their own environmental footprint, including from the release of fluorinated greenhouse gases during manufacturing to their significant energy consumption for their production and during their use,” the Chips Act reads.

LEAK: EU Commission's Chips Act and semiconductor package

The European Commission will present a ‘chips package’ to upscale capacity, relax state aid rules, finance research and establish international partnerships, according to several draft documents seen by EURACTIV.

However, the legislative proposal only considers the environmental impact based on the final product’s performance, in other words, how new generations of chips tend to enable more energy-efficient connected devices, power electronics, and ICT infrastructure.

By contrast, research from Harvard on the overall computing sector indicates that, while the operational energy consumption of computer devices has steadily decreased in terms of carbon emissions, the carbon footprint of computer systems has continued to increase due to the hardware manufacturing and infrastructure.

“The semiconductor industry is one of the most resource-intensive in the world. It is puzzling that with the Chips Act, the European Commission makes no mention of it,” said Pauline Weil, a research assistant at the think tank Bruegel.

A Commission representative stressed to EURACTIV that semiconductor manufacturing is covered by the EU climate targets and legislation such as the EU Emissions Trading System and the Eco-Management and Audit Scheme certification.

Meanwhile, the Electronic Component Manufacturer association estimated that the European semiconductor industry dropped gas emissions per output by 42% between 2010 and 2020 thanks to new abatement technologies, gas process optimisation, and less polluting perfluorinated chemistries.

Nevertheless, the Commission’s initiative is meant to bring the EU’s chipmaking to a different level, both in terms of quantity and quality.

Harvard’s research showed that the lion’s share of the computer sector’s environmental footprint is produced by semiconductor manufacturing. Additionally, the more sophisticated the chip, the higher the environmental impact on energy intensity, water consumption, and waste production.

The Interuniversity Microelectronics Centre (IMEC) noted that research on the overall environmental impact of the chips is still missing, partially because of the ever-changing and growing complexity of the production process, but the general trend seems clear.

Producing advanced 2nm microchips requires more than twice as much water and three times as much electricity than 28nm ones. The carbon emissions have also more than doubled in the passage.

To compete globally, the Commission wants to attract the best international players to settle fabrication facilities in Europe by providing public funding that covers up to 100% of the investments.

However, comparing companies’ public disclosures, Bloomberg found that major chipmakers have overtaken traditionally polluting industries such as automotive in terms of carbon footprints and hazardous waste.

In 2020, Greenpeace estimated that leading semiconductor manufacturer Taiwan Semiconductor Manufacturing Company (TSMC) accounted for almost 5% of the total energy consumption of Taiwan, a percentage the NGO expected to further grow with the new generation microchips.

TSCM emitted 15 million tons of CO2 equivalents in 2020, almost doubling its emission from the previous year. The world’s second producer, Samsung, emitted nearly 13 million tons of greenhouse gases in the same year.

In contrast, third-ranking chip manufacturer Intel has slashed its carbon footprint by 18% since 2000 and restored 90% of the water usage in 2020 despite growing productionAlthough increasingly based on renewables, production remains energy-intensive.

Intel is due to open a new factory in Europe, for which it commits to 100% renewable energy, net positive water use, and zero waste to landfills.

Intel plans billion-euro investment in next-generation microchips on EU soil

With investments amounting to 80 billion euros, Intel wants to massively expand its production facilities in Europe, focusing on next-generation microchips measuring two nanometres and smaller than that.

However, the Commission’s ambition to set up state-of-the-art fabrication plants in Europe is already a massively expensive endeavour to the tune of tens of billion euros. The EU’s high environmental standards are likely to add to that cost.

“In addition to caution on the efficiency of public spending, the intent of having fabrication capacities in the EU focuses on supply security with potential trade-offs for public spending efficiency and environmental sustainability,” Bruegel’s Weil added.

As far as chip manufacturing is concerned, the notion of digital sovereignty might not be immediately reconcilable with Europe’s green agenda. Therefore, the EU executive might have to prioritise between the two.

“The establishment of industrial facilities may have a negative impact on the environment, but this can be offset by their contribution to the sustainability transition in the long run,” the Commission spokesperson said.

[Edited by Alice Taylor]

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