Is US solar ready to prove its panels aren’t made with Uyghur forced labor?

Starting today, the U.S. solar industry will have to prove that the solar panels and components it imports are not produced using forced labor in China. A key industry group says companies have been preparing to meet this bar, but it’s unclear how smoothly the new process will go.

More than 100 megawatts’ worth of solar panels ensconced in metal shipping containers sat at U.S. ports at various points last year, blocked from entering the country, including shipments from solar manufacturers Jinko, Trina and Longi, the world’s largest panel maker.

The shipments were stopped because of suspected ties to Hoshine Silicon Industry, a silicon supplier based in China’s Xinjiang province. Human-rights organizations have said that more than 1 million Uyghurs and people from other Muslim ethnic minority groups have been forced into labor or detained at ​“reeducation” camps in Xinjiang, part of a campaign the U.S. has declared genocide. Last year, the U.S. government identified indicators of forced labor at Hoshine’s operations and restricted imports connected to the company.

Now, U.S. restrictions are tightening even further. The Uyghur Forced Labor Prevention Act, which was passed by Congress and signed by President Biden last year, goes into effect today, extending that import ban to anything produced in or using materials from the Xinjiang region.

The new law assumes that any imports that can be traced back to Xinjiang involve forced labor, and the onus will fall on importing companies to prove otherwise. The U.S. government has said it will closely scrutinize imports of polysilicon, which is produced from silicon and is an essential material for making solar panels, as well as imports of cotton and tomatoes.

Solar companies have been preparing for over a year to meet the law’s conditions. But there’s still at least some ​“anxiety and apprehension” in the industry because it’s not entirely certain how U.S. Customs and Border Protection (CBP) will enforce the law, said John Smirnow, general counsel at the Solar Energy Industries Association, a solar trade group. (This issue is separate from the Commerce Department investigation into whether new tariffs should be imposed on solar panels from Southeast Asia.)

On June 13, CBP released guidance instructing companies how to comply, but many importers argue the guidance was late to arrive and inadequately detailed, Politico reports. The Department of Homeland Security published further information on its enforcement strategy late last week.

A CBP spokesperson told Canary in an email that it had assembled a ​“robust engagement plan to ensure importers, stakeholders, and other interested parties have the information they need to comply with the Act,” and pointed to the guidance released last week. The agency also said it sent letters to companies known to have imported products that could be linked to Xinjiang but declined to say how many of those letters had been sent to solar companies.

A number of sources told Canary Media that the impact of the legislation on the solar industry will depend on CBP’s enforcement strategy. But the restrictions imposed on Hoshine products last year offered a window into how the agency will likely approach the new law, they said. Several solar companies — including, reportedly, Jinko, Longi and Trina — have been able to secure the release of their detained products.

The Solar Energy Industries Association has been recommending for months that its members reroute their supply chains away from Xinjiang. Those members include companies, like Jinko, Longi and Trina, that are based in China but have manufacturing facilities in other countries. Smirnow says he believes most major solar suppliers have by now examined their supply chains and eliminated connections to Xinjiang — at least for the products they’re shipping to the U.S.

“I wouldn’t be naive enough to think that everybody is tracing,” said Smirnow. ​“But for the major suppliers…our understanding is that those companies are able to provide the types of documents, the verifiable documentation, that Customs looks for to conclude that a [company’s products] should not be subject to detention.”

A complicated and opaque supply chain

But the import snags faced last year by some of the industry’s largest suppliers suggest that fully disentangling the solar supply chain from Xinjiang may be difficult for several reasons. Even though the U.S. gets most of its solar panels from Southeast Asia, the upstream supply chain for those products remains somewhat murky — and often leads back to China.

Metal silicon is a key feedstock for solar panels. It’s converted into polysilicon, which is used to make ingots, which are then turned into wafers. Wafers are transformed into the cells that make up a solar panel.

Though manufacturers have slowly been increasing polysilicon production outside Xinjiang, the region still produces a significant portion of the world’s supply. China as a whole accounts for 97 percent of the world’s wafer supply, according to the Department of Energy.

Traceability in the solar supply chain is ​“a huge issue,” said Suvi Sharma, founder and board member at U.S. solar panel manufacturer Solaria. ​“If we buy…a wafer that’s made in Europe, that does not at all tell us that it didn’t come from Uyghur labor. […] You have to go back to where the wafer supplier sourced their polysilicon and then where the polysilicon sourced their raw materials.”

In its guidance released last week, CBP advised that companies importing products using polysilicon must provide complete supply-chain documentation that details ​“all entities involved in the manufacture, manipulation, or export” of imported products as well as the country of origin for each material.

In order to comply with the law, Judith Alison Lee, co-chair of the international trade practice group at law firm Gibson Dunn, has advised clients in the solar industry to assemble an ​“extremely granular” accounting of their supply chain originating at the source of materials, she said.

The issue is complicated because the solar supply chain can be opaque — several sources told Canary of allegations that Chinese companies are not complying with requests for tracing.

And polysilicon supplies may be blended to produce cells. Some manufacturers are now apportioning production lines or even entire facilities to process solar products just for the U.S. market. Smirnow cited one company that is receiving only non-Xinjiang polysilicon at a certain facility. Other companies, Smirnow said, are relying on German- or U.S.-made polysilicon. One manufacturer that ships to the U.S. told Canary that more solar manufacturers are shifting to single sources of polysilicon for ingots to improve traceability. The manufacturer declined to be named because of the sensitivity of the issue.

Will the new U.S. law have an impact? 

Despite the supply-chain gymnastics, no major solar supplier, according to Smirnow, appears to have completely removed Xinjiang-made materials from its global operations. The manufacturer that spoke to Canary declined to say whether it is still using materials from Xinjiang for products not being imported into the U.S.

Some countries such as Canada and Britain have imposed sanctions on Chinese officials due to human rights abuses in Xinjiang, but no other country has placed similar restrictions on products from the region. Chinese authorities have continued to deny allegations of forced labor, calling them a ​“big lie.”

Nathan Picarsic, a co-founder of Horizon Advisory, which published a report last year on the solar industry’s ties to Xinjiang, said the industry’s efforts to date have not been enough to actually address the issue of forced labor. ​“It’s a surface-level effort that generates documentation that CBP wants to see but doesn’t actually address the root cause,” he said. ​“There have been attempts to trace and be able to document supply relationships. There hasn’t really been anything that we’ve seen that’s actually mitigating the real indicators of exposure to forced labor, which is really what the goal should be.”

The new law is also limited in reach because the U.S. accounts for only a fraction of the world’s solar market — just under 16 percent of global solar installations in 2021, according to the International Energy Agency.

Lee at Gibson Dunn wondered whether the law will have an impact beyond pushing companies to change their suppliers for goods imported into the U.S.

“Is the U.S. going to be alone in this? Are other countries going to join? And if not, is that supply of silicon just going to be diverted to other countries?” said Lee. ​“I wish I had the answer.”