Guest commentary: Solar supply chain ethics and how to make them better

By Arjun Kumar

November 15, 2022




Supply chain ethics spans three key areas: economic, environmental and social. In the solar industry, the three are currently heavily at odds. Economically, we can cite China for making solar cheaper. Since 2011, China has invested more than $50 billion into new solar PV supply capacity, 10-times greater than all of Europe. Today, more than 80% of global PV manufacturing occurs in China. Chinese investments have supported continued innovation of various segments in the PV supply chain and have led to an 80% decrease in cost over the last decade — making solar the most affordable generation technology in many countries. Environmentally, it has helped us, globally, to come closer to decarbonization and rely less on fossil fuels that harm the planet’s ecosystem. Socially, the question is more complex. On one hand, reducing carbon dioxide emissions through solar impartially benefits us all and may mitigate some of the negative social inequities brought upon by climate change. On the other hand, solar manufacturing in China has been under scrutiny for repeated human rights violations, especially in Xinjiang.


As a young professional in the solar industry, this issue is of great concern to me. Like many others who choose to work in this industry, I do so because it is aligned with my passion and care for people and the environment. I do not want to be a bystander in the harm unintentionally perpetrated by the industry. Nor would I wish for our clean energy transition legacy to be tarnished by complicity and inaction. This piece offers an honest look at the social and technical aspects of this ethical dilemma as it relates to the U.S. solar supply chain and the Xinjiang region.



Background


In 2017, the Chinese Communist Party introduced internment camps with the goal of deradicalization, re-education and repurposing the Muslim population in Xinjiang. Uyghurs, Kazakhs and other minorities have been detained in masses for expressing their religious faith, culture and tradition. It’s estimated that at least 1 million Uyghurs are currently detained in these camps, which is roughly 8.3% of the entire Uyghur population in Xinjiang.

Evidence from satellite imagery indicates that at least 135 factories are co-located with these camps. Workers in these camps are required to “intern” in these factories, either unpaid or paid below the minimum wage. Even once released, some former detainees are required to work in factories where they were interned. Participation is not voluntary and is forced through threats of further imprisonment.


Forced labor is not limited to Xinjiang’s internment camps. Based on research by Helena Kennedy Centre’s In Broad Daylight’s report, the Chinese government in 2020 declared that it had 2.6 million minority citizens placed in surplus labor transfer programs in Xinjiang and the rest of China. Uyghurs and minorities are often coerced into the labor transfer program by state officials. Common coercion tactics include offers to reduce detained family members time spent in internment camps and involuntary land transfers, where the government transfers the farmers’ land to government ownership for a small rental fee in order to free farmers from their property obligations. Surplus laborers in the solar industry are sent to be employed in jobs such as crushing raw quartz for mining companies, plant mechanics and as product inspectors in polysilicon manufacturing facilities.


It’s bad enough that minorities are being forced into work, but it’s worse considering that jobs in PV manufacturing come with high safety hazards. Extracting silicon from quartz often equates to heavy exposure to dust and fine particulate matter that can result in pneumoconiosis, a serious lung disease that can lead to death. Pneumoconiosis accounts for 81.81% of reported occupational diseases (OD) in China (25,000-30,000 cases every year) and is most prevalent in Xinjiang and the western regions of China.


Additionally, polysilicon manufacturing companies can be prone to accidents. In July 2020, small fires and explosions occurred in two polysilicon factories located in Xinjiang. Processing polysilicon involves high heat and the use of toxic chemicals, thus it requires skilled and trained labor. These fires and explosions both occurred during maintenance work and have been attributed to the use of untrained labor.


Ending American dependency on solar imports from Xinjiang will not be easy as the region alone accounts for 40% of global polysilicon manufacturing. Polysilicon is a major ingredient in PV technology for it makes up 45% of the material cost of a solar module. In general, modules alone account for 30% of the total cost of a project. China has continued to incentivize growth in Xinjiang by providing subsidies and state incentives such as corporate income and property tax exemptions, and subsidies for building new factories for module manufacturers. These incentives make it difficult for developers to keep clear of these modules as they enable greater margins and lower cost of electricity for the consumer.



Recent policy developments and challenges


This past July, the Uyghur Forced Labor Prevention Act (UFLPA) came into effect, a policy that prohibits the importation of goods made from forced labor in Xinjiang. Since then, 3 GW of modules have been held by U.S. Customs and Border Protection (CBP), which has contributed to significant solar installation delays and harmed America’s decarbonization goals. Nevertheless, the enactment of this law is a sound win for American values and morality – accentuated by it having near full bipartisan votes in both House and Senate.


Where does the UFLPA fall short? It focuses on banning imports from Xinjiang. Thus, all regions and entities outside of Xinjiang are not properly processed for forced labor. This allows for loopholes, such as moving the forced labor camps to factories outside of Xinjiang. Based on a report by the Australian Strategic Policy Institute, at least 80,000 Uyghurs were sent out of Xinjiang to work in factories around China between 2017 and 2019. If we truly want to oppose China’s oppression of the Uyghurs and other minorities, then we need to align ourselves with the values and ethics we espouse. And by we, I am referring to solar companies. Below are two main action areas where we can make a difference.



Supply chain audits and protocols


Solar companies need to mandate traceability checks and audit the module supply chain all the way to the quartz mining process. Implementing such an audit will be challenging because most solar module manufacturers are only vertically integrated from the ingot and cell making process upwards. Nevertheless, developers can insert language for supply chain audits on their supply contracts with their module manufacturers and require upstream suppliers to do the same with their polysilicon and raw material suppliers. The Solar Energy Industries Association (SEIA) in collaboration with Clean Energy Associates and Senergy Technical Services have introduced an initial guide to help organizations get started on implementing product traceability protocols. The protocol was developed in response to industry demand. To quote John Smirnow, SEIA’s VP of Market Strategy, “Solar customers expect their products to be ethically produced, and this protocol helps ensure that solar products coming into the United States are not made using forced labor.” Along with using this protocol, companies should blacklist the entities named on the UFLPA Entity List and filter from other sources such as those entities named in the In Broad Daylight report.



Support domestic manufacturing and vertical integration


In addition to enacting sustainability protocols, developers need to support domestic manufacturing through forward contracts. The passage of the Inflation Reduction Act (IRA) has incentivized solar manufacturers such as Hanwha Q Cells and REC Silicon to invest in domestic manufacturing of polysilicon. Developers that source domestically manufactured solar panels will be rewarded with the additional 10% investment tax credit adder.

Realistically, demand for domestically produced panels will be difficult to come by in the next few years. An alternative to this is supporting manufacturers like Canadian Solar, who are moving toward a more vertically integrated supply chain. Canadian Solar intends to build and operate the polysilicon factories themselves. Even though the factories are not located in North America, vertical integration will provide greater accountability and control over the process and inputs to PV cell manufacturing.



Summary


We must recognize that American solar projects installed between 2018 to 2022 are likely tainted with forced labor. As an industry, we must raise our awareness, acknowledge our role and use our power to change for the better. I have focused this piece on the persecution of the Uyghur population with the hopes of inspiring action to ensure that we rid the solar supply chain of unethical practices. Instituting traceability protocols and redirecting funding toward domestic or more transparent manufacturers is necessary for preserving our integrity as we respond to climate change.


Arjun Kumar oversees project development and engineering activities for Wunder Capital. Previously, Arjun was a development engineer with Sun Tribe Solar in Virginia. Arjun is a graduate of the University of Illinois at Urbana – Champaign. In his free time, Arjun assists his partner in developing @Castle_Hill_Collective, a community mindful arts space promoting mental health, connection, and empowerment.


Disclaimer: The opinions expressed are those of the author and do not necessarily represent those of The Wunder Company.




Source: solarpowerworldonline.com