Solar industry braces for forced labor law

Source: BY MATTHEW CHOI AND KELSEY TAMBORRINO, Politico • Posted: Tuesday, June 21, 2022

The Uyghur Forced Labor Prevention Act officially takes effect this week, prohibiting the importation of any goods mined, produced or manufactured wholly or in part from the Xinjiang region of China, unless an importer can prove that the products were not made with forced labor.

The law, signed by President Joe Biden last year, creates a so-called rebuttable presumption that could be of particular concern for the solar industry. About 50 percent of the world’s supply of polysilicon came from the Xinjiang region last year.

“I don’t see how this cannot be a major disruption,” Michael Parr, executive director of the Ultra Low-Carbon Solar Alliance, told ME ahead of the implementation.

The solar industry has had some time to prepare for the law. Companies have already had to contend with a “withhold release order” on one Chinese firm for almost a year, and have for months implemented a traceability protocol.

“Most major wafer makers have multiple factories and multiple polysilicon supply contracts, so keeping wafers from one factory free of polysilicon made in Xinjiang is not practically very difficult,” said Jenny Chase, head of solar analysis at BloombergNEF, in an email. But questions remain, she said, on what trail of proof the U.S. authorities will accept for the supply chains having been separated.

Christian Roselund, a senior policy analyst at Clean Energy Associates, an industry advisory firm, said there is a wide range of potential outcomes from the law’s implementation on the U.S. solar industry.

“It really depends upon who is on the entity list, but also how Customs enforces UFLPA, what suppliers they target and how broad of a brush they paint with, in terms of the net that they’re casting for enforcement,” he said. “There’s also the question of how quickly the industry can adapt and learn. I think we’re looking at a range of possibilities that go from a minimal impact on the U.S. solar market to a very significant impact and that all depends on the details.”

On Friday, the government’s Forced Labor Enforcement Task Force released an enforcement strategy, including an entity list naming several companies linked to polysilicon from Xinjiang.