The number of companies with corporate net-zero plans validated by the Science Based Targets initiative swelled to more than 500 as of mid-November. You won’t find chipmaker Intel on that list.
Intel, the world’s second-biggest chipmaker, with revenue of about $70 billion in FY 2022, said its emissions-reduction strategy is "aligned" with the net-zero guidance advocated by SBTi, but it doesn’t follow the guidelines for "numerous reasons" tied to how the company accounts for past and future progress, it said in its Climate Transition Action Plan, published late last year.
"We’re much more focused on how we reduce over time," said Todd Brady, vice president of global public affairs and chief sustainability officer at Intel, in an interview. "It’s a good framework for companies that haven’t really thought about this until much more recently."
The science of ‘science-based’ targets
SBTi is a nonprofit created in 2015 to help companies set voluntary "science-based targets" that align their greenhouse gas emissions reductions with the Paris Agreement’s goal of limiting global temperature increases to 1.5 degrees Celsius.
The organization validates whether individual company pledges stand up to that commitment, lending more credibility to their claims. As of November, more than 2,000 companies were chasing SBTi’s blessing for their corporate net-zero plans over the next two years.
To address that demand, SBTi became an independent entity in September, after years of operating as a partnership of CDP, United Nations Global Compact, We Mean Business, World Resources Institute and the World Wide Fund for Nature. It has created an independent technical council to review its criteria and increased the number of individuals dedicated to validating corporate targets.
Intel’s dilemma: a long history of reductions
Intel began investing in measures to reduce its emissions two decades ago. In its November progress report, the chipmaker said process improvements, chemical substitutions, energy conservation, renewable power investments and other measures have helped it avoid more than 64 million metric tons of carbon dioxide equivalent (CO2e) over the decade through 2022. That compares with 16 million metric tons of CO2e actually emitted.
During the same timeframe, Intel’s manufacturing output tripled.
Source: Intel 2023 Climate Transition Action Plan
The problem is that Intel’s absolute emissions aren’t decreasing. During 2021 and 2022, Intel reported 1.54 million metric tons in emissions, up from 1.36 million in 2020. That’s at odds with SBTi’s requirements for near-term reductions, which don’t allow companies to account for avoided emissions.
"While Intel’s long-term net-zero GHG goals are in line with a 1.5 degree emissions reduction scenario required by SBTi, we are challenged by the near-term reduction requirement without the ability to account for significant historical reductions," the company said in its report.
Intel’s climate transition action plan calls for a 10 percent reduction in absolute Scope 1 and Scope 2 emissions by 2030, based on a 2019 baseline. It is striving to reach net zero by 2040 for Scope 1 and 2, and by 2050 for its upstream Scope 3 emissions.
Another sticking point for Intel is that SBTi’s framework doesn’t consider the reduction in emissions or other potential benefits from using new technology in climate solutions, such as artificial intelligence that can reduce energy consumption. Intel is part of the Semiconductor Climate Consortium, formed in 2022, which is working on potential options for setting an SBTi-approved target.
"Intel’s priority is to actively reduce its emissions, in line with international standards and climate science," the company said.
An urgent need to address industry emissions
Notable Intel rivals and peers including Advanced Micro Devices, Applied Materials and Qualcomm have targets validated by SBTi, according to the nonprofit’s target dashboard, but fast-growing AI chipmaker Nvidia does not.
SBTi doesn’t offer sector-specific guidance for the semiconductor industry, but as production ramps up to sate the appetite for artificial intelligence and other digital services, emissions from these companies are growing. A conservative scenario modeled by McKinsey predicts that Scope 1 and 2 emissions will double from 2020 to 2030, reaching 183 million metric tons of CO2e. "To get on a net-zero trajectory by 2030, the semiconductor industry would benefit from a coordinated effort to apply current strategies in full while simultaneously developing and adopting new technologies," McKinsey said.
Big changes are needed to replace existing process gases, such as nitrogen trifluoride; heat transfer fluids; and existing fuel supplies, the firm said.
In a November research report, Boston Consulting Group underscored the need for more manufacturers to act, calling current efforts "insufficient" to reach net zero by 2050. "If the current growth path were to continue unchecked, carbon emissions from semiconductor production would rise by about 8 percent annually in coming years and not peak until about 2045," the firm predicts.