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Ethical solar sourcing part 2

In my first blog post of this series I took a look at the carbon implications of solar panel manufacture. Not all solar panels are the same – some have a much larger carbon footprint due to the way they are manufactured. This goes way back up the supply chain to the extent that the way the actual solar module factory runs is almost irrelevant in the overall picture – the dirty stuff happens at the raw materials end. Unfortunately that is exactly the part of the process where facts are hardest to come by, making carbon footprinting of solar panels an impossible task – at least for us as buyers.

In this blog post I’ll be looking at the parallel issue of human rights in the solar supply chain.

A landmark report

In 2021, two researchers at Sheffield Hallam University named Laura T. Murphy and Nyrola Elimä published a report called In Broad Daylight. It’s a remarkable piece of work, combining academic study with extensive fieldwork under difficult conditions, and its findings are devastating. The report focuses on the solar industry’s links to the practice of ‘labour transfer’ affecting indigenous Uyghur and Kazakh people in the Chinese region of Xinjiang. The researchers say:

“…labour transfers are deployed in the Uyghur Region within an environment of unprecedented coercion, undergirded by the constant threat of re-education and internment. Many indigenous workers are unable to refuse or walk away from these jobs, and thus the programmes are tantamount to forcible transfer of populations and enslavement.”

That word – enslavement. Reading the report I felt its finger pointing straight at me. Like many people in the UK over the last few years I have become ever more aware of the degree to which our prosperity as a nation has depended on slavery. It’s a crucial reckoning which we have yet to properly undertake as a society. But this was direct and personal. I was buying these products of slavery, and most of my waking hours were spent persuading others to buy them too.

It’s curious how solar has managed to sidestep the scrutiny we are now well-used to giving other things. I worked on the timber supply chain in the early days of the FSC.  I was an enthusiastic early adopter of the Fairphone. I’ve been drinking Fairtrade coffee since I was a student – and it was absolutely horrible back then! But I had never really considered the solar supply chain in the same way. Solar was high-tech, probably made in Germany, and the challenge was simply to get more of it built.

That complacency was completely turned upside down by Murphy and Elimä’s report. Over the last decade, the core solar industry has almost completely moved to China. There are still module manufacturers in the EU and US, but the heavy industries of quartzite mining, polysilicon production and wafer sawing are dominated by China.

The report lays out the core reasons this is a problem:

  • 95% of solar modules rely on one primary material – solar-grade polysilicon.
  • Polysilicon manufacturers in the Uyghur Region account for approximately 45% of the world’s solar-grade polysilicon supply.
  • All polysilicon manufacturers in the Uyghur Region have reported their participation in labour transfer programmes and/or are supplied by raw materials companies that have.
  • In 2020, China produced an additional 30% of the world’s polysilicon on top of that produced in the Uyghur Region, a significant proportion of which may be affected by forced labour in the Uyghur Region as well.

The stunning thing about this is the scale of the issue. The report goes on to look at many of the leading ‘Tier 1’ manufacturers of solar panels – brands that are familiar to anybody installing solar in the UK  – and charts their relationship with forced labour in Xinjiang. Some manufacturers show every sign of being directly involved, with solar production facilities even being co-located with detention centres. But almost every solar manufacturer buys their polysilicon or wafers on the open market. This means they are almost certainly buying raw materials which are at least in part the result of enslavement without necessarily knowing the extent of it themselves.

This is a picture of a supply chain which has gone completely off the rails when it comes to the most basic ethical standards. More concerningly, there is little to no transparency – the basic building block of ethical procurement. 

The solar industry responds

The response to Murphy and Elimä’s report from within the solar industry has been considerable, with several new initiatives coming forward. A number of UK developers have signed up to the Solar Energy UK statement which states:

We, members of the UK solar energy industry, condemn and oppose any abuse of human rights, including forced labour, anywhere in the global supply chain. We support applying the highest possible levels of transparency and sustainability throughout the value chain, and commit to the development of an industry-led traceability protocol to help to ensure our supply chain is free of human rights abuses

This is good – it shows the widespread concern which goes well beyond our community energy movement. Signatories include the largest UK solar developers with portfolios worth billions. 

Notably missing from the mix, however, are any of the main solar panel manufacturers. We do have to ask ourselves why that is. Do they not consider this issue to be important? It seems to me more likely that they are so heavily invested in the dominant supply chain that right now they don’t have a leg to stand on. In other words, they are hiding.

It’s instructive to look at the kind of statements put out by manufacturers who have broken cover on the issue. For example, see the human rights statement made by Solarwatt, a relatively low-volume German solar manufacturer. They say:

We are competing in a system of free trade. So free, that products that are imported into our European area don’t have any obligation to comply to the same social standards that we impose on ourselves, and for which we pay taxes and many other costs that relate to the way we have built up our society and its related values. The more one moves away from these standards, the cheaper products get. The farther away, the more difficult it is to check. Obviously, that doesn’t only apply to the solar industry.

That’s admirably candid, but it effectively amounts to an admission that they have lost control over their supply chain. And these are the good guys – at least they are saying something! An alternative approach is the blanket statement such as that produced by Eurener, another European module manufacturer, which consists of one single line:

Eurener EEW states that the modules produces in our factories categorically exclude the use of raw materials from suppliers in the Xinjiang region in its supply chain.

That’s great – but we can be forgiven for wanting a little more context or evidence. Note that these statements are found on the websites of UK solar distributors who have been passing on customer pressure to their suppliers – they are not being volunteered by the suppliers, and don’t seem to appear on their own websites. 

Why so coy? Given what we know about the supply chain it seems likely that in many cases there is nothing good to say. Even a supplier that is making positive steps may be unlikely to come forward because it would involve also admitting how bad things are overall. 

In some cases manufacturers say they consider their supply chain information to be so commercially sensitive that they cannot expose it to public view. That may be true, but it is not a great argument, given that this problem can be easily solved by allowing a credible but confidential third-party supply chain audit. It seems incredible but we have not yet seen solar panels in the UK market which have any sort of robust audit coverage. I would love to be wrong about this but we’ve been looking quite hard for several years.

Community energy

The response from within the community energy movement has been quite interesting. We have been in contact with many of our fellow solar co-operatives who care deeply about these issues, and we’re working together as part of the Community Energy England Ethical Sourcing working group. At the same time we’ve faced quite a lot of pushback. Understandably, hard-pressed community energy activists are not keen on having yet another set of challenges to deal with!

Some feel that we are so small that we cannot make a difference. I can’t agree with that. The community energy movement has always managed to have more influence and power than its raw statistics would imply. Moreover, many voices in the industry are effectively silenced by complicity. I argue that our role is to take the lead however and wherever we can.

Another angle I’ve heard more than once goes like this: climate change is a challenge for the whole world. If we build less solar because ethical solar is too expensive or hard to source, we are short-changing everybody, including even those belonging to the affected minorities in China.  That’s one of those arguments that sounds reasonable for the first few minutes and goes downhill from there. It ends up being uncomfortably reminiscent of the defences of slavery put forward in the early nineteenth century.

Is it true that we must tolerate human rights abuses in order to decarbonise? No, of course it isn’t! Our transition to a post-carbon economy must be a just transition. There is not much point in preserving humanity if in doing so we debase ourselves.

Looking for solutions

So, what can we actually do?

It’s become almost second nature now in the UK to look overseas and see if other countries have found solutions while we have been slowly waking up to the problem. On this issue, it is perhaps surprising that leadership is being seen most strongly from the USA. The Biden administration passed a bill in 2021 banning imports from Xinjiang, which has led to seizure of over 1000 shipments of solar equipment, reportedly including panels made by world-leading companies. This initiative should be seen alongside the Inflation Reduction Act passed in 2022, which contains provisions for very significant tax breaks for domestic production of solar. 

The response from manufacturers has been a steady stream of announcements of new solar capacity in the US – not just module assembly but vertically-integrated manufacturing at all stages of the supply chain. Of course, protectionism is nothing new in international trade. But this development offers the opportunity for US-based solar developers to source panels which are demonstrably free from the human rights abuses documented in Murphy and Elimä’s report. It has also ushered in a change in culture. At a recent event organised by sustainable business consultants Action Sustainability I spoke to an American representative of a solar manufacturer who said “this is part of our everyday work now”. She was surprised and shocked by the lack of action in the UK.

The US legislation looks to have also forced a re-think for some solar manufacturers who are staying in Asia but are changing their sourcing policies. We’ve seen a number of announcements of new solar capacity in other parts of China – notably in Qinghai, the province to the southeast of Xinjiang. While this may help to work around import restrictions, it’s not clear if it will actually improve the human rights situation. Qinghai does not have many Uyghurs, but it does have many other ethnic minorities, estimated at 45% of the province’s population and including Tibetans, Hui and others. I have seen the Chinese occupation of Tibet and witnessed human rights violations first-hand – there is ample evidence that this is ongoing.

All this negativity towards China can easily be misinterpreted as xenophobia. Of course there is nothing wrong per se in buying solar panels from China. It could be argued that China has played a very important role in enabling the solar revolution by bringing prices down, and many Chinese manufacturers make high quality products with a deserved global reputation. Across a large and complex economy it’s likely that some Chinese solar supply chains are better than others, and some may already be ready for ethical scrutiny. 

The key problem is that even if this were to be the case, the Chinese state effectively prohibits independent assessment. Intriguingly, it does not seem that labour costs are a very significant factor in the Chinese advantage – it follows that the Chinese solar industry could still be very competitive even if forced labour practices were entirely eradicated. There is some hope that pressure from global markets will force change, though we also need to be able to reliably know when this has happened.

The European solar industry

Across the Atlantic, there is movement within the EU. Until quite recently Europe was a major player in worldwide PV production, but over the last 15 years this has eroded almost completely.

Source: Fraunhofer Institute

Simply put, China has managed to produce solar panels of high quality at lower cost than Europe. Europe’s own protectionist measures in the form of so-called anti-dumping legislation from 2013 to 2018 had little effect in stemming the flow. 

Now we are seeing renewed calls within the EU for measures to stimulate EU solar manufacture. The EU’s answer to the US Inflation Reduction Act is the Net Zero Industry Act. Rather than focusing on financial incentives, this looks to build the market in other ways, by supporting markets and enhancing skills.  The Act has received lukewarm support at best: economic thinktank Bruegel acidly commented:

Those who oppose the proposal will possibly be relieved when they understand that it will cost nothing and achieve nothing

Nevertheless there is something of a quiet renaissance of solar in the EU. This is supported by a number of factors – increased transport costs reduce the cost advantage of Asian solar, as do increasing living standards and wages in China. Geopolitical upheavals, particularly Russia’s war in Ukraine, have focused European minds on the importance of controlling energy and its means of production.

This has opened a rather narrow window for us, as a small solar co-operative, to source our solar panels from this newly-emergent European solar sector. Of course, it is not enough for panels to be manufactured in the EU – we also need to see evidence that the whole supply chain is ethically sourced. That narrows down the options considerably. Research from the Fraunhofer Institute shows how few upstream facilities there are in Europe:

There are only four wafer manufacturers, and five polysilicon producers (not all of which are currently operational). Of these only Wacker is a large player internationally, as the 5th largest solar polysilicon producer globally.

Our choice

At the moment the Big Solar Co-op has decided to use solar panels from Meyer Burger. They are a Swiss company, manufacturing in Germany but more crucially sourcing significant proportions of their raw materials from European sources, having signed supply agreements with Wacker, Norwegian Crystals and Norsun. They further state that the balance of their polysilicon comes from South Korea. 

Meyer Burger have been supplying solar panel-making equipment to others for over 30 years before entering the manufacturing market themselves in 2021. Our panels are sourced via our distributor Wind and Sun who have been going even longer and who have fully supported us in our ethical sourcing journey. Even with their help we have had to piece together the evidence to make our decision – as with all the other manufacturers we have examined, no independent supply chain audits are available.

It was not an easy decision to make. Meyer Burger panels are considerably more expensive than competitors – up to 30% more expensive than mid-market panels with broadly similar specifications. One saving grace is that they are very high quality, with excellent long-term warranties, low annual degradation rates, and good performance in lower light. This means that over time the impact of the high capital cost is not quite as severe. However our decision still entails a significant financial penalty.

Is it worth it? We think so. Of course our relatively small volumes of panels are not going to change the world on their own. Some people have told us that we are wasting our time – the panels we are not buying are just going to others anyway. That’s a bit like the argument that you might as well get on a plane because it’s going with or without you – it ignores the fact that if you can persuade others not to fly then sooner or later the planes stop. 

In 1862, in a meeting at the Manchester Free Trade Hall, Lancashire cotton workers agreed to maintain an embargo against cotton picked by enslaved people in the US. The decision was made at great personal cost for many of them who lost their livelihood and faced destitution. Yet ultimately the embargo was credited by Lincoln as one of the factors leading to the overthrow of slavery in the US. 

More prosaically I keep thinking of that first disgusting cup of student Fairtrade coffee – and the fact that 25% of all coffee sold in the UK is now Fairtrade (and tastes pretty good). To make change happen, you have to start somewhere, and this is where we choose to start with ethical solar.

In the next blog I’ll be looking forward to what else we can do to push forward the ethical solar agenda and reporting on our progress  – including some unusual and innovative approaches that we are trying out.