Solar Supply Chain Grows More Opaque Amid Human Rights Concerns

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 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 Tuesday, 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 a 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, like 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, Ms. 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 Ms. 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 percent 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 Force 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 Tuesday, 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 percent. In the near term, the manufacturing capacity in the United States is sufficient to meet less than a 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.

One example in the new report is JinkoSolar, a Chinese-owned company that has done some of the most extensive work to establish a supply chain outside China, including factories in Vietnam, Malaysia and the United States. But the report found that those factories’ use of raw materials from China kept JinkoSolar’s potential exposure to Xinjiang high.

In May, Homeland Security Investigations, an arm of the Department of Homeland Security, raided JinkoSolar’s factory in Jacksonville, Fla., and an office in San Francisco. The inquiry appears to be linked to multiple concerns, among them that JinkoSolar misrepresented the source of some imports containing materials from Xinjiang and incorrectly classified products, resulting in an incorrect duty rate, a person with knowledge of the investigation said.

A spokesperson for Homeland Security Investigations declined to comment, citing a continuing investigation.

JinkoSolar said in a statement that, based on the information available to the company, any speculation that the investigation was tied to forced labor was “unfounded,” and that it had a longstanding commitment to transparency and compliance with U.S. law.

The company has also called claims that it had high exposure to Xinjiang “baseless.” It said that it was confident in its supply chain traceability, that products for the U.S. market were made only with U.S. and German polysilicon and that U.S. customs officials have reviewed and released JinkoSolar products.

The new report also raised questions about the supply chain for Hanwha Qcells, a South Korean company that has become one of the largest producers of solar panels made in the United States. In January, Qcells announced a $2.5 billion expansion of its Georgia operations that would make it the sole company producing all of its components — ingots, wafers, cells and finished panels — in the United States.

Despite Qcells’ growing U.S. presence, the report concluded that the company’s potential exposure to Xinjiang was very high, since the company uses undisclosed suppliers in China for the vast majority of its products.

The report also said a Chinese company, Meike Solar Technology, which gets raw material from Xinjiang, reported Qcells as one of its largest customers in the first half of 2022, though Qcells said it had cut off the supplier relationship in 2021.

“Qcells has adopted a code of conduct that prohibits forced labor made products in our supply chain, and we terminate agreements if suppliers fail to comply,” the company said in a statement. As part of its strategy to guard against products from forced labor, Qcells said, it uses maps to trace product origins and verification audits to ensure its suppliers follow its code of conduct. The company said none of its North America products had been detained by customs officials.

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,” Mr. Carr said.

Zolan Kanno-Youngs contributed reporting.