The fact that US authorities have detained close to $43 million of electronics equipment from India in the current financial year, should serve as a lesson to would-be solar panel manufacturers in Australia about the need to pay very close attention to labour conditions in their supply chains.

As part of Australia’s move to renewable energy, the federal government is investing $1 billion in the SunShot Solar Program which aims to develop Australia’s solar manufacturing industry.

While the economic and environmental benefits are indisputable, the program’s capacity to fulfil Australia’s human rights obligations are another story.

Realising the potential for Australia to manufacture its own solar panels to reduce dependence on problematic Chinese-made products is more complex than it may first appear.

Currently, legislators around the world are enacting laws which prohibit the import of goods made wholly or in part with forced labour.

These have the potential to exclude even “Australian-made” solar panels from key international markets, if these have been built from raw materials or components of dubious provenance.

Under the US Uyghur Forced Labour Prevention Act (UFLPA), ‘electronics’ shipments from India are increasingly being put under the microscope by US Customs and Border Protection over links to forced labour.

While the US Customs and Border agency does not disclose the types of electronic equipment it has detained, the category includes solar panels.

With polysilicon sourced from China’s western region of Xinjiang a clear priority for UFLPA enforcement efforts, it is likely that the 111 detained shipments contain solar panels that are “made in India” but reliant on Chinese supply chains.

How is polysilicon manufactured?

As the world’s largest manufacturer of polysilicon, China’s stranglehold on the solar panel market represents a significant challenge for the ethical rollout of green energy initiatives worldwide. Though its government rejects accusations of forced labour, the risk of state-sponsored forced labour in solar supply chains has been extensively documented in UN reports and independent research.

Key stages of global solar supply chains can be traced back to its very beginning where quartz is first mined and transformed to metallurgical grade silicon before being again transformed to polysilicon. Forced labour has been reported in the mining of quartz as well as the production of metallurgical-grade silicon and solar-grade polysilicon and Uyghur communities are being disproportionately targeted by these state-sponsored forced labour programs.

The vast scale of production is demonstrated by the fact that solar-grade polysilicon is the primary material in 95 per cent of solar modules. Of this, up to 32 per cent of the world’s metallurgical-grade silicon and 35 per cent of solar-grade silicon comes from Xinjiang.

More countries adopt legislation to combat forced labour

The US is not alone in its efforts to reduce forced labour risk, particularly import restrictions specific to goods produced in the Xinjiang region.

Over in the EU, new laws prohibiting the import of goods manufactured in whole or in part through forced labour will commence in 2027. The EU has signalled that attention will be paid to products coming from areas with a high risk of state-imposed forced labour.

Without traceability from raw materials to finished goods, and due diligence on labour standards throughout, manufacturers expose themselves to the risk that their goods may be stopped at US or EU borders, and potentially denied market access. Port fees like detention and demurrage charges can easily extend to lost sales and brand damage if businesses fail to comply.

In the UK, the Court of Appeal’s ruling that the National Crime Agency’s failure to investigate the importation of cotton produced in the Uyghur Region was unlawful is yet another powerful example of how nations around the world are wising up to the injustices of modern slavery and are in the process of rolling out legislation that will curb it.

Supply chain focus critical to Australia’s solar industry

The increased scrutiny by governments worldwide to prevent the passage of goods made with forced labour should be a wake-up call to those working in Australia’s budding solar industry.

Importantly, in its first funding round under the SunShot program, ARENA criteria require applicants for funding to commit to taking reasonable steps to identify, assess and address risks of forced labour in their operations and supply chains involved in SunShot projects.

But more will need to be done to ensure Australian solar manufacturers will have access to clean, alternative supply chains.

Given the risk of forced labour in solar supply chains goes right back to quartz mining, as the Silicon to Report has argued, consideration should be given to supporting the extraction and supply of quartz, metallurgical grade and solar grade silicon, as a priority in Australia.

For now, the US and EU markets have indicated that both environmental and human rights and labour standards matter but it’s only a matter of time before more countries join their ranks.

Though reporting standards may differ, what they share in common is the requirement that goods have no links to forced labour.

As a country with strong labour standards, Australia stands to benefit from positioning itself as the supplier of choice for the growing solar panel market.

Governments and industry have a choice to make: pay the upfront cost of labour rights due diligence now or lose out on market access further down the line.

In this already competitive green energy market, the right decision couldn’t be more obvious.