Environmentalists balk at proposed exemptions for GlobalFoundries

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GlobalFoundries
Inside the GlobalFoundries semiconductor manufacturing plant in Essex. File photo by Mike Dougherty / VTDigger

Environmentalists say a proposed deal between state officials and GlobalFoundries, Vermont’s largest private sector employer, does not align with the Global Warming Solutions Act.

In the spring, the international semiconductor manufacturing company filed a petition with the Utilities Commission to make its Essex Junction facility, known as “Fab 9,” an independent energy utility.

Instead of buying power from Green Mountain Power, GlobalFoundries would buy power from the regional wholesale market for the installation and process it through its own conductors.

GlobalFoundries and members of Gov. Phil Scott’s administration recently signed a letter of intent that outlines a greenhouse gas reduction plan for the company if it becomes a self-managed utility.

The plan describes “should avoid the need” to include GlobalFoundries in developing the rules of Vermont’s Global Warming Solutions Act “if the reduction plan is met,” the last line of the letter read. “The parties reserve rights regarding current or future regulatory authority. “

The law, passed in 2020, said the state must significantly reduce greenhouse gas emissions in the years to come.

GlobalFoundries, headquartered in Malta, New York, said it uses 8% of Vermont’s electricity – more than the city of Burlington. According to estimates from Renewable Energy Vermont, a clean energy advocacy organization, the company’s manufacturing processes contribute 3% of Vermont’s greenhouse gas emissions.

It is also one of the largest semiconductor manufacturers in the world, with sales of $ 5.7 billion in 2020. Between its Essex Junction and Williston campuses, it employs 2,200 people. in Vermont.

Gregory Rieder, senior technical staff at GlobalFoundries, said by email that the company’s energy independence would allow it to reduce electricity costs.

“About 50% of our annual operating expenses at the Vermont site are currently allocated to the cost of electricity,” he wrote. “The Self-Directed Utility (SMU) will allow GF to purchase the product in the open and competitive market. “

The model keeps the Vermont plant “competitive with our other manufacturing sites in the United States and overseas,” he wrote.

Meanwhile, members of the Conservation Law Foundation, Renewable Energy Vermont and AllEarth Renewables have opposed the plan proposed by GlobalFoundries, saying the company will likely get its energy from fossil fuels, which the plan does not help Vermont to. meet its emission reduction requirements and that it places that burden on Vermonters.

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The greenhouse gas emission reductions required by the Global Warming Solutions Act include 26% below 2005 levels by 2025, 40% below 1990 levels by 2030 and 80% below 1990 levels by 2050.

Rieder said the company plans to comply with the law as it applies to the company.

“Yet at present none of the requirements of the law apply to GF or any other state enterprise,” he wrote. “Instead, the Global Warming Solutions Act sets statewide greenhouse gas emission reduction requirements, and the state could be sued if those reductions are not achieved. “

He said the letter of intent reflects the company’s commitment to tackling climate change.

Elena Mihaly, acting vice president of the Conservation Law Foundation Vermont, called the plan “a pretty amazing example of corporate escape from climate and community responsibility.”

“It’s basically like giving the city of Burlington a free pass to not comply with the climate law that was passed, popularly, by the Legislature,” she said.

Peter Sterling, executive director of Renewable Energy Vermont, is concerned about how the plan would affect the state’s goals of producing more energy using the state’s renewables.

“We are now backing down by exempting 8% of all Vermont electricity from these requirements, which means all other Vermont and Vermont business owners and Vermont utility owners will have to work harder to meet these targets. “Sterling said.

As an “ambitious target”, the letter states that GlobalFoundries will aim to reduce its emissions by 2025 to represent a 26% reduction in its greenhouse gas emissions by 2005.

While this reduction mimics the statewide requirement mandated by the Global Warming Solutions Act, it does not represent a significant reduction in the company’s emissions. GlobalFoundries emissions were higher in 2005 than they are today.

The Fab 9 facility emitted about 383,000 metric tonnes of carbon dioxide equivalent in 2005, according to the letter. A 26% reduction would take it to 283,000 metric tonnes – but last year it emitted just 289,000 metric tonnes, Sterling said.

The reduction from current emissions is less than 6,000 metric tonnes, a reduction of 1.9%.

The plan would allow GlobalFoundries to offset up to 3.3% of its emissions using carbon credits. Sterling said those numbers, taken together, mean the company could increase emissions slightly.

Asked about the increase, Rieder said GlobalFoundries does not necessarily plan to use the carbon credits.

“The limited opportunity to purchase carbon offsets (capped at 3.3% of total emissions) is a method that has been approved by Vermont regulators,” he wrote. “While it is important to have the option available, GF does not currently intend to purchase carbon offsets to mitigate potential increases in production. “

GlobalFoundries has pledged to invest $ 10 million in manufacturing process projects for greenhouse reduction, he said.

“If the state wants GF’s operations to grow, the company needs flexibility on how it manages to reduce greenhouse gases in order to mitigate increases in production,” he said. writing.

The letter appears to give the company that flexibility. It was signed by Peter Walke, commissioner of the Department of Environmental Conservation; June Tierney, Commissioner of the Ministry of the Civil Service; and Glenn Colton, a representative of GlobalFoundries.

It states that in the future, the Natural Resources Agency, the Ministry of Civil Service and GlobalFoundries would work together to “develop a mechanism to adjust gross emissions targets to enable responsible growth above levels. of 2020 ”.

Jason Maulucci, the governor’s press secretary, said in an email that the governor’s strategic priorities “are to grow the economy, make Vermont more affordable and protect the most vulnerable.”

“He is also committed to tackling climate change and has come up with more funding for climate action than any governor in history,” Maulucci wrote. “With these principles in mind, we have monitored this process and have always said that if Global Foundries were committed to meeting certain affordability and environmental goals, we would be comfortable with the arrangement. “

The decision ultimately rests with the Utilities Commission, Maulucci said.

Green Mountain Power is supporting GlobalFoundries’ plan to become its own utility, but was not involved in the letter of intent, said Kristin Carlson, GMP vice president of strategy and external relations.

Instead, GMP worked with GlobalFoundries to create a plan that wouldn’t shock its customers with inflated rates.

“If the company left Vermont tomorrow, in which case customers could face an instant rate increase of up to 3% which, of course, would hurt not only our customers, but our customers as well. ‘state economy,’ she said. .

Instead, GlobalFoundries would pay a fee of $ 16.3 million over the four-year transition period to mitigate this rate hike.

Mihaly said she was concerned that the company’s plan was voluntary and that the company had not made a commitment to cut emissions beyond 2025.

“We cannot let the Scott administration work on a side deal to exempt GlobalFoundries at the expense of the rest of Vermont at this time,” Mihaly said.

Essential objective

If the proposal is approved, GlobalFoundries would be the state’s first self-managed utility. The Conservation Law Foundation does not believe that such a utility is legal or that the commission would have the power to create one.

The commission postponed the hearings on GlobalFoundries’ petition to give commissioners more time to understand the issues at stake and the scope of their own jurisdiction.

In a schedule changing order, the commissioners wrote that the proposal “involves many complex factual and legal determinations on contentious issues, including one of the remaining central questions: whether, to what extent and how GlobalFoundries would be subject to the ‘renewable energy, energy efficiency and greenhouse gas emission reduction standards if allowed to operate as a self-managed utility.

When asked if the company would consider leaving Vermont if the Utilities Board rejects its request to become a self-administered utility, Rieder said the future of the company in the state “will be significantly influenced. through our ability to manage our costs efficiently and affordably compared to our other GF manufacturing sites around the world.

Operating a self-managed utility “will help GF achieve this essential goal,” he said.

Sterling, of Renewable Energy Vermont, said it was hard to imagine the company leaving the state, but said he wasn’t sure this was the conversation the state should have.

“The right conversation is, are we going to allow a highly profitable multinational corporation to pollute more in Vermont,” he said, “then ask the people of Vermont to keep paying to clean up our environment? “

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