TSMC leads rush for renewables ahead of Taiwan energy vote

The Taiwan Semiconductor Manufacturing Co headquarters in Hsinchu. TSMC plays a crucial role in the global electronics supply chain. The logistical snarl caused by the pandemic showed how vital the island is to keeping auto and tech production lines running.

This month, Taiwan will hold a referendum that could have far-reaching effects on the world’s supply of semiconductors.Taiwan is home to the world’s biggest chipmaker, Taiwan Semiconductor Manufacturing Co, and plays a crucial role in the global electronics supply chain. The logistical snarl caused by the pandemic showed how vital the island is to keeping auto and tech production lines running. Now a longer-term threat is emerging: energy supply.  Energy security and reliance on imported fossil fuels have long been key political issues for Taiwan that have become more inflammatory after the government committed to net-zero emissions by 2050. Only Australia is more dependent on coal power for its electricity among the world’s advanced economies.Two blackouts earlier this year raised concern about Taiwan’s ability to meet power demand that is rising by 2.5% a year. While the outages were at least partly caused by human error, they highlighted the government’s challenge in trying to decarbonise its grid, reduce dependence on imported energy and solve a long-running debate over nuclear power. For the electronics plants that drive the economy, they were a stark reminder of the need to find new sources of green energy soon to be able to expand production. Even Taiwan’s aim to increase the share of green energy to 20% by 2025 has a long way to go. Last year, the island imported almost 98% of its energy. About 82% of its electricity came from thermal power stations, with most of the remainder generated by two ageing nuclear plants. Renewables generated only 5.5%.Power usage at TSMC, which is planning a new 2-nanometer wafer foundry near its headquarters in Hsinchu, could double within three years, according to a report by Bloomberg Intelligence analyst Charles Shum. TSMC became the first in its industry to sign up to the RE100 renewable energy initiative last year, pledging to use 100% renewable energy by 2050. Delta Electronics, United Microelectronics Corp and others followed suit.The December 18 referendum will ask citizens four questions - two related to power: whether to activate a fourth nuclear plant that was mothballed in 2015, and where to build a new natural gas terminal. The results could extend the island’s reliance on imported coal and make it harder to meet rising demand from factories.The nuclear issue has been a thorn in government policy for years. The ruling Democratic Progressive Party (DPP) had pledged to end atomic energy by 2025, when the last of the currently operating plants was due to be decommissioned. The opposition Kuomintang (KMT) argues that nuclear is necessary to generate emission-free baseload power and without it Taiwan could face power outages.“We support nuclear power as it’s free of carbon tax and supplies stable power,” said Tsai Lien-sheng, secretary-general at Taiwan’s Chinese National Federation of Industries. Anti-nuclear groups say renovating the fourth plant would be prohibitively expensive and unnecessary, not to mention concerns about nuclear waste disposal and the safety of operating reactors on an island prone to earthquakes.“Pro-nuclear advocates have repeatedly used this trick - agitating the fear of energy shortages,” said Paul Jobin, associate research fellow at Taiwan Academia Sinica’s Institute of Sociology. “It is technically impossible to start that ghost of a plant.” In a poll conducted in November by the Taiwanese Public Opinion Foundation, 43.5% supported activating the fourth nuclear plant, while 45.9% opposed it. A 2018 referendum voted to continue using nuclear power.A second referendum topic seeks to block CPC Corp’s construction of a $2bn LNG terminal on the coast at Taoyuan. Critics say the facility would damage a 7,000-year-old algal reef, while advocates say the terminal is vital to supplant coal imports with less-polluting natural gas. Taiwan’s existing two LNG terminals are already at full capacity. “If construction of the facility is halted, it will be a huge blow to stable power supply and plans to reduce emissions,” the Bureau of Energy said.The government has proposed moving the terminal 455 meters offshore to protect the reef. But even this could delay the project by 2.5 years, derailing efforts to raise the share of natural gas to 50% of the power mix by 2025, according to Liang Chi-yuan, chair professor of management at National Central University.“If nuclear power is to be eliminated, raising the gas power generation to 50% of power mix is not just a goal, but a must,” said BloombergNEF power analyst Wei Hanyang. “Without the third gas-receiving terminal, it’s likely that Taiwan won’t have enough power by 2025.”In the November opinion poll, 42.3% of respondents said they would vote to protect the reef in Taoyuan, while 36.7% supported construction of the terminal. The two other referendum questions concern the imports of pork and the scheduling of future referendums. Defeat for President Tsai Ing-wen’s DPP on all four issues could harm the ruling party’s prospects in local elections next year.Longer term, the vote could derail Taiwan’s efforts to fight global warming. Its per capita emissions rank among the world’s highest, said Niven Huang, Managing Director of KPMG Sustainability Consulting Co in Taiwan.