Managing Director & Partner
Two trends broadly affecting the semiconductor industry threaten to significantly increase its carbon emissions from around 0.3% of total global emissions today.
First, demand for chips is accelerating. Virtually every modern industrial and consumer device—from children’s toys to rocket ships, and from the smallest appliance to the biggest automobiles—as well as most daily activities, such as sending an email, ultimately run on semiconductors.
Second, as chips increase in processing power, semiconductor production almost inevitably becomes more carbon intensive. Manufacturing more advanced semiconductors requires ever more complex processes, which consume more electricity and process gases.
If the current growth path were to continue unchecked, carbon emissions from semiconductor production would rise by about 8% annually in coming years and not peak until about 2045.
The need to combat climate change grows more urgent as the Paris Agreement’s goal of limiting the increase in global average temperatures to 1.5°C above preindustrial levels slips away. To do its part, the semiconductor industry must develop a decarbonization plan to reach net zero.
But without a clear picture of semiconductor emissions levels at every stage of chip manufacture and usage, there can be no path to net zero. With that in mind, BCG, SEMI, and the Semiconductor Climate Consortium (SCC) have published Transparency, Ambition, and Collaboration: Advancing the Climate Agenda of the Semiconductor Value Chain, a report that offers the most complete analysis of semiconductor-related greenhouse gas (GHG) emissions to date, as well as a detailed analysis of current and future emissions across the semiconductor value chain to facilitate targeted development of abatement solutions.
The research is especially notable for its ambitious range. Not only did we calculate Scope 1 and Scope 2 emissions—essentially, emissions that directly result from semiconductor design and manufacturing activities and from the energy consumed during those operations, respectively—but we also examined Scope 3 emissions. These are upstream CO2 emissions from suppliers’ production and materials sourcing activities as well as downstream emissions from the use of chips by customers in daily applications.
Our research yielded five key findings:
The full report develops and analyzes a series of scenarios for GHG emissions in manufacturing through 2050, charting possible semiconductor industry outcomes against an overall goal of adhering to the 1.5°C pathway. (See the exhibit.) Because data on supply chain and device usage is still difficult to measure and assess, we do not include these activities in our forecasts.
The “low-carbon energy” scenario anticipates that the semiconductor industry can curb over half of benchmark 2050 emissions—the level of carbon output in the absence of any viable action to reduce it—by supporting the realization of the International Energy Agency’s Stated Energy Policies Scenario (STEPS). STEPS reflects the impact of existing government policy frameworks and announced plans. However, this outcome leaves chip manufacturing emissions at 168 Mt per year in 2050 and nearly 5 Gt total, significantly above net zero and 1.5°C targets.
Our other scenario incorporates company commitments by the 40 highest emitters in semiconductor manufacturing, as currently reported, representing a substantial majority of all emissions. This scenario promises material progress toward a collective net zero goal. Even so, its results fall short of net zero by 2050—and of meeting the 1.5°C objective, by a factor of 3.5x.
As the report shows, achieving the 1.5°C carbon expenditure goal will not be easy for semiconductor companies. Indeed, even the significant efforts already pledged and taken will not reduce the industry’s carbon footprint to net zero. Overcoming this gap will require deeper collaboration across the industry, which we strongly encourage and the SCC has begun to foster.
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