Since the Paris Agreement was signed in 2015, tech companies have pledged to achieve net zero emissions. Apple, one of the leading companies, sent shockwaves through the industry in 2020, when it announced a goal to go 100% carbon neutral for its supply chain and products by 2030.
A growing number of multinational and large local companies are committing to become carbon neutral. While such a move has yet to be mandated by the government, a major multinational firm last year signed a Memorandum of Understanding (MoU) with Foxwell Power, a subsidiary of Shinfox Energy, for renewable energy procurement.
In addition, Foxwell was commissioned to conduct market research and forward planning for the company's future service of renewable energy in Southeast Asia, with a view to achieving 100% renewable energy by 2030.
"The cost of renewable energy in Southeast Asia is relatively low, and some regions have local module plants, so there is no need to rely on imports. It is a good choice for companies to set up their own sites as long as there is sufficient capital." said Yang Yun-jen (楊允仁), technical director of Foxwell Power.
Their project is still in the planning phase, and will progress quickly once implemented, Yang added.
Many companies obtain renewable energy by establishing their own solar farms due to their huge annual electricity consumption and to comply with requirements from international supply chains. Notably, coordination with local power companies is required to invest in independent power generation site, which involves more efforts than self-consumption.
In addition to Southeast Asia, many companies have also established plants in the U.S. in recent years. Since the U.S. has a complete and free electricity market system, coupled with favorable policies and tax incentives, it has an advantage over Southeast Asia in terms of the use of renewable energy by foreign companies.
Many major brands are actively promoting energy transition of their supply chains. Hon Hai, for example, pledged last year to assist more than 45 and 100 key suppliers to use 100% renewable energy by 2025 and 2050, respectively.
Currently, there are still many obstacles facing the renewable energy market in Taiwan.
According to the observation of the industry by Hsu Guan-hua (許冠華), project director of Foxwell Power, many challenges still remain to be overcome for the supply chain to reach net zero.
The first issue is the availability of renewable energy in the region where the plant is located. In recent years, many Taiwanese companies have moved their manufacturing to Southeast Asia, which requires a robust system to obtain adequate renewable energy to meet the requirements of upstream brand owners.
Moreover, under the pressure of "transform or lose orders" from brands such as Apple, suppliers with inherently thin margins bear higher operating costs due to the use of renewable energy, which may be passed on to product prices.
Supply chain management can be more straightforward for international brands such as Apple or Microsoft, due to their substantial orders that offer high incentives. However, for other second-tier or higher-tier manufacturers, proactive and supplier-oriented approaches to energy transition are necessary. Taking Walmart, the world's leading retailer, as an example, its sustainable supply chain program has supported more than 40 suppliers complete their renewable energy purchase through partnering with energy companies and renewable energy consultants.
