Uighur pressure builds
Pressure is mounting to take action on solar panels that use materials or components made in the Xinjiang region in western China.
A fact sheet issued by the White House at the conclusion of the G7 meetings in Cornwall on June 13 said, “The United States and our G7 partners remain deeply concerned by the use of all forms of forced labor in global supply chains, including state-sponsored forced labor of vulnerable groups and minorities and supply chains of the agricultural, solar, and garment sectors—the main supply chains of concern in Xinjiang.”
Richard Neal (D-Massachusetts), chairman of the House Ways and Means Committee, and 23 other committee Democrats sent a letter to acting US Customs head Troy Miller on June 10 asking why Customs has not moved to block solar panels made with polysilicon from Xinjiang from entering the US. The letter said committee members were promised action was imminent nearly three months ago.
The Senate Finance Committee added language to the Wyden tax credit bill in late May to bar solar cells, wind turbines and batteries from being imported into the United States until the United Nations certifies that such equipment does not use materials or components mined or manufactured using forced or child labor. The language was proposed by three Republicans on the committee led by Richard Cassidy (R-Louisiana). The committee hopes to fold the Wyden bill into a large infrastructure bill later this summer.
Tax equity investors and lenders are evaluating what happens if Chinese solar panels are blocked from entry in cases where the financing has to fund before the panels are in the United States.
The Solar Energy Industries Association issued a supply chain traceability protocol in late April with detailed recommended procedures to ensure that use of materials or components originating in Xinjiang can be traced through the supply chain. Companies importing solar panels into the US are expected to be able to provide supply-chain maps showing every step in the manufacturing process from the raw materials to the finished goods.
Tracing will require, among other things, balancing output with inputs at each step in the manufacturing process. For example, if a factory ships 3,000 solar panels a day with 72 full-size cells per panel, then the factory should be bringing in approximately 6.5 million cells per month.
A staggering amount of documentation is expected to be retained to prove the provenance of materials. “Documented information shall be retained that identifies specific quantities and volumes of materials, e.g., modules, cells, wafers, etc., that are transformed at each step in the supply chain and transferred between steps.” Presumably manufacturers already keep this information in their computers.
Manufacturers are expected to impose these requirements down the supply chain. Solar companies are expected to choose module suppliers based on their willingness to implement these procedures.
If a US solar company finds that a supplier is not complying, then it is expected to reject or quarantine the panels. This requires writing such a right into the module contract.
The pressure to clean up supply chains could soon broaden to child labor in cobalt mines in the Congo. Cobalt is an essential ingredient in rechargeable lithium-ion batteries.
The Clean Power Alliance, the community choice aggregator for Los Angeles and Ventura counties in California, is requiring solar developers signing long-term power contracts to sell it electricity to ensure that their “direct” equipment suppliers comply with a broad supply-chain code of conduct. Failure to do so could lead to a default and, if not timely corrected, loss of the power contract.
The code addresses a variety of labor issues. Electricity generators would be expected to impose these requirements on their solar panel, inverter and other equipment suppliers. The Clean Power Alliance reserves the right to audit to confirm compliance.
Workers must be free to quit. They cannot be under age 15 or, if higher, the minimum age to work in the country. The work week cannot be more than 60 hours, and they need at least one day off every seven days.
Workers must be paid at least the minimum wage and other benefits required under local law and be paid overtime pay at higher rates than the regular hourly wage.
There cannot be discrimination or harassment tied to any of the following: “race, color, age, gender, sexual orientation, gender identity and expression, ethnicity or national origin, disability, pregnancy, religion, political affiliation, union membership, covered veteran status, protected genetic information or marital status in hiring and employment practices such as wages, promotions, rewards, and access to training.”
Workers have to be provided with reasonable accommodation for religious practices and must be free to join unions.
Kat Gamache, with Norton Rose Fulbright in Washington and Houston, said the Clean Power Alliance tends to lead the CCA pack in terms of power contract provisions, so she expects other CCAs to take a similar approach.
CCAs are city or county local procurement aggregators that buy electricity for their resident members, often from renewable energy suppliers. There are 24 such CCAs currently in California. They supply a quarter of the electricity load. Most new renewable energy power contracts in the state are with CCAs.