A new investigation has renewed attention about human rights abuses in Xinjiang’s polysilicon industry. Polysilicon is a key ingredient in the manufacturing of solar panels, an industry that is expected to boom in coming years amid growing demand for renewable energy. But as Bloomberg points out, the benefits of greater solar power adoption may be tainted both by the widespread use of forced labor in its production, and also offset by the impact of the power Xinjiang’s polysilicon refineries rely on. For Bloomberg Green, Dan Murtaugh, Colum Murphy, James Mayger, and Brian Eckhouse investigated links between four major polysilicon manufacturers—Daqo New Energy, Xinte Energy, East Hope Group, and GCL-Poly Energy—and forced labor in Xinjiang:

Companies and governments are also growing uneasy about their reliance on a region rife with allegations of human-rights abuses. Three owners of Xinjiang’s polysilicon refineries have been linked to a state-run employment program that, according to some foreign governments and academics, may at times amount to forced labor. China denies such accusations and recently insisted that journalists and diplomats are free to go see for themselves.

[…] The owner of one polysilicon factory, GCL-Poly Energy Holdings Ltd., said in a 2019 report that it had accepted 121 poor minority workers from the Uyghur heartland in southern Xinjiang. Photos posted by the local government in June 2017 show workers, lined up in blue uniforms, about to be sent by the labor program to companies including East Hope Group Co., an aluminum smelter that in recent years also started producing polysilicon in Xinjiang. The previously unreported document was found by Adrian Zenz, a German researcher based in Minnesota who’s become a chief source of data about the labor program in Xinjiang—and thus a focus of China’s wrath.

[…] No nation produces as much as China along every step of the solar supply chain. And because the global solar industry needs all the polysilicon it can get, it won’t be able to turn its back on Xinjiang anytime soon. “Any silicon-based solar panel may have at least a small amount of Xinjiang silicon,” says Jenny Chase, head of solar analysis at BNEF. “Only a few modules can be guaranteed free of it.”

[…] Turning sand into polysilicon is an extremely energy-intensive process. Electricity accounts for about 40% of a factory’s operating costs, which is what makes Xinjiang so appealing. It has some of the cheapest power rates in the country, even if burning the dirtiest fossil fuel taints the climate benefits of the solar panels eventually produced. All four factories are located near coal power plants in Xinjiang, where cities such as Urumqi and Kashgar have at times had some of the worst air quality in China. [Source]

The Chinese government has been quick to rebuff any accusations that forced labor is taking place in Xinjiang. Most recently, it launched an aggressive campaign to urge Chinese consumers to boycott brands that have dared to suggest forced labor is occurring in the region’s cotton industry. But the government has also been far from transparent in allowing reporters to examine manufacturing facilities. Bloomberg’s reporters wrote about the heavy handed police surveillance they faced while trying to reach the polysilicon facilities.

China’s invited journalists to check out claims of forced labor at its Xinjiang polysilicon plants. Here’s what happened when Bloomberg got there:https://t.co/sKaVDrGCyb pic.twitter.com/MRJc8KbrHJ

— Alex Wayne (@aawayne) April 13, 2021

6/ For the next three days, agents followed our reporters everywhere, obstructing all attempts to speak to locals and deleting photos.

The veil over Xinjiang has made the search for answers about the links between China's labor program and its solar industry difficult.

— Bloomberg Green (@climate) April 13, 2021

Bloomberg’s report is not the first investigation into the use of forced labor in Xinjiang’s solar industry. In January, the consultancy Horizon Advisory released a report naming the same four companies as well as JinkoSolar—one of the U.S.’s top solar panel suppliers—as bearing signs of using forced labor. The New York Times’ Ana Swanson and Chris Buckley reported on the details of that investigation:

Major solar companies including GCL-Poly, East Hope Group, Daqo New Energy, Xinte Energy and Jinko Solar are named in the report as bearing signs of using some forced labor, according to Horizon Advisory, which specializes in Chinese-language research. Though many details remain unclear, those signs include accepting workers transferred with the help of the Chinese government from certain parts of Xinjiang, and having laborers undergo “military-style” training that may be aimed at instilling loyalty to China and the Communist Party.

[…] Together, the solar companies named in the report supply more than a third of the world’s polysilicon, which is refined from rock and turned into the solar panels that end up on rooftops and utility energy projects, including those in the United States and Europe.

[…] Since unfettered on-the-ground access to Xinjiang for foreign journalists and researchers is virtually impossible, the Horizon Advisory researchers do not provide direct testimony of forced labor. Instead, they present signs of possible coercion from Chinese-language documents and news reports, such as programs that may use high-pressure recruitment techniques, indoctrinate workers with patriotic or military education, or restrict their movement. [Source]

As scrutiny over Xinjiang increases, manufacturers have already begun making plans to shift their supply chains elsewhere. The Wall Street Journal’s Phred Dvorak and Matthew Dalton reported this week on efforts by the renewable energy industry to shift their supply chains out of Xinjiang:

Zaid Ashai, chief executive of Boston-based Nexamp, which buys solar panels and other components from China and elsewhere for the U.S., said it has become virtually impossible to send independent auditors into Xinjiang to check operations there.

[…] Even if Chinese suppliers in Xinjiang say they are free of forced labor, “attestations without verification mean nothing at this point,” Mr. Ashai said. “And given the troubling news and human rights reports that have leaked from the province, as concerned global citizens, we have to take that seriously.”

[…] The Solar Energy Industries Association, the U.S.’s national trade group, has advised members to move their supply chains out of Xinjiang by as early as June and create tracking systems to ensure products they buy aren’t tainted. Some investment advisers have started warning clients that U.S. sanctions are coming.

[…] European lawmakers say they are ready to take that step even if it means slowing the shift to renewable energy, one of the bloc’s top policy goals. [Source]

Even if able to disentangle its supply chains from Xinjiang, a major challenge for the solar industry may be how to avoid a public backlash in China. The massive online blowback faced by companies including Nike, Adidas, Burberry and others for their denunciation of forced labor may be a harbinger for other nationalistic campaigns targeting companies doing business in Xinjiang. Major brands are not the only businesses caught in the crossfire–ostensibly independent watchdogs and nonprofits have also buckled under intense political pressure from Beijing.

This week, Axios’ Bethany Allen-Ebrahimian reported that the Better Cotton Initiative (BCI), a reputed independent cotton auditor, had removed a months-old statement about its withdrawal from Xinjiang from its website:

What’s happening: The Better Cotton Initiative (BCI), a Europe-based nonprofit, has recently faced pressure to rescind its October 2020 announcement that it was enacting a policy of “responsible disengagement” and pulling out of Xinjiang.

– In late March, the Chinese state-affiliated Global Times ran a series of articles lambasting BCI for ceasing its Xinjiang operations.

– On March 26, BCI’s Shanghai branch said that it had found no evidence of forced labor in the Xinjiang cotton industry.

What they’re saying: “We will not be providing input on this at the moment,” BCI spokesperson Joe Woodruff told Axios in an email. [Source]

Different branches of BCI have been embroiled in internal conflict since the so-called “anti-anti-forced labor campaign” began last month. South China Morning Post’s Mimi Lau reported in March that the Chinese branch of BCI had challenged its Geneva headquarters’ findings, claiming that it had found no evidence of forced labor in Xinjiang. The head of BCI’s Shanghai branch also went on state broadcaster CCTV to publicly claim they had found no evidence of forced labor, contradicting BCI’s own earlier findings.

Now, China plans to replace the auditor altogether. This week, South China Morning Post’s Cissy Zhou reported that China plans to set up its own cotton certification scheme to challenge the international auditor:

China has stepped up plans to launch its own version of the under fire Better Cotton Initiative after the network cut off all ties with Xinjiang due to concerns about the alleged forced labour issue in the region, according to three people familiar with the matter.

Beijing-based cotton vertical service provider Zhongnong Guoji started the Weilai Cotton, or future cotton, project two years ago, but it did not make much progress until January when two state-backed organisations – the China Fashion Association and the Modern Seeds Development Fund – became involved, according to Zhao Yan, one of the coordinators for the project.

[…] “We have been living with Switzerland’s standards for years, but the country doesn’t even produce cotton. Now it is time to form our own national standards,” said Zhao.

Zhao, who will be the chief brand officer for the project, confirmed that the recent international hostility towards Xinjiang cotton had accelerated the project that is expected to demonstrate a “national aspiration” at this “crucial moment”. [Source]

The debate about forced labor in the renewable energy industry comes at a critical time for U.S. and Chinese climate policymakers. Today, President Biden’s envoy for climate policy John Kerry is expected to land in Beijing to meet with his Chinese counterparts ahead of a major climate summit next week. In an interview with The Wall Street Journal this week, Kerry described climate as “a free-standing issue” that was “not for trade” against other key U.S. priorities. Given the forced labor issue in solar manufacturing, it remains to be seen how policymakers will manage the challenge of keeping human rights and climate issues separate at talks.