China’s solar energy business is expected to be impacted. In this sense, following this report, the American and European Union (EU) authorities have committed themselves to prevent the entry of products made with forced labor on their territories. The impact could be significant on the solar panel market, whose production could eventually be repatriated to the West.
Solar energy in China: suspicion of forced labor
Onsolar power production in China,Horizon Advisory ‘s report claims that poor workers have been forcibly moved to Xinjiang to work on polysilicon production. This silicon ore is a key component of the cells in most solar panels. 95% of them use them and 45% of its world production is from Xinjiang.
JinkoSolar, LONGi and Daqo New Energy would be involved
Chinese multinationals involved in solar development in the West are cited in the report. Thus JinkoSolar, LONGi and Daqo New Energy are presented as having close ties to the Xinjiang Production and Construction Corps (XPCC). This government organization, already under U.S. sanctions, is known for organizing repression of the Uyghur population.
The XPCC would also provide solar companies with grants and workers from “boot camps.” This term is used by the Chinese authorities to refer to the political re-education camps for Uyghur dissidents. 1.3 million Uyghurs, mainly from Xinjiang, are said to pass through these camps each year.
The “lie of the century
The Chinese Foreign Ministry strongly denies any allegations of forced labor. JinkoSolar and Daqo were also quick to deny using such practices. The Chinese Photovoltaic Industry Association called the American accusations of human rights violations in Xinjiang “the lie of the century”.
Unanimous condemnation from Western companies
“Forced labor has no place in the solar industry,” says the Solar Energy Industries Association (SEIA) .
SEIA, which represents U.S. solar companies, says it takes the report very seriously. In a statement on January 8, 2021, it reaffirms its opposition to human rights violations. By the same token, encourages companies to move their supply chains out of Xinjiang. A joint statement from the organization was signed by 175 of its members, including the U.S. subsidiaries of JinkoSolar and LONGi.
European companies encouraged to define production protocols
“We cannot accept such practices in the solar industry,” says Walburga Hemetsberger, CEO of SolarPower Europe.
SolarPower Europe represents the European solar energy companies. He announced that he was investigating the situation in Xinjiang. He said he is considering different options to ensure that no forced labor is used in the manufacturing of solar panels. The organization recommends, among other things, the definition of transparency and traceability protocols with Chinese actors.
A half-hearted reaction from Western organizations
The United States has already responded to the situation in Xinjiang. The U.S. government has issued orders banning imports of cotton and tomatoes from the region. In general, U.S. law allows Customs to refuse goods that are the product of forced labor. However, it is necessary to prove this.
But today, the U.S. Congress wants a new law reversing the burden of proof. In short, only goods from Xinjiang for which it can be demonstrated that no forced labor was used will be allowed to enter the United States.
406 votes for and 3 against in the House of Representatives for this Uyghur Forced Labor Prevention Act. Given the consensus between Democrats and Republicans, the text should be passed by the Senate and enter into force in the coming months. The United States then urged Europe to follow suit and ban imports of Xinjiang products.
More ambiguous reaction of the European Union: making the buyer responsible
“The pressure is building on the Commission and the member states,” notes Joerg Wuttke, president of the EU Chamber of Commerce in China.
The latter expects Europe to intensify its control over Xinjiang products as well. However, the EU, which signed a Comprehensive Investment Agreement with China last December, has a more ambiguous position than the United States.
The European Commission (EC) is working on a new regulation to control Chinese goods. This would be based on the duty of care of European companies. The text would make the latter responsible when their suppliers violate international treaties on labor rights signed by China.
But human rights advocates and businesses question the appropriateness of this measure. They point to the ease with which the origin of polysilicon can be hidden. Dilutions of Xinjiang’s production into the production of other regions are already proven.
Many MEPs therefore want the EC to go further, given the gravity of the situation in Xinjiang. The Parliament’s Legal Affairs Committee has therefore asked the EC to propose a regulation similar to the US bill.
For the German Bundestag, the Chinese treatment of the Uyghurs is even qualified as genocidal acts.
What consequences for the development of solar energy in the West?
The growth of solar has been spectacular in recent years. It is linked, among other things, to the falling cost of solar panels as well as encouraging public policies. But forced labor, if proven, could have a significant impact on the sector.
Concentration of solar panel manufacturing in China
The U.S. Uyghur Forced Labor Prevention Act targets products made in Xinjiang, even in part.
“Almost all silicon-based solar modules are likely to contain Xinjiang silicon,” notes Bloomberg solar analyst Jenny Chase.
To be able to prove verifiably that a solar panel is not linked to forced labor in Xinjiang would therefore be almost impossible.
Sanctioning China: slowing the expansion of solar in the West
Chinese production of solar panels represents 70% of the world’s production. Not to mention exports of sub-modules sold to foreign manufacturers. A near-total embargo on these products could therefore well slow down plans for solar expansion in the United States. The same is true in Europe if the EU were to sanction China more severely.
Finally, the price of polysilicon. The latter could indeed increase rapidly if the Europeans and Americans turn away from Xinjiang production at the same time.
“Everyone knows what’s going on in China”
“Everyone knows what is happening in China. When infrastructure is installed there, you have to accept that there is a high chance that forced labor will be used,” says Milan Nitzschke, president of the European solar lobby EU ProSun.
Many actors see this as an opportunity to promote the return of European production of solar panels. This production only moved to China about 15 years ago.
In this sense, polysilicon is already produced at several sites in Germany. Many entrepreneurs say they are ready to re-establish a production line in Europe. The SolarPower Europe association therefore calls on the EU to define a European strategy to effectively support local production of solar panels.
In short, the West is considering cutting its ties with Chinese production, especially of polysilicon. The Americans will surely use this delicate situation for China to their diplomatic advantage. Europe remains more cautious, more dependent on Chinese goods production.
In reality, the situation of this ethnic minority will only change when dependence on Chinese production is reduced. In the meantime, the Middle Kingdom holds a part of European household consumption in its hands. This would even include the production of certain essential goods (e.g. medicines).