Solar supply chain grows more opaque amid human rights concerns
By Ana Swanson and Ivan Penn
Global supply chains for solar panels have begun shifting away from a heavy reliance on China, in part because of a recent ban on products from Xinjiang, a region where the U.S. government and the United Nations accuse the Chinese government of committing human rights violations.
But a new report by experts in human rights and the solar industry found that the vast majority of solar panels made globally continue to have significant exposure to China and Xinjiang.
The report, released earlier this week, also faulted the solar industry for becoming less transparent about the origin of its products. That has made it more difficult for buyers to determine whether solar panels purchased to power homes and electricity grids were made without forced labor.
The analysis was done by Alan Crawford, a solar industry analyst, and Laura T. Murphy, a professor of human rights and contemporary slavery at Sheffield Hallam University in England, along with researchers who chose to remain anonymous for fear of retribution from the Chinese government. The London-based Modern Slavery and Human Rights Policy and Evidence Center provided funding.
The solar industry has come under stiff criticism in recent years for its ties to Xinjiang, which is a key provider of polysilicon, the material from which solar panels are made. The region produces roughly one-third of both the world’s polysilicon and its metallurgical-grade silicon, the material from which polysilicon is made.
As a result, many firms have promised to scrutinize their supply chains, and several have set up factories in the United States or Southeast Asia to supply Western markets.
The Solar Energy Industries Association, the industry’s biggest trade association, has been calling on companies to shift their supply chains and cut ties with Xinjiang. More than 340 companies have signed a pledge to keep their supply chains free of forced labor.
But the report found that major global companies remain likely to have extensive exposure to Xinjiang, and potentially to forced labor, calling into question the progress. The report rated the world’s five biggest solar manufacturers — all with headquarters in China — as having “high” or “very high” potential exposure to Xinjiang.
Some Chinese companies, such as LONGi Solar and JA Solar, have clear ties to suppliers operating in Xinjiang, the report said. But even within “clean” supply chains set up to serve the United States or Europe, many companies still appear to be getting raw materials from suppliers that have exposure to Xinjiang, Murphy said.
In many cases, according to the information they issue publicly, companies aren’t buying enough materials from outside Xinjiang to meet their production goals, indicating that they may be using undisclosed suppliers. In other cases, companies sent Murphy information about their supply chains that was directly contradictory.
“At every stage, there’s missing information,” she said.
China’s dominance over the solar industry has presented a challenge for the United States and other countries, which are rushing to deploy solar panels to mitigate the impact of climate change. China controls at least 80% of global manufacturing for each stage of the supply chain.
The Chinese government denies the presence of forced labor in the work programs it runs in Xinjiang, which transfer groups of locals to mines and factories. But human rights experts say those who refuse such programs can face detention or other punishments. A U.S. law that went into effect in June last year, the Uyghur Forced Labor Prevention Act, assumes that any product with materials from Xinjiang is made with forced labor until proved otherwise.
Since then, U.S. customs officials have detained $1.64 billion of imported products, including an unspecified volume of solar panels, to check them for compliance. Solar companies say the detentions have caused widespread installation delays in the United States, putting the country’s energy transition at risk.
On August 1, the Biden administration announced that it had added four Chinese companies, as well as several of their subsidiaries, to a special list of firms restricted from sending products to the United States because of their participation in receiving, recruiting or transporting forced labor or members of persecuted groups from Xinjiang. The companies supply products to the automotive, apparel, food, electronics and other industries.
As solar projects continue to ramp up for the energy transition, the concern is that materials and equipment with ties to forced labor could grow.
Over the next decade or so, the solar industry projects it will regularly install double the amount it has in past years, with annual growth expected to average 11%. In the near term, the manufacturing capacity in the United States is sufficient to meet less than one-third of national demand, according to Wood McKenzie, an energy research and consulting firm.
In June, Walk Free, an international human rights group, released a report estimating that 50 million people globally lived under forced labor conditions in 2021, an increase of 10 million from 2016.
The organization attributed part of that growth to the much-needed but rapid increase in renewable energy to address climate change. The organization said it supported the energy transition but wanted to stop forced labor as a source of products.
In a statement to the researchers, LONGi said that it always complied with the applicable laws and ethics in jurisdictions where it operated, and that polysilicon from Xinjiang was used in modules that were sold in China.
JA Solar did not respond to a request for comment from the researchers or from The New York Times. Both LONGi and JA Solar have been planning to set up factories in the United States.
Tax credits and other incentives for clean energy offered under the Inflation Reduction Act of 2022 have been unleashing new investments in the United States. On Friday, First Solar, a U.S.-based manufacturer, announced plans to invest up to $1.1 billion for a new U.S. factory at a location yet to be determined.
But Michael Carr, executive director of Solar Energy Manufacturers for America, which represents U.S.-based solar manufacturers, said the United States had fallen so far behind China in solar manufacturing that an enormous amount of work, capital and technical knowledge would be needed to catch up.
“It’s hard to have certainty — and some might say impossible to know — the sourcing of the polysilicon until you have a domestic supply of wafers and an alternative to China,” Carr said.