A bit less than a year ago, I wrote here in the Corner: “Polysilicon is a key component of solar panels,” and that the Democrats’ green agenda was extremely likely to increase the use of polysilicon from Xinjiang, where the Chinese government has been accused of rounding up hundreds of thousands of ethnic Uyghur Muslims in what the State Department has labeled a genocide. “About half the world’s supply of polysilicon comes from Xinjiang,…. By 2022, four of the world’s top five polysilicon manufacturers will be in China. Wacker, Germany-based top producer, has no plans to expand.”
To its credit, the administration banned imports of polysilicon from certain companies based in the region, and contemplated banning all imports from the region. As 2021 continued, production of polysilicon started shifting out of the region into other parts of China.
But very quietly, U.S. solar energy projects have ground to a halt because apparently almost of them are using polysilicon that can be traced back to China, even though it is being moved through Malaysia, Thailand, Vietnam and Cambodia. The Wall Street Journal reported last week:
Auxin Solar Inc., a tiny, struggling maker of solar panels, has thrown the entire American renewable-energy industry into chaos.
A petition Auxin filed with the Commerce Department accusing Chinese companies of circumventing tariffs spurred a U.S. probe in March that has effectively halted most solar-panel imports, according to utilities and industry groups, delaying solar projects all over the country.
Utility chief executives and politicians including California Gov. Gavin Newsom have protested, warning that the investigation could set back U.S. efforts to transition to cleaner energy sources to combat climate change. A U.S. solar trade group estimates the turmoil could cost the industry billions of dollars.
Since the Commerce Department agreed to investigate, the complaint has halted panel shipments from Southeast Asia to the U.S., according to utilities and trade groups, because makers overseas worry that they could be hit retroactively with extra duties.
The argument of Silicon Valley-based Auxin Solar is that most of the U.S. solar industry is evading U.S. tariffs on Chinese-made solar cells and panels that are the final stages of production by routing them through through those other Southeast Asian countries, and attempting to hide that they originated in China.
At the beginning of the month, senator Jacky Rosen of Nevada and 21 other senators, of both parties, wrote a letter urging President Biden to bring the commerce Department investigation to a “swift conclusion” and declaring “a determination should carefully consider the significant policy ramifications and reject the petitioner’s request for retroactivity.”
“Already, as a result of Commerce’s decision to initiate this investigation, industry surveys indicate that 83 percent of U.S. solar companies report being notified of canceled or delayed panel supply. Without a reliable and cost-effective source of panels, existing and proposed solar projects could come to a halt,” the senators’ letter stated. “Left unaddressed, cutting off this supply of panels and cells also could cause the loss of more than 100,000 American jobs, including approximately 18,000 manufacturing jobs.”
The word “China” and “Uyghur” do not appear in the senators’ letter; if all you knew about this issue was from their letter, you would think the U.S. Commerce Department was investigating the sourcing of these solar panels for no particular reason.
The sudden and widespread slowdown proves that the U.S. solar panel industry is, at least for now, dependent upon polysilicon from China, and likely a significan portion of that polysilicon comes from Xinjiang and exploited Uyghur labor. Americans like solar power — er, as long as the solar power projects are far away from them — but also support a tough stance on China on the issue of human rights. The solar energy industry is effectively saying that for now, the U.S. cannot have both — and that it must accept the risk of supporting Chinese abuse and exploitation of the Uyghurs in return for developing current solar energy projects.
UPDATE: For what it is worth, the tariffs, which were first put in place in 2012, are also designed to prevent Chinese dumping of low-priced solar panels and components, to undermine the U.S. solar panel industry — and solar companies contend that Auxin Solar – a small domestic supplier — is attempting to eliminate competition from those Southeastern Asian countries. Still, the solar industry is particularly reliant on supply chains going back to China, and it is increasingly difficult for outsiders to determine whether slave labor is used in production processes or not. As a study from the University of Nottingham’s Rights Lab released in March noted, “By one estimate, some 97 percent of global photovoltaic solar panels may include components from Xinjiang Uyghur Autonomous Region that may have been made by forced labour. While the Chinese government contests these allegations, reliable independent human rights due diligence and supply-chain auditing on the ground in XUAR is now effectively impossible. Researchers have been doxed, facilities raided, and China has adopted a new Anti-Sanctions Law that may criminalise cooperation with such inquiries.”