Corporate Environmental Report

Energy



We believe that the most pressing environmental threat is climate change, caused by the increase in greenhouse gas (GHG) concentrations in the atmosphere. We have therefore set the highly ambitious goal of becoming carbon dioxide (CO2) neutral by 2010. This means that by that date our operations will not contribute to climate change.

CO2 is the principal greenhouse gas. This is produced when fossil fuels - gas, coal and oil - are burned to make heat and electricity for homes and industry. Experts fear that the increased concentration of GHGs is making the world hotter - often referred to as global warming.

We use energy in our factories and when distributing our products. Even though our total contribution to climate change is relatively small in global terms - we use enough electricity to supply a town roughly the size of Venice in Italy - we are determined to do all we can to reduce our contribution to climate change.

For a typical semiconductor manufacturer, electricity can be the largest single expense. Our target is to reduce total energy consumption by at least 5% a year for each million dollars of added value. (Added value refers to sales revenue minus purchasing costs). This will help us meet our goal to neutralize our CO2 emissions by 2010. We intend to achieve this by: increasing energy efficiency; using heat and power plants; using renewable energies and creating carbon sinks through reforestation.

If the improvement in energy mix foreseen for 2010 is achieved (65% cogeneration, 30% conventional, 5% renewable), this will allow CO2 emissions for each million dollars of production to drop by more than 80% from the 500 tonnes 1990 to only 80 tonnes in 2010. Reaching the Decalogue goal for energy will result in company-wide savings of $900 million for the period 1994-2010.

We have developed an energy roadmap for reducing CO2 emissions and estimate that overall CO2 savings of 11 million tonnes can be achieved during the period 1994-2010. Based on our energy roadmap, we estimate that conventional energy will account only for 29% of our total energy demand in 2010.

The chart below shows our greenhouse gas emissions by source, converted to carbon-equivalent, to measure our Global Warming Index for 2000. It includes direct emissions from our facilities and manufacturing processes, indirect emissions from energy consumption, emissions from employee transport and emissions from product transport. Overall, ST estimates 0.49 million metric tonnes of carbon equivalent.

Continue to reduce total energy consumption for million dollars of added value by at least 5% per year

INCREASE ENERGY EFFICIENCY
The trend in energy saving continues to improve - 29% over the period 1994-2000 at equal production. We recently changed our indicator - from Production Value to Added Value - but this has not influenced the trend.

Examples

	Technical improvements in the way we test wafers at our site in Agrate, Italy, provides an energy saving of 85%. This has been achieved through a new competitive technology to probe wafers by creating a minizone of clean area around the wafer under test. This delivers productivity improvements and a more flexible plant layout, eliminates the need for an expensive clean-air work area and allows most of the testing to take place in air quality similar to offices.
	Our Ball Technic System (BTS™), an energy-saving technique to descale condenser tubes pioneered at our Toa Payoh site in Singapore, is now being used by other plants, as a result of the ST Knowledge Sharing initiative. This has produced a saving of 18,000 MWh per year (equivalent to more than $1.2 millions per year).
	In our Malta site before 1999, no means of heat recovery in HVAC was available. A heat recovery system was installed in 1999 and since then the recovery system from the compressors has resulted in a powerful tool for the improvement of energy conservation (less fuel consumption), with the additional benefit of reduction of CO2 emissions as shown in the chart below.

Alternative Energies: adopt, wherever possible, alternative energy sources such as cogeneration and fuel cells

USING COMBINED HEAT AND POWER PLANTS
Conventional power stations that burn fossil fuels give off a lot of heat, wasting as much as 70% of the energy they consume. We are starting to use a more efficient generating technology that uses a system known as combined heat and power (CHP), or cogeneration, that captures most of the waste heat and uses it to make steam or provide heating.

By 2010 combined heat and power energy should supply 65% of ST’s electricity with 30% coming from conventional methods.

Examples

At Catania in Italy we intend to buy electricity, heat and cooling from a new gas-driven CHP plant being built close to our site. This will prevent the emission of more than a quarter of the CO2 that would otherwise have been released. The same approach will be adopted in six other factories and all new plants will get their energy from CHP plants.

Renewable Energies - wind, photovoltaics and thermal solar. Increase their use to provide at least 5% of our total energy supplies by end 2010

USE RENEWABLE ENERGY WHERE ECONOMICALLY VIABLE
There is a lot of energy in the wind and the sun. Societies throughout the ages have made use of this renewable resource to drive windmills (to grind wheat and pump water). Engineers have designed new technologies that can harness the wind and the sun to make electricity. Modern windmills drive turbines and photovoltaic cells convert light into electricity.

While these methods are clean and the power endlessly renewable, they are still not as efficient as fossil fuels and are therefore a lot more expensive at current prices. Wind power can be competitive in certain windy areas. The cost of solar power is falling as the technology improves and demand for solar cells increases.

Greater interest in renewable energy - driven by the threat of climate change - and improvements that reduce costs are making the technologies increasingly attractive. We have started pilot projects in both wind and solar energy.

Examples

	In Phoenix, Arizona, USA, we have installed a 20 kW solar power generating plant on the roof of our factory, in a joint project with the local energy company. Although it will supply less than 1% of our electricity needs there, we hope that the pilot will lead to improvements in the technology and wider use of solar power.
	In Saint Genis, France, close to the Jura Mountains, we are planning to erect a 660 kW wind turbine that will be connected to the electricity grid. This will supply about 40% of the electricity needed for our nearby offices. CO2 output will by reduced by 67 tonnes a year - about the same as a gasoline car would produce traveling for 250,000 kilometers.
	A feasibility study for a larger project is also in the final negotiation stages in Morocco where we plan to install a wind farm. The electricity generated by this power plant should supply about 20% of the current power demand of our two Moroccan sites - bringing savings in CO2 of some 13,000 tonnes of CO2 annually.

Carbon Sequestration: compensate the remaining CO2 emissions due to our energy consumption through reforestation or other means aiming at total neutrality towards the environment by 2010

PLANT TREES TO ABSORB CARBON DIOXIDE
Carbon is absorbed and stored when plants grow (through the biological process of photosynthesis) and also by the sea (the salt water reacts with the CO2). These carbon stores are called sinks. Planting more trees is the easiest way to ensure that greater quantities of CO2 are absorbed - a process known as sequestration. In theory, a carbon-emitting activity, such as a plane flight, can be “neutralized“ by planting an appropriate number of trees to absorb the CO2. And because global warming is a global problem, it means that trees can be planted anywhere in the world to achieve the same effect.

But there are also problems associated with planting forests for this purpose. First, the trees will release CO2 if they die or are burned in a forest fire. Second, some trees need a lot of water and can deplete groundwater reserves in dry areas. Exotic species can cause infestation when their seeds are spread by the wind. To prevent these and other environmental impacts, great care has to be taken to plant the right trees in the right places, and provide long-term care.

We are involved in the final stages of negotiation for a significant carbon sequestration program which, through extensive reforestation, aims to neutralize our greenhouse gases emissions. Working with the Stephen F. Austin State University in East Texas, the plan is to plant native pine trees over an area of 2,000 to 8,000 hectares.