With climate change at our doorstep, humanity has been slow to adapt its energy consumption habits to avoid warming the planet beyond repair. Nonetheless, important milestones have been reached in recent years regarding investment in renewable forms of energy. In October 2020, the International Energy Agency (IEA) confirmed that solar electricity was now the cheapest form of electricity, undercutting the economics of the more traditional gas or coal power plants. This achievement has been in the making thanks to a continuous year-on-year decline in the cost of renewable energy production, especially in the last decade, which is particularly true for solar energy.
However, the picture isn’t all that rosy – but not for the reasons you might think. Aside from the fact that the energy sector is dragging its feet when it comes to adopting renewable energy, the solar industry has recently been accused of enabling human rights abuses in a report by Sheffield Hallam University (SHU) published in May 2021. To understand the implications of the allegations made by the report for humanity’s transition towards renewable energy generation, we have to take a deeper look at the solar industry and its supply chain.
The Solar Industry and its Supply Chain
Solar energy is produced using photovoltaic cells, which are then assembled into panels. Photovoltaic technology largely relies on one material: silicon. Used in about 95% of solar panels on the market, silicon also happens to be the second most abundant element on the planet. In nature, silicon is most often encountered in the form of polysilicon, which is itself obtained by harvesting quartz, the raw material.
Extracting the raw material
Refining the raw material into polysilicon
Melting the polysilicon into ingots
Slicing the ingots into wafers
Turning the wafers into cells
Combining the cells into a panel
The network that links a solar panel manufacturer to the various suppliers involved in the production of solar panels is referred to as its supply chain. At the industry-wide level, this can be thought of as the network that links companies across the world operating at every step of the solar panel production process.
For the production process, it is clear that whoever controls the supply of polysilicon also controls the entire solar industry’s supply chain; a solar manufacturing company cannot hope to produce solar panels without the primary raw material. For the longest time, the solar industry was dominated by only seven companies – based in the United States, Japan, and Germany – who produced virtually all of the polysilicon used to manufacture solar panels for the world economy until 2005.
Fast forward 15 years and the solar industry as a whole is now dominated by China. Against the backdrop of an incredibly high rate of economic growth, China learned the know-how behind the different stages of the solar production process from Western companies. Chinese companies have leveraged the low labour costs, cheap coal power, and weak environmental regulations to grow their market share. In 2020, 75% of the world’s supply of polysilicon came from China. Specifically, 45% of the world’s supply of solar-grade polysilicon originated from one troubled part of China: the western region of Xinjiang.
The reasons behind China’s newfound dominance are not purely economic. According to the SHU report and other sources like the New York Times, the inexpensive labourers employed in the early stages of the production process by Xinjiang-based Chinese companies are being forced to work.
Forced Labour in Xinjiang
As part of China’s crackdown on Uyghur separatism in Xinjiang, Beijing has built a network of detention facilities – referred to as “re-education camps” by the Chinese government – to detain close to one million ethnic Uyghurs against their will. Uyghurs are a predominantly Muslim, Central Asian ethnic group with a language close to Turkish. Xinjiang is currently home to about 12 million Uyghurs.
While there has been extensive reporting on the issue, what received less attention is the Chinese government’s objective to turn the region into a docile, stable, and productive economic hub – a goal that involves using the threat of “re-education” to control the region’s minority populations outside of the camps.
Faced with the possibility of being sent – or even sent back – into detention, ethnic Uyghurs are forced to take part in what Beijing refers to as “surplus labour” and “labour transfer” programs. Depicting ethnic minorities as lazy and unproductive, the Chinese Communist Party (CCP) designates as “surplus labour” any unemployed, seasonally employed, or retired citizens living outside the camps. The local governments of the region are then required to identify all the “surplus labourers” and “transfer” them through the forced acceptance of employment with participating companies, located either close to home or elsewhere in Xinjiang.
While the Chinese government claims that these programs are only “poverty alleviation” measures aligned with Chinese law, the inability of workers to walk away from their jobs without being sent into detention fits the International Labour Organization’s official definition of forced labour. The SHU report also highlights that employees are unpaid or underpaid, work in facilities equipped with prison-like security systems, and are not allowed to voluntarily leave their workplace. This is a denial of the human right to free choice of employment guaranteed by Article 23 of the UN Declaration of Human Rights, and it violates both the Forced Labour Convention of 1930 and the Abolition of Forced Labour Convention of 1957. If Beijing’s number reporting is to be believed, one-fifth of Xinjiang’s Uyghur and Kazakh population is currently subjected to these programs.
Companies operating in the region that participate in these programs receive various incentives – in the form of subsidies, low taxation, and other benefits – for employing surplus labourers. In recent years, the Xinjiang authorities specifically targeted the polysilicon industry with these incentives as a part of their broader effort to attract “labour-intensive” industries. This makes Xinjiang-based companies operating in the early, more labour-intensive steps of the solar panel production process – such as Xinjiang Hoshine Silicon Industry Co. Ltd. – complicit in the use of forced labour.
Reactions From the International Community
This use of forced labour taints the production of a number of basic labour-intensive commodities through their exposure to Chinese suppliers, and the international community has taken notice. Cotton, for example, was also found to be produced using forced labour in Xinjiang. China produces close to 20% of the world’s cotton supply, and Xinjiang alone accounts for 84% of Chinese production.
Shortly after the publication of reports exposing the forced labour involved in the production of cotton in Xinjiang in early 2020, major apparel brands began pledging not to use the region’s cotton, removing complicit suppliers from their supply chains. The United States even moved to ban the import of cotton and tomatoes – another good tainted by forced labour – from Xinjiang.
As for polysilicon, the story is not as simple and is still unfolding. Traceability protocols (sets of guidelines used by companies to ensure they meet certain obligations) and no forced labour pledges have been circulating around the solar industry to signal that companies are taking the issue seriously. This summer, the United States overcame partisan politics to pass a law banning the import of goods originating from Xinjiang; the new legislation assumes that products from the region are made using forced labour unless proven otherwise.
But due to solar energy’s crucial role in the fight against climate change, the importance of Xinjiang as a producer of polysilicon, and the difficulty to investigate working conditions in the region, the import ban is creating a new problem; it is seemingly setting up a trade-off between safeguarding human rights and solving climate change.
Implications for Renewable Energy
The entire solar industry’s supply chain is fairly simple – it essentially boils down to the various companies that operate across each step of the production process. However, an individual solar panel manufacturer’s own supply chain can be quite complex, due to interactions with multiple suppliers at every step of the production process, blurring the origins of the raw materials used. Due to the Chinese government tightly controlling the region, investigating working conditions in Xinjiang to distinguish the companies using forced labour from those who don’t is virtually impossible. This means that it is incredibly hard for an individual company to declare that their finalized solar product is free of forced labour, regardless of whether the company itself engages in such practices.
Even though less than half of the world’s polysilicon comes from the region, polysilicon shipments from different suppliers are often mixed and combined together during the production process. Overall, this means that most – if not all – of the industry is tainted with forced labour, due to its exposure to Chinese companies who operate in the early, labour-intensive stages of production which are overwhelmingly based in Xinjiang. The obvious solution is to move the entire industry’s solar supply chain away from the region – but that can take years, and there are often significant costs involved, which would push the price of solar energy back up. Indeed, one of the reasons for the industry’s love story with Xinjiang is the cheap labour and coal power its business environment provides – something other regions do not offer.
Until governments intervene and industry stakeholders break up with Xinjiang, solar energy as an alternative to fossil fuels will, sadly, lose a bit of its appeal.