At the UN climate conference in Glasgow this month, scientists were unequivocal: The only way to avoid the most catastrophic effects of climate change is to transition quickly away from coal, oil and gas to cleaner sources of energy such as wind, solar and hydropower.
Leaders nodded in agreement. US President Joe Biden called on the world to “double down on clean energy deployment.” Indian Prime Minister Narendra Modi said his country would generate half of its energy from renewables by 2030, while UK Prime Minister Boris Johnson said green technology would help Britain achieve “net zero” in power generation by 2035.
But there is one little-discussed yet significant barrier to those bold pledges: Without a supply chain that runs through Taiwan, one of the world’s most vexing geopolitical hotspots, quickly flipping the switch on green power will be nearly impossible.
An essential ingredient for renewable energy systems to work is the semiconductor. Made from pure elements such as silicon or germanium, semiconductors facilitate the harnessing, conversion, and transfer of renewable energy to the power grid. Without these vital chips, the efficiency of green technologies is limited, and their value diminished.
Put simply, the promise of a greener future provided by renewable energy depends on high-quality semiconductors.
Which brings us to Taiwan, the world’s leading manufacturer of these essential chips (found in everything from smartphones to smart toasters). Last year, Taiwan’s foundry market – the outsourcing of semiconductor fabrication – accounted for more than 60% of total global foundry revenue, with 50% attributed to just one company, the Taiwan Semiconductor Manufacturing Company (TSMC).
To understand the magnitude of Taiwan’s hold on this sector, consider what happened this spring to the auto industry. When global demand for electronics spiked and semiconductor supplies diminished, some 1.3 million vehicles were left stranded on the assembly line.
But while automakers generated the most headlines, the renewable-energy sector, particularly manufacturers of solar panels and wind turbines, was also hit hard. For instance, in February, US-based solar giant Enphase Energy reported that “constraints in the global semiconductor supply chain” had hurt its production worldwide.
Given the importance of semiconductors to clean energy solutions, and Taiwan’s outsized role in the chip-making business, one might assume Taiwan would have had a seat at the table in Glasgow. But that assumption would be wrong.
Taiwan, which China views as a breakaway province, is not part of the United Nations system that hosted the COP26 climate talks. While a delegation from Taipei engaged from the sidelines, Taiwan’s role in solving the climate crisis was not on the official agenda.
To save the planet from catastrophic warming, it’s time to bring Taiwan into the conversation.
Accelerating the transition from fossil fuels to renewable energy is one of the most cited ways to curb the climate-change threat.
The International Renewable Energy Agency (IRENA) reports that it is still possible to achieve emission reduction targets set by the 2015 Paris Agreement, but only if coal and other dirty sources of power drop precipitously in the next few years. Doing that will require a significant and immediate scaling-up of renewable energy sources.
It will also mean strengthening current semiconductor supply chains while developing new ones.
As the chip shortage this spring demonstrated, Taiwan’s supply-chain stranglehold is not a viable long-term solution, and governments are moving to expand their chip manufacturing capabilities.
In the US, for instance, TSMC, Samsung Electronics and Intel have announced plans to open new foundries, while Abu Dhabi-controlled GlobalFoundries, the world’s third-largest semiconductor foundry, also plans to expand production.
Still, it could take years for this extra capacity to come online, leaving green-energy manufacturers reliant on existing supply chains to fill their orders.
But even the existing pipeline is being squeezed, as China has gone on the offensive to limit Taiwan’s engagement with Western governments.
When a group of Taiwanese business executives – including chip manufacturers – visited the Czech Republic, Slovakia and Lithuania in late October, Chinese diplomats warned that “necessary measures” would be taken in response. China issued a similar rebuke days later, when a group of American lawmakers flew to Taiwan in a US Navy aircraft, a provocation China called “sneaky.”
In Europe, this vague pressure is having an effect. Recent momentum behind a bilateral trade deal between the European Union and Taiwan – which would have strengthened cooperation in strategic technologies such as semiconductors – stalled at the “eleventh hour.”
EU lawmakers were reportedly split on how to balance business with Taiwan amid increasingly bellicosity by China, with one German politician accusing pro-China “Merkelites” of derailing the deal.
While Beijing’s response to Taiwanese diplomacy is to be expected, the planetary implications of sidelining Taiwan are massive. To power a large-scale green-energy revolution, the world needs the kind of high-end semiconductors that Taiwan produces.
Western governments that are serious about climate change should focus less on appeasing China and more on helping Taiwan’s chipmakers expand capacity while building up their own capabilities. By engaging with Taiwan, and making those trade ties official, governments can secure supply chains and source a key ingredient for meeting their climate-change commitments.
The climate summit in Glasgow was remarkable for its breadth. An estimated 40,000 politicians, campaigners and business representatives gathered for two weeks to hammer out a blueprint for saving the planet. But to turn those promises into action at the speed required, the world should deepen its ties with the tiny island state that wasn’t even on the guest list.