The semiconductor manufacturing process requires several steps, the most important of which are the creation of silicon crystal from molten silicon, imaging electronic circuits on the silicon wafer in a lithography machine with the help of laser light, etching and baking, and finally packaging and testing. Each process requires certain amounts of energy, water, chemicals and other resources, and generates a certain amount of waste.

In the chip industry, ASML's impact on the environment has three aspects:

1. Shrink: The reduced energy, resources and waste when using a chip as a result of ASML's capabilities to shrink the features on a chip
2. Chip production: The energy, resources and waste resulting from manufacturing a chip on a production line, including the ASML scanner
3. Scanner production: The energy, resources and waste associated with manufacturing an ASML scanner

The following illustration (figure 6) shows that the largest amount of energy is consumed by the chips themselves - this graph is based on a DRAM memory chip and holds true for most chips. The biggest benefit to the environment would involve reducing the amount of energy needed by the chip. Thanks to ASML's lithographic tools, we can shrink the size of electronic features on a chip and reduce energy consumption. This is the biggest contribution we can make. On top of this, we aim to reduce our own emissions. In this chapter we will explain our sustainability contributions to these areas.

1. Shrink
The majority of the energy consumed and waste generated from the chip in its lifetime is from its daily use. Smaller resolution chips (shrink) use less energy. ASML's contribution to helping our customers shrink the size of transistors on a chip, thereby reducing energy consumption of the chip, offers the greatest opportunity to sustain our knowledge economy.

2. Chip production
Using an ASML scanner in a factory to image chips also requires energy and resources. This is addressed by ASML in two ways.

A. ASML has repeatedly introduced completely new generations of scanners, which has significantly reduced the size of transistors "printed" on the silicon wafer. The size of the smallest feature has shrunk more than 6,000 times, while the energy consumption of the scanner itself has remained relatively stable. We also introduced water cooling instead of air cooling, which is four times more energy efficient, and we have introduced more efficient motors and pumps. We retrofit many of these improvements on older models, which is reflected in our substantial business in Field Options and Service sales.

All this means chip producers require much less energy and resources to produce a transistor. It is estimated that producing a fully functional electronic transistor is now thousands of times cheaper than printing a character in a newspaper.

Thanks to increased performance and efficiency measures, energy consumption is on a modestly increasing path but trending down within every generation of scanners, even when standardized per wafer output, which does not reflect the increased added value per wafer by adding more transistors or bits.

What you don't see in graph 12 is the added value of our lithography systems, because every new generation of our scanners can image many more transistors on a single wafer. This means that a wafer coming out of a new machine contains more computing and memory power than one from its predecessor. If we include the miniaturization capability of our machines, the next graph shows how much energy is needed to image the smallest feature on a chip. Over time, lithographic scaling has led to an exponential reduction of energy needed to create transistors and memory cells.

Total nominal Power kW/wafers per hour (NXT: provisional and estimated data)
Our new EUV scanner is expected to use significantly more energy, which is almost entirely related to the new EUV light source. However, as we explained earlier, shrinking the size of transistors is the biggest contribution we can make to the environment, and EUV is the breakthrough technology which will take further miniaturization well into the next decade.

While a more energy-intensive EUV system will gradually become the workhorse of the chip industry in the next decade, the impact on total energy consumption of a production line to produce one transistor or memory cell will remain modest. ASML estimates that our scanners account for a relatively small part of the total energy used by a chip maker - we estimate it at 2 to 3 percent based on the performance of our current most advanced scanners in the field, growing to around 9 percent when EUV is introduced. The energy needed to produce one complete, but much smaller, transistor will therefore continue its positive trend, as seen in graph 13.

We have programs in place that will improve the energy efficiency of this complex technology over the next few years, and together with our customers we will explore further opportunities to re-use thermal energy.

B. We have achieved incremental improvements in our existing architecture. This technological evolution is visible in the KrF product family which has resulted in a 15 percent decline in energy use per wafer per generation as shown in graph 14.

The more recent ArF product family has also started a similar trendline as evidenced in graph 15. We achieve better energy efficiency through higher productivity at roughly equivalent power consumption.

3. Scanner production
The third impact ASML has on the environment is related to our own manufacturing sites and offices. While ASML is a modest consumer of energy, emitting greenhouse gases similar to those emitted by a medium-sized financial institution or a publisher (source: Carbon Disclosure Project 2009) new generations of lithography systems require more resources. Our new scanners use more water and our EUV scanners have powerful lasers that use more energy. In addition, the new systems are larger and require more cleanroom space to build and operate, increasing the size of climate control systems.

While our environmental footprint is modest, we acknowledge that our aim to reduce total usage of resources is challenged by our new products, additional capacity and continuing new product development. Therefore, in order to take our responsibility as a corporate citizen and commit to being responsible with energy and other resources and waste emissions, we will introduce a mix of efficiency, recycling and conversion efforts to improve our environmental sustainability performance. Using 2010 as our base, we have set an ambitious corporate target to reduce CO₂ emissions by 50 percent in 2015. We will work towards this goal in the following ways:

• Improve energy efficiency of offices, clean rooms and installations
• Improve efficiency of scanner systems and lasers
• Reduce emissions of on-site installations
• Substitute grey electricity with green electricity

All categories offer significant opportunities and we will report on progress towards our target in next year's Sustainability Report.

Furthermore, we plan to recycle 90 percent of non-hazardous waste by 2015 (2009: 52 percent) by introducing improved recycling systems and redesigned packaging. Our aim is to recycle as much hazardous waste as possible, but where this is not possible due to small volumes we will process it in a controlled manner through special high-temperature incineration with energy conversion. Larger volume categories of hazardous waste offer the opportunity of recycling, which we have taken and will continue to take. In 2009 we recycled 79 percent of hazardous waste, and our target is to recycle 80 percent by 2015.

In order to become more efficient with water, we will make water conservation part of our 2010-2015 construction plans at our manufacturing site and headquarters in Veldhoven and elsewhere. Our equipment uses a significant waste stream of immersion water from the immersion system which can be re-used by ASML and the customer for less critical applications (e.g. rinsing of wafers). We believe there may be additional opportunities and will investigate these in 2010 and report on targets in next year's Sustainability Report.

Lastly, it is worth mentioning that our systems are mainly built from metals. Very little plastic is used and the use of chemicals in our machines is also very limited. ASML follows the SEMI guidelines for our systems and is actively involved in SEMI regulations, like the SEMI International Compliance and Regulatory Committee, in which new and upcoming regulations are discussed. Although ASML systems are excluded from the RoHS (Reduction of Hazardous Substances) directive as they involve Large Scale Stationary Equipment, ASML is voluntarily working on implementing the RoHS restrictions for materials to be compliant with the legal due dates and demands by 2011. ASML screens all new materials for RoHS and REACH (Registration, Evaluation and Authorization of Chemicals) legislation. For new products, multi-discipline Sustainability reviews were organized to determine risks in the development process and to determine necessary control measures. ASML has started to implement the RoHS requirements to outsourced designs and parts of the equipment.
ASML's commitment to continuously improving its environmental performance means that environmental considerations are part of its day-to-day business decisions. Environment-related expenditures are likewise included in normal procurement and investment decisions.

ASML operates four production sites around the world. Its biggest production site is in Veldhoven, the Netherlands. Furthermore ASML has cleanroom facilities in the USA and Taiwan. In Richmond, a production site manufactures optic components for the ASML systems. For these production locations, consumption of resources is registered and reported quarterly to the environmental program director. The month after the end of each quarter a Sustainability Board meeting is planned to be organized, in which trends are discussed and actions are initiated.

Electricity and fuel consumption
As can be seen in table 4, for all ASML production sites total energy use remained at the same level in 2009 compared with 2008. The company's worldwide electricity consumption increased by 8.4 percent, while fuel use decreased by 12.8 percent. The total energy consumption figure is calculated by taking the sum of energy from fuels purchased as well as energy from electricity purchased. The fuels that are used at ASML sites consist of natural gas, fuel oil, propane and hydrogen.

Table 4 Energy consumption (x 1012 Joule)	2007	2008	2009
Fuels purchased	357	315	275
Electricity purchased	393	459	498
Total energy use	750	774	773

Our fuel use has decreased due to the limited use of the cogeneration plant (which produces electricity with the help of natural gas) at our Veldhoven facilities and the closing of a building in our Tempe facilities. Electricity use increased mainly because of the expanded Veldhoven production facilities. ASML traditionally continues to invest in new technology and production facilities during cyclical downturns in order to maximize benefits from cyclical upturns. In addition, ASML opened a production site with cleanroom facilities in Linkou, Taiwan (see table 5). In 2009, ASML launched a new investigation into potential energy conservation for the production plant in Veldhoven. This investigation will be finalized in 2010.

Table 5 Energy consumption per region  (percent of total energy consumption)	2007	2008	2009
Asia	0%	0%	4%
Europe	70%	72%	70%
USA	30%	28%	26%

Air emissions
The most evident air emissions from ASML production sites involve CO₂ emissions, which are calculated for direct CO₂ emissions (from the combustion of fuels by ASML) as well as indirect CO₂ emissions (from purchased electricity).
For the calculation of the CO₂ emissions from purchased fuels and purchased electricity, up-to-date emission factors have been used per production site. Even though total energy usage in 2009 was stable in comparison with 2008, CO₂ emissions increased by 4 percent (seegraph 16). This was mainly due to increased electricity use at Veldhoven and the new production facility in Linkou, Taiwan, which was partly offset by office closures in Tempe. In 2009, the ACE production facilities in Taiwan started reporting their electricity use and accompanying air emissions, which explains the increased emissions in Asia (see table 6).

Table 6 Emissions of greenhouse gases per region  (percent of total emissions of greenhouse gases)	2007	2008	2009
Asia	0%	0%	6%
Europe	68%	65%	68%
USA	32%	35%	27%

In 2009, ASML Netherlands B.V. acquired a NO_x emission trade permit. In accordance with this permit, ASML must monitor, measure, register, verify and report its NO_x emissions. The NO_x emissions in Veldhoven in 2009 decreased by about 14.1 percent compared to 2008, from 54 x 103 kg to 45 x 103 kg. This decrease is purely based on the decrease in fuel consumption.

Water consumption
ASML is committed to containing and reducing its water consumption through comprehensive state-of-the-art re-use, recycling and other water reduction projects. All water used is tap water. Total water consumption at ASML increased by 20.8 percent in 2009 compared to 2008 (see graph 17). Water efficiency has deteriorated as a result of the increasing immersion and EUV production activities in our facilities at Veldhoven and Wilton, as well as the data reported from our new ACE facility in Taiwan (table 7). Our increasingly popular immersion machines use ultrapure water between the lens and the wafer (see economics - products section). This ultrapure water is produced by ASML itself with the help of a purifier.

Table 7 Tap water consumption per region (percent of total tap water consumption)	2007	2008	2009
Asia	0%	0%	10%
Europe	70%	77%	67%
USA	30%	23%	23%

About 1.25 liters of water are needed to produce 1 liter of ultrapure water. EUV machines and lasers in Veldhoven and Wilton require more cooling water than previous machine types.

Waste water in Veldhoven and Wilton is discharged via neutralization units. The level of acidity in the waste water after passing through the neutralization units is continuously monitored. In Veldhoven, the quality of discharged waste water is checked annually by an independent expert, according to legal requirements. There was no violation of the legal waste water quality standards in 2009.

Waste materials
ASML uses mainly non-hazardous materials to construct products, such as metals, glass, modest amounts of plastics and wiring. ASML machines are tested by processing wafers as if in a real semiconductor factory. For the coating and development of these wafers, chemicals are used in process labs on ASML premises. The use of these chemicals is monitored.

In its lithography machines, ASML uses gases for rinsing and conditioning purposes. In addition to XCDA (extra clean dry air) inert gases are used, such as nitrogen, xenon, neon and helium. Hydrogen gas is also used in the lithography machines for cleaning purposes. The use of these gases is monitored on a daily basis.
ASML strives to minimize waste and enhance efficiency in the use of materials throughout our operations. By maximizing our recycling efforts, we promote sustainable production practices and have reduced landfill. ASML facilities in Veldhoven, Wilton, Tempe and Linkou operate metal, glass, paper and plastic collection and recycling programs. In addition, product shipping containers are returned to the company for re-use. At our Veldhoven facility, we separate foil and plastic waste from the company waste. The foil is then separated by type of polymer (polyethylene and polypropylene) and recycled into granules ready for use by the plastic processing industry.
Non-hazardous waste materials decreased by 29.0 percent in 2009 compared to 2008 and hazardous waste also decreased by 21.0 percent. This can be explained by the reduction in production activities in 2009 in Veldhoven and Wilton. ASML's total waste disposal decreased by 27.9 percent in 2009 (see graph 18).

Of all waste materials disposed in 2009, 92 percent were disposed in Veldhoven. Of all waste materials disposed in Veldhoven, 55.3 percent were recycled. Of the remaining disposed waste materials, 44.3 percent were incinerated using energy conversion and less than 0.5 were landfilled.

As mentioned above, total waste amounts disposed by ASML fell as a result of decreased business activity. This decline came about despite the set-up of the ACE, Linkou facilities of ASML in Taiwan, the start of reporting waste disposals in 2009 and an increase in the volume of waste materials in Tempe, Arizona due to clean-up activities related to the closing of one building (see also table 8).

Table 8 Disposal of waste materials per region (percent of total disposal of waste materials)	2007	2008	2009
Asia	0%	0%	2%
Europe	95%	94%	92%
USA	5%	6%	6%

Environmental incidents
In 2009, one environmental incident was reported at our production site in Wilton. In October, a hydraulic oil hose fitting leaked onto our asphalt-paved building exterior from our waste cardboard compactor. The area was properly cleaned with an oil absorbent material, collected and containerized for proper contracted disposal. The legal authorities in Connecticut were immediately notified. The fitting was repaired that same day by the compactor's waste hauling company. The legal authorities decided that no follow-up action was needed and no fine was incurred.

Logistics
Logistics is not included in ASML's CO₂ official footprint, but it is clear that we have a responsibility to be efficient in our Logistics efforts. In 2009 - a downturn year - we shipped 82 systems, arranging shipping for 49 systems, while our customers arranged shipping for the remaining 33. The shipment of one Twinscan machine takes two specially designed aluminum containers with stringent climate conditions. Most of our shipments are destined for Asia and the United States.
Customers want their new systems installed as soon as possible after they leave the ASML factory in Veldhoven, because of the high capital cost of a machine and because of the high revenue and profit-generating potential of an ASML scanner early in its life. Our customers therefore expect their scanners to be shipped overnight by air instead of sea, which would take weeks. Air freight has a higher CO₂ footprint than ocean shipments, and ASML has investigated ocean shipping as an alternative for non-urgent freight. The volume of non-urgent shipments is low and would require new, heavier containers to withstand ocean shipping conditions.
Instead, we focused our efforts in 2009 on reducing travel altogether by storing empty containers near a customer's premises for re-use, instead of returning them to headquarters in Veldhoven for cleaning and repair. Local partners in Asia now prepare the containers, which are then used for shipments between chip makersin the region. This has resulted in fewer kilometers traveled and a savings of € 372,000 in shipping costs in 2009, which had a positive impact on CO₂ emissions. This program will be expanded in 2010 and beyond.
We opened a distribution center for spare parts at Incheon airport in South Korea in 2009, which has two beneficial impacts: it reduces delivery times of spare parts to Asian customers by 16 to 30 hours, while also reducing intercontinental freight costs and CO₂ emissions because we can consolidate shipments.
Ground shipments to ASML from our suppliers were also scrutinized in 2009, leading to the installation of storage hubs near ASML's manufacturing facilities in Veldhoven. Instead of delivering directly from their own sites, suppliers can now deliver just in time from this hub. ASML and its suppliers have calculated that it can reduce the number of long-distance transports by half. Eight of our 38 product key suppliers joined this program in 2009, and we plan to add more key suppliers in 2010.

Also in 2009, we joined a transport collaboration network comprising different industries. The aim is to consolidate shipments between countries and regions insofar as these take place outside the consolidated shipments from global logistics companies. This should also help reduce long-distance freight volumes.

To achieve the objectives as written down by our Board of Management in the Sustainability Policy, ASML has integrated Environmental Management into its business planning and decision-making. Targets have been established and environmental performance is monitored on an ongoing basis. These targets include further investigations into improvements in energy management, noise levels, soil risk management, management of transportation, as well as improved training provisions and communication on environmental matters.

Since January 1, 2003, ASML's environmental management system has been certified according to ISO 14001, starting with ASML locations in the Netherlands. From April 1, 2004, this system was applied to ASML activities worldwide.

The ISO 14001 certification covers all worldwide activities and locations, including marketing, design, sales, installation, product support and manufacturing of wafer steppers, scanners, optics and customized lithographic equipment.

To check compliance with those standards, regular audits are performed by independent experts. We adopt new technologies and operating procedures with a view to improving environmental performance. ASML is subject to environmental regulations in areas such as energy resource management, the use, storage, discharge and disposal of hazardous substances, recycling, clean air, water protection and waste disposal. We have taken measures to comply with these regulations in the course of our business operations.

ASML facilitates awareness of environmental topics among its employees. More information on the combined EHS training can be found in the Health and Safety chapter.

Audit
Accountability and transparency can only be guaranteed by a well-designed audit process. ASML conducts audits, followed by corrective actions and regular management reviews, to monitor and ensure that our management system procedures are operating effectively and efficiently.

In addition, in 2009 ASML introduced an annual auditing procedure of the internal controls over the ASML sustainability reporting process. The intention is to further integrate this audit topic with the existing audit plan.

Internal ISO 14001 audits are performed regularly at ASML sites according to a worldwide audit schedule, and if possible combined with Health and Safety audits. Our internal auditors are trained to accepted relevant standards. Audits are coordinated centrally but where possible, are conducted by local auditors. Non-compliances found during these internal audits are identified as Environmental Action Requests (EAR) and monitored to ensure timely completion by the respective action holders.

External audits are conducted by an external certification body (within the scope of ASML's ISO 14001 certified environmental management system). External auditors are accompanied by local EHS staff. In 2009, BSI Global performed new surveillance audits of ISO 14001 at several ASML locations. In its review at year-end 2009 they commented that "ASML implemented an effective environmental management system." It was concluded that ASML remains in compliance with the ISO 14001 standard.

Environmental permits and legal compliancy
ASML has all the necessary environmental and safety permits for its buildings and operations at all locations. These permits are maintained, updated and checked for compliance in consultation with local authorities. In 2009, periodical compliance visits were conducted by local authorities. No major non-compliance was found. ASML remains fully compliant with local legal requirements.