There is no doubt that the global semiconductor-chip shortage is problematic across many sectors. Phones, vehicles, computers, ATMs and health-care devices use this important technology and power us through our daily lives. While it’s encouraging to see New York’s elected leaders recognize the gravity of the current chip shortage, it’s incredibly discouraging to consider New York’s climate goals may crush the opportunity to bring semiconductor companies to the Empire State.
Under the Climate Leadership and Community Protection Act (CLCPA), New York plans to dramatically reduce the use of organic fuels that help power semiconductor-chip manufacturers across the world. By the end of 2040, New York’s electrical grid must be completely free of greenhouse-gas emissions. How state leaders plan on making that goal a reality is a huge question mark at the moment. There are many unknowns about the renewal of nuclear-power plants which produce a tremendous amount of power for our state. There are also a lot of questions about the capability of renewable-energy sources to make up for the loss of organic fuels plus the added electricity demand on the horizon.
In its 2022 Power Trends report, the New York Independent System Operator put the issue of reliability under a bright spotlight. The executive summary of that report states the following: “The pace of deactivation of current fossil-fueled resources must not exceed the pace of development and deployment of new, non-emitting electricity supply resources that can provide the reliability services that New Yorkers expect.”
Additionally, a July 2022 analysis from The Empire Center found that without nuclear power, wind and solar sources will have to generate 67 percent of New York’s electricity. According to data from the United States Energy Information Administration, wind and solar accounted for just 6.5 percent of New York’s energy production in 2020. This massive gap will likely cause semiconductor companies to disqualify New York for future chip plants.
The unfortunate reality is that New York’s harsh business climate is already forcing companies to build transformative projects in other states. Earlier this year, Intel chose to build two chip plants totaling $20 billion in Ohio. Additionally, Samsung executives decided to build their new $17 billion chip plant in Texas. While those selections were made before the passage of New York’s Green CHIPS bill, large subsidies played a role in those deals.
If Gov. Kathy Hochul and policy makers are serious about recruiting chip makers to New York state, they need to reconsider the state’s final climate plan. With so many questions about energy reliability, semiconductor manufacturers are likely to bet their chips elsewhere.
Justin Wilcox is executive director of Upstate United, which says it is a non-partisan, pro-taxpayer, pro-economic growth and pro-upstate education and advocacy coalition made up of business and trade organizations from across upstate New York.