Solar Firms Eye Supply Tracing as China Forced Labor Debated

(Bloomberg) -- Some of the world's biggest solar companies pledged to oppose forced labor in their supply chains as concerns mount about the sector's reliance on China's Xinjiang region.

A group of 175 companies involved in the industry, including Chinese leaders such as Longi Green Energy Technology Co. and JA Solar Technology Co. along with global utility giants Duke Energy Corp. and Engie SA., signed up to a written pledge which also demands increased transparency efforts.

They'll aid development of a system to identify the source of raw materials and inputs along the supply chain that ultimately produces photovoltaic panels, according to the Solar Energy Industries Association, a U.S.-based trade group which works with about 1,000 firms.

The push comes as the U.S. said it will bar products made in Xinjiang amid accusations of forced labor and mistreatment of the ethnic Uighur Muslim minority. China last month rejected the claims as fabricated and said the U.S. decision violated trade rules.

Read more: China Criticizes U.S. Ban on Xinjiang Goods Over Forced Labor

Xinjiang is a particular concern to the solar industry as the region is home to four of the world's five largest factories that make solar-grade polysilicon, the base material for photovoltaic panels. While the association's pledge asks companies to commit to ensuring supply chains are free from forced labor, the document doesn't specifically name Xinjiang or other locations.

The association has called on companies to go further than that, and to ensure their products don't have links to the region. “Given reports of labor abuses in Xinjiang and the inability to conduct independent audits there, solar companies should immediately move their supply chains,” said John Smirnow, SEIA's vice president for market strategy.

About 36% of global polysilicon capacity is in Xinjiang, according to BloombergNEF data. Prices have risen 85% since the middle of last year, and a shortage of the material could prove to be a bottleneck for solar panel manufacturing this year amid surging demand, BOCI Research Ltd. analyst Tony Fei said in a report last month.

More than 80% of additional polysilicon production in 2021 is expected to come from China, Fei said.

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