Solar PV industry caught up in China forced-labour controversy

Political momentum is swaying in favour of European solar panel manufacturers, as work progresses on a new EU law banning forced labour practices that would effectively block Chinese imports.

China’s share in each manufacturing stage of solar panels exceeds 80%. And these cheap panels are fuelling Europe’s solar boom. However, the tide may be turning. 

Germany’s chemical giant BASF announced its exit from joint ventures in Xinjiang on 9 February, a region in Western China in which systematic human rights abuses of the Uyghur Muslim minority have been documented.

Similar moves have been made across other industries: carmaker Volkswagen is eyeing an out itself, as thousands of its cars are stuck in a US port for components linked to forced labour.

“There is no country around the globe where this crime [of state-sponsored forced labour] is committed so forcefully as in the People’s Republic of China and in the Xinjang autonomous region in particular,” said Reinhard Bütikofer, a green EU lawmaker who spoke at a conference convened by the European Solar Manufacturers Council (ESMC) in Brussels on Thursday (15 February).

“What they do is clearly in a league of its own,” added the German lawmaker, who is among a group of MEPs sanctioned by the Chinese government for being critical of Beijing.

EU institutions are currently set to start negotiations on a forced labour regulation, proposed in 2022 – a law that could translate the widespread practices in China into what may amount to a ban on Chinese solar modules.

The US adopted a similar law in 2022 – which led to the Volkswagen cars stuck in port.

Forced labour in supply chains

“Our aim is to eliminate all products made with forced labour from the EU market,” EU Trade Commissioner Valdis Dombrovkis explained from the outset, when presenting the forced labour law. 

For the proposal to become law, the European Parliament and the Council of EU member states must agree on an identical text. Both have adopted their positions and are expected to begin negotiations soon to finalise the law. 

China’s peculiarities may make the rules, that could come into force by 2026, especially hard-hitting.

“Supply chains in China are so intransparent,” explained Adrian Zenz of the non-profit Victims of Communism Foundation. “If you can no longer disentangle supply chains and other issues between China, Xinjiang and other parts of China, you may need to divest from the whole country,” he added.

Campaigners stress that the entire Chinese solar panel supply chain should be affected by this. 

According to Chloe Cranston at Anti-Slavery International, the law “will be vital in preventing goods made with forced labour from entering the EU Market and, given the reliance of the solar industry on the Uyghur Region, this would likely include solar panels”.

“As of 2023, the Uyghur region accounted for an estimated 35% of the world’s polysilicon, and this is down from previous estimates,” said Rushan Abbas, who founded the Campaign for Uyghurs movement in 2017. 

Polysilicon is the base material of modern solar panels, which undergoes several treatment steps, mostly in China, before becoming finished solar cells that are assembled for installation.

“Research has found that the four leading polysilicon producers in the region all openly admit to participating in labour transfer programs [that employ forced labour],” she added.

What is happening instead? “There is bifurcation,” explained Abbas. “Solar companies are creating clean supply chains for panels that are usually destined for the US market in order to comply with the Uyghur Forced Labor Prevention Act,” she explained.

That “clean” supply chain could also come to service Europe. But it would do little to address the apparent issues. 

EU lawmakers set to define position on forced labour products ban

As members of the European Parliament prepare to vote on their position on the proposed EU law to ban products made with forced labour from the EU market, they reiterated their call on member states to accelerate their negotiations.

Getting rid of a competitor

Why would the  European Solar Manufacturers Council (ESMC) convene such a conference gathering the EU’s most vocal China hawks? 

“Forced labour should have no place in the solar supply chain,” stressed Johan Lindahl, secretary-general of the industry alliance. 

ESMC member companies, who represent solar panel production capacities of about 6 GW per year, are not in the best shape. In early February, the association called for “emergency measures,” against Chinese competitors who offer cheaper prices for solar panels of similar quality. 

To stem the bleeding, the group called for upwards of €200 million in short-term state support to buy unsold European solar panels gathering dust in warehouses. 

But cash injections won’t solve the industry’s long-term problem: Europe is not a competitive location to produce solar panels. In its 2023 renewables report, the International Energy Agency (IEA), estimates that a solar panel fully produced in Europe from start to finish would be 140% more expensive than its Chinese counterpart by 2028.

European Commission officials, wary of jeopardising climate goals, have been reluctant to impose another round of anti-dumping tariffs. Green EU lawmaker Anna Cavazzini, who champions domestic solar manufacturers, said “the Commission seemed so inactive in this debate.”

According to the solar industry, the agreed law to reshore clean industries in Europe may not bite quickly enough. It remains up to the incoming European Commission to square this circle.

Europe's solar industry warns against tariffs on imports

Europe’s solar power industry has warned policymakers not to impose tariffs on imports, amid fears that disrupting supplies of products from China would seriously damage Europe’s ability to rapidly install clean energy.

[Edited by Nathalie Weatherald and Frédéric Simon]

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