How much energy will new semiconductor factories burn through in the US?

A crane seen at a construction site.
The Taiwan Semiconductor Manufacturing Co. facility under construction in Phoenix, Arizona, US, on Tuesday, Dec. 6, 2022. | Caitlin O’Hara/Bloomberg via Getty Images

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.

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.

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.”