Solar Energy Boom Could Worsen Forced Labor in China, Group Says

(Bloomberg) -- The rising demand for solar energy threatens to increase the risk of forced labor in the supply chain, which often includes raw materials produced in China’s Xinjiang region.

An analysis conducted by the Rights Lab at the University of Nottingham and supported by the British Academy warns of a handful of consequences if the solar industry doesn’t quickly find a way to make sure there’s no forced labor in its supply chains. Without intervention, the increase in demand for solar energy is likely to worsen conditions for workers, it says. 

Alternatively, a haphazard response to forced labor could slow the roll-out of solar energy, making prices higher and limiting progress toward net zero goals. Or supply chains could split, with some goods able to certify fair labor practices and others not, an outcome that might not address the overall problem, the researchers say.

The findings once again put China’s role as a major supplier of renewable energy technologies in the spotlight. A little less than half of the world’s polysilicon, the ultra-conductive material that makes up solar panels, is produced in Xinjiang -- a region that’s home to Uyghur people and other ethnic minorities. 

Advocacy groups and a panel of United Nations experts expressed concerns that those groups have been subject to mass detention. As many as 3 million laborers in Xinjiang are transferred each year as part of government-sponsored labor programs, according to a Bloomberg News analysis of official data.  

Beijing calls those allegations the “lie of the century.” It denies the reports, saying they’re part of a Western effort to undermine development in the region and that such work programs are aimed at providing job opportunities.

“The fact that we can’t definitively put these concerns to bed, is itself a warning sign to all involved,” said James Cockayne, professor of global politics and anti-slavery at Rights Lab and one of the report’s authors. “It’s an indication that we can’t conduct effective, reliable human-rights due diligence to the standard required by international norms, which is feasible in pretty much every other value chain around the world.”

But it’s hard for investors, lenders or customers to know exactly what’s happening in the supply chain, in part because the Chinese government has cracked down on independent investigations. Most of the current evidence relies on a variety of sources, including testimonies from Uyghur and other ethnic minorities, reports in Chinese-language media, documentation by foreign journalists, and occasional database or document leaks.

To address the lack of transparency, the Rights Lab researchers introduced a new method for quantifying the risk of forced labor in a given supply chain, using industry and trade data and a well-regarded database of social impact assessments. In this case, they calculated the accumulated risk of forced labor for solar energy production in the electricity grid in 30 different countries.

They plan to apply the same methodology to other forms of power, so that governments and utilities can compare forced labor risk of different energy types the same way they compare costs or emissions. It could also be used to show the value for companies that can verify their products are made with supply chains free of forced labor.

That verification has gotten more important in recent months. The U.S. cited forced labor concerns when it barred the import of some Xinjiang solar products last June, and in December passed the Uyghur Forced Labor Prevention Act. Effective June, the new law bans goods from Xinjiang unless companies can prove they aren’t made with forced labor. That move stirred “enormous anger” across Chinese society and the solar industry, a Chinese industry association said at the time.  

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