The climate cost of Biden’s semiconductor buildout in Arizona

In April of this year, the Biden-Harris Administration announced that the federal government has signed a contract to provide up to $6.6 billion in direct funding under the CHIPS and Science Act. This funding would support TSMC’s plan to build three massive new semiconductor factories (fabs) in Phoenix, Arizona, to make some of the world’s most advanced semiconductors.

But there’s a catch. This new contract is in danger of being a multi-billion dollar down-payment on new fossil fuels.

As we showed in our report Clean Clicks or Dirty Chips, big plans by TSMC to build new semiconductor factories (fabs) in Arizona are actually leading to more fracked gas, and a dangerous delay in the retirement of coal fired power plants – flying in the face of what communities want. 

Semiconductor factories use incredible amounts of power to run. Just TSMC’s planned fabs are estimated to need 1200 megawatts of electricity, and there are tens of new factories in the pipeline by the world’s biggest semiconductor companies across the US. In fact, our report found that new factories under construction now by four of the biggest semiconductor manufacturers – Intel, TSMC, Samsung, and Micron – will need approximately 2.1 gigawatts in new electricity per year. That’s more than double the annual usage of Seattle.

Unless these tech titans act now to ramp up renewables, they’re threatening to seriously undermine the fossil fuel phase out, and push their own targets way off track.

The problem is that for a factory with the power demand of a city you can’t just plug it into the wall. Right now, there just isn’t enough electricity to meet the demand – and definitely not enough clean energy. So where’s it all going to come from? Well according to plans by Arizona’s biggest electricity providers, the short answer is coal and gas. And that’s a huge problem.

Last year the two biggest power providers in Arizona set out plans to meet future demand growth, mainly coming from big new data centers and fabs built by chipmakers Intel and TSMC. Although the plans do include new renewables and battery storage, a big part also relies on delaying the retirement of coal plants that otherwise should be winding down, and burning more gas. That will result in a dramatic and long term rise in greenhouse gas emissions, and will mean saddling local communities with worse air pollution from more fossil fuels being burned.

This pattern is being repeated across the U.S., where massive investments in semiconductor manufacturing from Texas to New York are triggering dangerous new investment in fossil-based electricity generation – despite claims by the chipmakers like Intel that they plan to make their products using renewable energy. 

That’s where the greenwashing comes in.

Companies can claim to use “renewable electricity” despite their actual power coming from gas and coal-fired power plants by essentially purchasing offsets, called unbundled Renewable Energy Certificates (RECs). These unbundled RECs are cheap, easy to source, and allow companies to say that they have reduced emissions by using clean energy. The bad news is that they have almost no effect on actually reducing fossil fuel burning, and – as we’re seeing in real time in Arizona – can actually hide new fossil fuel infrastructure being built. 

As an example, our report found that 80% of Intel’s electricity use in 2022 was offset by unbundled RECs rather than real renewables, masking thousands of tons of emissions.

There’s a solution to make this devil’s bargain into a real energy transition. Chipmakers need to stop greenwashing with RECs, and instead invest in new renewable electricity generation and battery storage so they’ll have clean energy around the clock. And, the US Government needs to end its proxy investment in fossil fuels by tying its support to real renewables – not just offsets.