- The Solar Energy Industries Association launched a traceability tool last week, aimed at helping manufacturers and importers of solar products identify the source of a solar product's material inputs and trace the movement of these inputs throughout the supply chain.
- The launch of the tool, the Solar Supply Chain Traceability Protocol, is a response to human rights abuses in Xinjiang, China. The goal is for companies to implement the protocol's key principles and become better equipped to navigate U.S. import compliance obligations, the association said.
- The tool also aims to provide customers with greater supply chain transparency. And it includes an independent, third-party audit mechanism to measure a company's implementation of traceability policies and procedures.
Demand for polysilicon from non-Xinjiang suppliers has been growing, and new capacities have been announced for Chinese regions outside Xinjiang. But China's share of the world's polysilicon capacity, including electronic grade for semiconductors, will increase to more than 80% this year, according to Johannes Bernreuter, a polysilicon market analyst and head of Bernreuter Research.
The Solar Energy Industries Association's early-stage guidance is aimed at helping manufacturers and importers of solar products demonstrate the provenance of solar products. It also provides information to help companies implement traceability programs, so they can ensure their solar products are ethically produced.
The best way to overcome these supply chain issues would be an alternative supply chain outside China, said Bernreuter. "But this is very hard to establish, as the Chinese solar industry has developed a huge advantage with its economies of scale," he added.
In the short term, the only option is tracing and rearranging the supply chain, he said.
For the solar industry, concerns that solar products produced in Xinjiang could have links to forced labor, and the fact that solar energy deployment is essential for achieving a carbon neutral future, explain why providing assurance that solar products are free from forced labor is so important, officials said.
"Customers want assurances that the [solar] products that they are purchasing don't include forced labor or that their manufacturers are taking steps to prevent forced labor. And transparency is a key element of that," John Smirnow, vice president of market strategy for the Solar Energy Industries Association, said during a webinar.
The new traceability protocol is also intended to help importers meet their U.S. customs law reasonable care obligations and improve an importer's ability to respond to U.S. Customs and Border Protection requests for information and audit inquires, according to the association.
Additionally, in the U.S., the Uighur Forced Labor Prevention Act, which requires an importer to establish by clear and convincing evidence that any good that includes materials from Xinjiang contains no forced labor in its supply chain, is circulating in Congress. If this bill becomes law, a company might not be able to import products into the U.S., Smirnow said.
"And that's just a risk profile that is unacceptable from an industry perspective," he added. "Clear and convincing evidence" is a very high standard, and it requires an independent third-party audit, he said.
"Certainly, we are hearing about potential enforcement action on polysilicon from Xinjiang," Smirnow said, on which the Solar Energy Industries Association does not have specifics. But the U.S. government has already taken significant action against imports, such as tomato and cotton products, from the region.
Even in the absence of new laws, supply chain transparency can be a key competitive differentiator for solar companies, which often pride themselves as being at the forefront of the sustainability movement.
In its transparency protocol, the Solar Energy Industries Association noted that transparency in a solar company's supply chain could increase an organization's rating by independent agencies and attract investment.
According to SEIA, most companies across the solar modular supply chain already have advanced systems in place to track materials through the various manufacturing processes. This protocol envisions organizations integrating product traceability to upstream suppliers, and into the applicable management system, in such a way that will allow customers to determine the provenance of material inputs from a specific module all the way back to the plant that produced the raw materials.
Weaving product traceability into the entirety of the solar module supply chain will require organizations at each level to cooperate and share sensitive information, the association said.
In addition to launching the solar supply chain traceability protocol, the association updated its solar commitment handbook, which defines common labor, health and safety, environmental, and ethical standards and expectations for solar companies.
The association also created a solar buyers' guide on traceability that solar companies and other stakeholders can use to ask suppliers about ethical sourcing in their solar and storage value chain.
S.L. Fuller contributed to this report.