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    Are Tesla and Texas a Perfect Match? It’s Questionable.

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    While its C.E.O., Elon Musk, and the state’s conservative lawmakers share libertarian sensibilities, they differ greatly on climate change and renewable energy.Tesla’s move from Silicon Valley to Texas makes sense in many ways: The company’s chief executive, Elon Musk, and the conservative lawmakers who run the state share a libertarian philosophy, favoring few regulations and low taxes. Texas also has room for a company with grand ambitions to grow.“There’s a limit to how big you can scale in the Bay Area,” Mr. Musk said Thursday at Tesla’s annual meeting hosted at its new factory near the Texas capital. “Here in Austin, our factory’s like five minutes from the airport, 15 minutes from downtown.”But Texas may not be the natural choice that Mr. Musk makes it out to be.Tesla’s stated mission is to “accelerate the world’s transition to sustainable energy,” and its customers include many people who want sporty cars that don’t spew greenhouse gases from their tailpipes. Texas, however, is run by conservatives who are skeptical of or oppose efforts to address climate change. They are also fiercely protective of the state’s large oil and gas industry.And, despite the state’s business-friendly reputation, Tesla can’t sell vehicles directly to customers there because of a law that protects car dealerships, which Tesla does not use.Tesla’s move is not surprising: Mr. Musk threatened to leave California in May 2020 after local officials, citing the coronavirus, forced Tesla to shut down its car factory in the San Francisco Bay Area. But his decision to move to Texas highlights some gaping ideological contradictions. His company stands at the vanguard of the electric car and renewable energy movement, while Texas’ lawmakers, who have welcomed him enthusiastically, are among the biggest resisters to moving the economy away from oil and natural gas.“It’s always a feather in Texas’ hat when it takes a business away from California, but Tesla is as much unwelcome as it is welcome,” said Jim Krane, an energy expert at Rice University in Houston. “It’s an awkward juxtaposition. This is a state that gets a sizable chunk of its G.D.P. from oil and gas and here comes a virulent competitor to that industry.”In February, a rare winter storm caused the Texas electric grid to collapse, leaving millions of people without electricity and heat for days. Soon after, the state’s leaders sought — falsely, according to many energy experts — to blame the blackout on renewable energy.“This shows how the Green New Deal would be a deadly deal for the United States of America,” Gov. Greg Abbott said of the blackout on Fox News. “It just shows that fossil fuel is necessary for the state of Texas as well as other states to make sure we will be able to heat our homes in the wintertimes and cool our homes in the summertimes.”Mr. Musk, a Texas resident since last year, seemed to offer a very different take on Thursday, suggesting that renewable energy could in fact protect people from power outages.“I was actually in Austin for that snowstorm in a house with no electricity, no lights, no power, no heating, no internet,” he said. “This went on for several days. However, if we had the solar plus Powerwall, we would have had lights and electricity.”Tesla is a leading maker of solar panels and batteries — the company calls one of its products Powerwall — for homeowners and businesses to store renewable energy for use when the sun has gone down, when electricity rates are higher or during blackouts. The company reported $1.3 billion in revenue from the sale of solar panels and batteries in the first six months of the year.Mr. Musk’s announcement that Tesla would be moving its headquarters from Palo Alto, Calif., came with few details. It is not clear, for example, how many workers would move to Austin. It’s also unknown whether the company would maintain a research and development operation in California in addition to its factory in Fremont, which is a short drive from headquarters and which it said it would expand. The company has around 750 employees in Palo Alto and about 12,500 in total in the Bay Area, according to the Silicon Valley Institute for Regional Studies.It is also not clear how much money Tesla will save on taxes by moving. Texas has long used its relatively low taxes, which are less than California’s, to attract companies. County officials have already approved tax breaks for the company’s new factory, and the state might offer more.Over the years, California granted Tesla hundreds of millions of dollars in tax breaks, something that Gov. Gavin Newsom noted on Friday. But because Tesla will continue to have operations in California, it may still have to pay income tax on its sales in the state, said Kayla Kitson, a policy analyst at the California Budget & Policy Center.Whatever incentives they offer Tesla, Texas officials are not likely to change their support for the fossil fuel industries with which the company competes.In a letter to state regulators in July, Mr. Abbott directed the Public Utility Commission to incentivize the state’s energy market “to foster development and maintenance of adequate and reliable sources of power, like natural gas, coal and nuclear power.”A Tesla factory under construction in Austin in September.Joe White/ReutersThe governor also ordered regulators to charge suppliers of wind and solar energy “reliability” fees because, given the natural variability of the wind and the sun, suppliers could not guarantee that they would be able to provide power when it was needed.Mr. Abbott’s letter made no mention of battery storage, suggesting that he saw no role for a technology that many energy experts believe will become increasingly important in smoothing out wind and solar energy production. Tesla is a big player in such batteries. Its systems have helped electric grids in California, Australia and elsewhere, and the company is building a big battery in Texas, too, Bloomberg reported in March.Texas has no clean energy mandates, though it has become a national leader in the use of solar and wind power — driven largely by the low cost of renewable energy. The state produces more wind energy than any other.Another issue that divides Tesla and Texas is the state’s law about how cars can be sold there.As in some other states, Texas has long had laws to protect car dealers by barring automakers, including Tesla, from selling directly to consumers. California, the company’s biggest market by far, has long allowed the company to sell cars directly to buyers, which lets it earn more money than if it had to sell through dealers.Tesla has showrooms around Texas, but employees are not even allowed to discuss prices with prospective buyers and the showrooms cannot accept orders. Texans can buy Teslas online and pick the vehicles up at its service centers.Once the Austin factory starts producing vehicles, including a new pickup truck Tesla calls Cybertruck, those vehicles will have to leave the state before they can be delivered to customers in Texas.Efforts to change the law by Tesla and some state lawmakers have gone nowhere, including during the legislative session that concluded this year. That’s partly because car dealers have tremendous political influence in the state.Perhaps once Tesla has moved to Austin and started producing cars, Mr. Musk might have enough political clout to get the Legislature to act. Texas lawmakers typically meet only every two years, however, so it would most likely take at least until 2023 for the company’s customers to receive a car directly from its factory there.Michael Webber, professor of mechanical engineering at the University of Texas at Austin, said Mr. Musk’s decision to move to Texas might have been influenced in part by the ability to pressure the state to change its law.“The Texas car market is the second-largest car market in America after California, so if you are selling cars it kind of makes sense to get closer to your customers,” Mr. Webber said. “The Texas car market is particularly difficult outside of cities because of the legislative barriers.”There were already signs on Friday that some in Texas, including those involved in oil and gas and related industries, were happy to have Tesla because it could eventually employ thousands of people.“It can only be positive for Texas, because it brings more business to Texas,” said Linda Salinas, vice president for operations at Texmark Chemicals, which is near Houston. “Even though it’s not fossil business, it’s still business.”She said Texmark might even benefit from Tesla’s manufacturing operations in the state. “Texmark produces and sells mining chemicals to people who mine copper, and guess what batteries are made out of?”Peter Eavis More

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    Building Solar Farms May Not Build the Middle Class

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    To hear Democrats tell it, a green job is supposed to be a good job — and not just good for the planet.The Green New Deal, first introduced in 2019, sought to “create millions of good, high-wage jobs.” And in March, when President Biden unveiled his $2.3 trillion infrastructure plan, he emphasized the “good-paying” union jobs it would produce while reining in climate change.“My American Jobs Plan will put hundreds of thousands of people to work,” Mr. Biden said, “paying the same exact rate that a union man or woman would get.”But on its current trajectory, the green economy is shaping up to look less like the industrial workplace that lifted workers into the middle class in the 20th century than something more akin to an Amazon warehouse or a fleet of Uber drivers: grueling work schedules, few unions, middling wages and limited benefits.Kellogg Dipzinski has seen this up close, at Assembly Solar, a nearly 2,000-acre solar farm under construction near Flint, Mich.“Hey I see your ads for help,” Mr. Dipzinski, an organizer with the local electrical workers union, texted the site’s project manager in May. “We have manpower. I’ll be out that way Friday.”“Hahahahaha …. yes — help needed on unskilled low wage workers,” was the response. “Competing with our federal government for unemployment is tough.”For workers used to the pay standards of traditional energy industries, such declarations may be jarring. Building an electricity plant powered by fossil fuels usually requires hundreds of electricians, pipe fitters, millwrights and boilermakers who typically earn more than $100,000 a year in wages and benefits when they are unionized.But on solar farms, workers are often nonunion construction laborers who earn an hourly wage in the upper teens with modest benefits — even as the projects are backed by some of the largest investment firms in the world. In the case of Assembly Solar, the backer is D.E. Shaw, with more than $50 billion in assets under management, whose renewable energy arm owns and will operate the plant.While Mr. Biden has proposed higher wage floors for such work, the Senate prospects for this approach are murky. And absent such protections — or even with them — there’s a nagging concern among worker advocates that the shift to green jobs may reinforce inequality rather than alleviate it.“The clean tech industry is incredibly anti-union,” said Jim Harrison, the director of renewable energy for the Utility Workers Union of America. “It’s a lot of transient work, work that is marginal, precarious and very difficult to be able to organize.”The Lessons of 2009Since 2000, the United States has lost about two million private-sector union jobs, which pay above-average wages. To help revive such “high-quality middle-class” employment, as Mr. Biden refers to it, he has proposed federal subsidies to plug abandoned oil and gas wells, build electric vehicles and charging stations and speed the transition to renewable energy.Industry studies, including one cited by the White House, suggest that vastly increasing the number of wind and solar farms could produce over half a million jobs a year over the next decade — primarily in construction and manufacturing.David Popp, an economist at Syracuse University, said those job estimates were roughly in line with his study of the green jobs created by the Recovery Act of 2009, but with two caveats: First, the green jobs created then coincided with a loss of jobs elsewhere, including high-paying, unionized industrial jobs. And the green jobs did not appear to raise the wages of workers who filled them.The effect of Mr. Biden’s plan, which would go further in displacing well-paid workers in fossil-fuel-related industries, could be similarly disappointing.In the energy industry, it takes far more people to operate a coal-powered electricity plant than it takes to operate a wind farm. Many solar farms often make do without a single worker on site.In 2023, a coal- and gas-powered plant called D.E. Karn, about an hour away from the Assembly Solar site in Michigan, is scheduled to shut down. The plant’s 130 maintenance and operations workers, who are represented by the Utility Workers Union of America and whose wages begin around $40 an hour plus benefits, are guaranteed jobs at the same wage within 60 miles. But the union, which has lost nearly 15 percent of the 50,000 members nationally that it had five years ago, says many will have to take less appealing jobs. The utility, Consumers Energy, concedes that it doesn’t have nearly enough renewable energy jobs to absorb all the workers.Joe Duvall, the local union president at the D.E. Karn generating complex in Essexville, Mich. The plant, about an hour away from the Assembly Solar site, is scheduled to go offline in 2023.Erin Schaff/The New York Times“A handful will retire,” said Joe Duvall, the local union president. “The younger ones I think have been searching for what they’d like to do outside of Karn.”While some of the new green construction jobs, such as building new power lines, may pay well, many will pay less than traditional energy industry construction jobs. The construction of a new fossil fuel plant in Michigan employs hundreds of skilled tradespeople who typically make at least $60 an hour in wages and benefits, said Mike Barnwell, the head of the carpenters union in the state.By contrast, about two-thirds of the roughly 250 workers employed on a typical utility-scale solar project are lower-skilled, according to Anthony Prisco, the head of the renewable energy practice for the staffing firm Aerotek. Mr. Prisco said his company pays “around $20” per hour for these positions, depending on the market, and that they are generally nonunion.Mr. Biden has proposed that clean energy projects, which are subsidized by federal tax credits, pay construction workers so-called prevailing wages — a level set by the government in each locality. A few states, most prominently New York, have enacted similar mandates.But it’s not clear that the Senate Democrats will be able to enact a prevailing wage mandate over Republican opposition. And the experience of the Recovery Act, which also required prevailing wages, suggests that such requirements are less effective at raising wages than union representation. Union officials also say that much of the difference in compensation arises from benefits rather than pay.A Different Kind of OwnerUnion officials concede that some tasks, like lifting solar panels onto racks, don’t necessarily require a skilled trades worker. But they say that even these tasks should be directly supervised by tradespeople, and that many others must be performed by tradespeople to ensure safety and quality. “If you hire people off the street at $15 per hour, they’re not skilled and they get injuries,” Mr. Barnwell said. “We would never let a bunch of assemblers work together alone.”One potentially dangerous job is wiring the hundreds or thousands of connections on a typical project — from solar panels to boxes that combine their energy to the inverters and transformers that make the electricity compatible with the rest of the grid.Mr. Barnwell’s union has developed a contract that would employ far more skilled workers than the industry norm so that two-thirds of the workers on a project are tradespeople or apprentices. To be more competitive with nonunion employers, the contract offers tradespeople only $18 an hour in benefits, roughly half the usual amount, and a wage of slightly under $30 an hour. Apprentices earn 60 to 95 percent of that wage plus benefits, depending on experience.So far, there have been relatively few takers. A key reason is that while utilities have traditionally built their own coal- and gas-powered plants, they tend to obtain wind and solar energy from other companies through so-called power purchase agreements. That electricity is then sent to customers through the grid just like electricity from any other source.Once construction is completed, many solar farms often operate without a single worker on-site.Erin Schaff/The New York TimesWhen utilities build their own plants, they have little incentive to drive down labor costs because their rate of return is set by regulators — around 10 percent of their initial investment a year, according to securities filings.But when a solar farm is built and owned by another company — typically a green energy upstart, a traditional energy giant or an investment firm like D.E. Shaw, the owner of Assembly Solar in Michigan — that company has every incentive to hold down costs.A lower price helps secure the purchase agreement in the first place. And because the revenue is largely determined by the purchase agreement, a company like D.E. Shaw must keep costs low to have a chance of earning the kind of double-digit returns that a regulated utility earns. Every dollar D.E. Shaw saves on labor is a dollar more for its investors.“For third parties selling power to utilities, they are competing to get the contract,” said Leah Stokes, a political science professor at the University of California, Santa Barbara, who studies utilities. “And the difference between what they’re paid and what their costs are is profit.”Union Labor, ‘Where Possible’In mid-2019, the electrical workers union in Flint elected a trim and tightly coiled man named Greg Remington as its business manager and de facto leader. Around the same time, Mr. Remington ran into an official with Ranger Power, the company developing the project for D.E. Shaw, at a local planning commission meeting.“He was all smiles — ‘Oh, yeah, we look forward to meeting,’” Mr. Remington said of the official. “But he never returned another phone call. I sent emails and he never got back to me.”Development is the stage of a solar project in which a company buys or leases land, secures permits and negotiates a power purchase agreement with a utility. After that, the developer may cede control of the project to a company that will build, own and operate it.But the two companies often work in tandem, as in the case of D.E. Shaw and Ranger Power, which are joint-venture partners “on certain Midwest projects and assets,” according to a Ranger spokeswoman. D.E. Shaw helps fund Ranger Power’s projects, and its involvement provides the resources and credibility to get projects off the ground.Greg Remington, the business manager at the electrical workers local in Flint, Mich. “A lot of this stuff, you’ve got to strike while the iron is hot,” he said of getting a union foothold in green energy construction projects.Erin Schaff/The New York TimesWhen a lawyer for Ranger Power appeared at a Board of Zoning Appeals hearing in Indiana to help advance a Ranger project there in 2019, he emphasized that “the development backing is from D.E. Shaw Renewable Investments,” adding that “they own and operate 31 wind and solar projects across the nation, and they have over $50 billion in investments.” (The firm’s project portfolio is now much larger.)Still, given the sometimes messy maneuvering that goes into obtaining land and permits, it can be helpful for a prominent firm like D.E. Shaw to stand at arm’s length from the development process.In a 2018 letter to a local building trades council in Southern Illinois, known as the Egyptian Building Trades, a Ranger Power official wrote that a solar project the company was developing in the area was “committed to using the appropriate affiliates of the Egyptian Building Trades, where possible, to provide skilled craftsmen and women to perform the construction of the project.” The letter said any entity that acquired the project would be required to honor the commitment.But the project mostly hired nonunion workers to install solar panels. According to a complaint filed by a local union last fall with the Illinois Commerce Commission, the construction contractor has used workers who are not qualified and not supervised by a qualified person “to perform electrical wiring and connections” and paid them less than the union rate.Prairie State Solar, an entity owned by D.E. Shaw that was created to oversee the project, has denied the claims. Prairie State has hired union tradespeople for a portion of the work. Ranger officials likewise played up the construction jobs that the Assembly Solar project would bring to Michigan. But by the time Mr. Remington got involved, the county had approved the project and he had little leverage to ensure that they were union jobs. “A lot of this stuff, you’ve got to strike while the iron is hot,” he said.County officials say that the project is bringing large benefits — including payments to landowners and tax revenue — and that they have no say over organized labor’s involvement. “I don’t think it’s our responsibility in any way to intervene on behalf of or against a union,” said Greg Brodeur, a county commissioner.‘Like a Moving Assembly Line’On an afternoon in mid-May, several laborers coming off their shift at Assembly Solar said they were grateful for the work, which they said paid $16 an hour and provided health insurance and 401(k) contributions. Two said they had moved to the area from Memphis and two from Mississippi, where they had made $9 to $15 an hour — one as a cook, two in construction and one as a mechanic.Jeff Ordower, an organizer with the Green Workers Alliance, a group that pushes for better conditions on such projects, said that out-of-state workers often found jobs through recruiters, some of whom make promises about pay that don’t materialize, and that many workers ended up in the red before starting. “You don’t get money till you get there,” Mr. Ordower said. “You’re borrowing money from friends and family just to get to the gig.”The Assembly Solar workers described their jobs installing panels: Two workers “throw glass,” meaning they lift a panel onto the rack, while a third “catches it,” meaning he or she guides the panel into place. Another group of workers passes by afterward and secures the panels to the rack.One of the men, who identified himself as Travis Shaw, said he typically worked from 7 a.m. until 5 p.m. six days a week, including overtime. Another worker, Quendarious Foster, who had been on the job for two weeks, said the workers motivated themselves by trying to beat their daily record, which stood at 30 “trackers,” each holding several dozen panels.“Solar is like a moving assembly line,” said Mr. Prisco, the staffing agency leader. “Instead of the product moving down the line, the people move. It replicates itself over and over again across 1,000, 2,000 acres.”The solar industry is shaping up to look less like a workers’ paradise than something more akin to an Amazon warehouse: grueling work schedules, middling wages and steady profits for wealthy investors.Erin Schaff/The New York TimesMr. Prisco and other experts said meeting a tight deadline was often critical. In some cases, project owners must pay a penalty to the electricity buyer if there are delays.Elsewhere on the site, Mr. Remington pointed out a worker whom he had seen splicing together cables, but she declined to comment when approached by a reporter. Mr. Remington, who visits frequently and has the moxie of a man who, by his own accounting, has been chased around “by some of the finest sheriffs” in Michigan during hunting season, said he had asked the worker the day before if she was a licensed journeyman or if a journeyman was directly supervising her work, as state regulations require. The worker indicated that neither was the case.A spokeswoman for McCarthy Building Companies, the construction contractor for D.E. Shaw Renewable Investments, said that all electrical apprentices were supervised by licensed journeymen at the state-mandated ratio of three-to-one or better and that all splices involved a licensed electrician.During a brief encounter on site with a reporter, Brian Timmer, the project manager who had exchanged a text with a union organizer, said, “That’s the reason I can’t talk to you” when he was asked about union labor. “It gets a lot of people upset.” (Mr. Remington said he was later told by McCarthy that it might use union electricians for a limited assignment — repairing some defective components.)The county electrical inspector, Dane Deisler, said that McCarthy had produced licenses when he had asked to see them, but that he hadn’t “physically gone through and counted” the licenses and didn’t know how many licensed electricians were on site.Mr. Remington is convinced there are far fewer than a project of this scale requires. “That’s a high-voltage splice box right there,” he said while driving around the perimeter, alluding to potential dangers. He pointed to another box and said, “Tell me if you don’t think that’s electrical work.”Later, explaining why he invested so much effort in a job site where few of his members are likely to be employed, Mr. Remington reflected on the future. “Well, this is going to be the only show in town,” he said. “I want us to have a piece of it.” More

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    U.S. Bans Chinese Imports of Solar Panel Materials Tied to Forced Labor

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    Much of the world’s polysilicon, used to make solar panels, comes from Xinjiang, where the United States has accused China of committing genocide through its repression of Uyghurs.The White House announced steps on Thursday to crack down on forced labor in the supply chain for solar panels in the Chinese region of Xinjiang, including a ban on imports from a silicon producer there. More

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    China's Solar Dominance Presents Biden With Human Rights Dilemma

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    President Biden’s vow to work with China on issues like climate change is clashing with his promise to defend human rights.WASHINGTON — President Biden has repeatedly pledged to work with China on issues like climate change while challenging Beijing on human rights and unfair trade practices.But those goals are now coming into conflict in the global solar sector, presenting the Biden administration with a tough choice as it looks to expand the use of solar power domestically to reduce the United States’ carbon dioxide emissions.The dilemma stems from an uncomfortable reality: China dominates the global supply chain for solar power, producing the vast majority of the materials and parts for solar panels that the United States relies on for clean energy. And there is emerging evidence that some of China’s biggest solar companies have worked with the Chinese government to absorb minority workers in the far western region of Xinjiang, programs often seen as a red flag for potential forced labor and human rights abuses.This week, Mr. Biden is inviting world leaders to a climate summit in Washington, where he is expected to unveil an ambitious plan for cutting America’s emissions over the next decade. The administration is already eyeing a goal of generating 100 percent of the nation’s electricity from carbon-free sources such as solar, wind or nuclear power by 2035, up from only 40 percent last year. To meet that target, the United States may need to more than double its annual pace of solar installations.That is likely to be an economic boon to China, since the United States still relies almost entirely on Chinese manufacturers for low-cost solar modules, many of which are imported from Chinese-owned factories in Vietnam, Malaysia and Thailand.China also supplies many of the key components in solar panels, including more than 80 percent of the world’s polysilicon, a raw material that most solar panels use to absorb energy from sunlight. Nearly half of the global supply comes from Xinjiang alone. In 2019, less than 5 percent of the world’s polysilicon came from U.S.-owned companies.“It’s put the Democrats in a hard position,” said Francine Sullivan, the vice president for business development at REC Silicon, a polysilicon maker based in Norway with factories in the United States. “Do you want to stand up to human rights in China, or do you want cheap solar panels?”The administration is increasingly under pressure from influential supporters not to turn a blind eye to potential human rights abuses in order to achieve its climate goals.“As the U.S. seeks to address climate change, we must not allow the Chinese Communist Party to use forced labor to meet our nation’s needs,” Richard L. Trumka, the president of the A.F.L.-C.I.O., wrote in a letter on March 12 urging the Biden administration to block imports of solar products containing polysilicon from the Xinjiang region.China’s hold over the global solar sector has its roots in the late 2000s. As part of an effort to reduce dependence on foreign energy, Beijing pumped vast amounts of money into solar technology, enabling companies to make multibillion-dollar investments in new factories and gain market share globally.China’s boom in production caused the price of panels to plummet, accelerating the adoption of solar power worldwide while forcing dozens of companies in the United States, Europe and elsewhere out of business.A solar equipment factory in China’s Jiangxi Province in January. China’s hold over the global solar sector has its roots in the late 2000s, when Beijing began pumping vast amounts of money into solar technology.CHINATOPIX, via Associated PressIn the past few years, Chinese polysilicon manufacturers have increasingly shifted to Xinjiang, lured by abundant coal and cheap electricity for their energy-intensive production.Xinjiang is now notorious as the site of a vast program of detention and surveillance that the Chinese government has carried out against Muslim Uyghurs and other minority groups. Human rights groups say the Chinese authorities may have detained a million or more minorities in camps and other sites where they face torture, indoctrination and coerced labor.In a report last year, Horizon Advisory, a consultancy in Washington, cited Chinese news reports and government announcements suggesting that major Chinese solar companies including GCL-Poly, East Hope Group, Daqo New Energy, Xinte Energy and Jinko Solar had accepted workers transferred with the help of the Chinese government from impoverished parts of Xinjiang.Jinko Solar denied those allegations, as did the Chinese government. Zhang Longgen, a vice chairman of Xinjiang Daqo — a unit of one of the companies cited by Horizon Advisory — said that the polysilicon plants were not labor intensive, and that the company’s workers were freely employed and could quit if they wanted, according to Global Times, a Chinese Communist Party-owned newspaper. The report said that only 18 of the 1,934 workers at Xinjiang Daqo belonged to ethnic minorities, and that none were Uyghur.The other companies did not respond to requests for comment.Experts have had difficulty estimating how many laborers may have been coerced into working in Chinese solar facilities given restrictions on travel and reporting in Xinjiang. Many multinational companies have also struggled to gain access to the region’s factories to rule out the risk of forced labor in their supply chains.Mark Widmar, the chief executive of First Solar, a solar panel maker based in the United States, said exposure to Xinjiang was “the unfortunate reality for most of the industry.”“How the industry has evolved, it’s made it difficult to be comfortable that you do not have some form of exposure,” he said. “If you try to follow the spaghetti through the spaghetti bowl and really understand where your exposure is, that’s going to be tough.”The revelations have attracted attention from lawmakers and customs officials, and prompted concerns among solar investors that the sector could be destined for tougher regulation.Under the Trump administration, American customs agents took a harder line against products reportedly made with forced labor in Xinjiang, including a sweeping ban on cotton and tomatoes from the region. Those restrictions have forced a reorganization of global supply chains, especially in the apparel sector.The Biden administration has said it is still reviewing the Trump administration’s policies, and it has not yet signaled whether it will pursue other bans on products or companies. But both Mr. Biden and his advisers have insisted that the United States plans to confront China on human rights abuses in Xinjiang.A spokeswoman for the National Security Council said that the draconian treatment of Uyghurs “cannot be ignored,” and that the administration was “studying ways to effectively ensure that we are not importing products made from forced labor,” including solar products.Congress may also step in. Since the beginning of the year, the House and Senate have reintroduced versions of the Uyghur Forced Labor Prevention Act, which would assume that imports from Xinjiang were made with forced labor and block them from American ports, unless the importer showed proof otherwise. The House version of the bill singles out polysilicon as a priority for enforcement.The legislation has broad bipartisan support and could be included in a sweeping China-related bill that Democrats hope to introduce this year, according to congressional staff members.Amid the threat of new restrictions, the Solar Energy Industries Association, a trade group, has led an effort to help solar companies trace materials in their supply chain. It has also organized a pledge of 236 companies to oppose forced labor and encouraged companies to sever any ties with Xinjiang by June.Some Chinese companies have responded by reshuffling their supply chains, funneling polysilicon and other solar products they manufacture outside Xinjiang to American buyers, and then directing their Xinjiang-made products to China and other markets.Analysts say this kind of reorganization is, in theory, feasible. About 35 percent of the world’s polysilicon comes from regions in China other than Xinjiang, while the United States and the European Union together make up around 30 percent of global solar panel demand, according to Johannes Bernreuter, a polysilicon market analyst at Bernreuter Research.John Smirnow, the general counsel for the Solar Energy Industries Association, said most solar companies were already well on their way toward extricating supply chains from Xinjiang.A high-security facility that is believed to be a re-education camp in the Xinjiang region of China in 2019. President Biden and his advisers have said that they plan to confront China on human rights abuses in Xinjiang.Greg Baker/Agence France-Presse — Getty Images“Our understanding is that all the major suppliers are going to be able to supply assurances to their customers that their products coming into the U.S. do not include polysilicon from the region,” he said.But it is unclear if this reorganization will quell criticism. Episodes of forced labor have also been reported in Chinese facilities outside Xinjiang where Uyghurs and other minorities have been transferred to work. And restrictions on products from Xinjiang could spread to markets including Canada, Britain and Australia, which are debating new rules and guidelines.Human rights advocates have argued that allowing Chinese companies to cleave their supply chains to serve American and non-American buyers may do little to improve conditions in Xinjiang and have pressed the Biden administration for stronger action.“The message has to be clear to the Chinese government that this economic model is not going to be supported by governments or businesses,” said Cathy Feingold, the director of the A.F.L.-C.I.O.’s International Department.Chinese companies are also facing pressure from Beijing not to accede to American demands, since that could be seen as a tacit criticism of the government’s activities in Xinjiang.In a statement in January, the China Photovoltaic Industry Association and China Nonferrous Metals Industry Association condemned “irresponsible statements” from U.S. industries, which they said were directed at curbing Xinjiang’s development and “meddling in Chinese domestic affairs.”“It is widely known that the ‘forced labor’ issue is in its entirety the lie of the century that the United States and certain other Western countries have concocted from nothing,” they said.On Monday, Secretary of State Antony Blinken warned that the United States was falling behind China on clean energy production.But bringing solar manufacturing back to the United States could be a challenge, analysts said, given the time needed to significantly bolster American production, and it could also raise the price of solar panels in the short term.The United States still has a handful of facilities for manufacturing polysilicon, but they have faced grim prospects since 2013, when China put retaliatory tariffs on American polysilicon. Hemlock Semiconductor mothballed a new $1.2 billion facility in Tennessee in 2014, while REC Silicon shut its polysilicon facility in Washington in 2019.China has promised to carry out large purchases of American polysilicon as part of a trade deal signed last year, but those transactions have not materialized.In the near term, tensions over Xinjiang could be a boon for the few remaining U.S. suppliers. Ms. Sullivan said some small U.S. solar developers had reached out to REC Silicon in recent months to inquire about non-Chinese products.But American companies need the promise of reliable, long-term orders to scale up, she said, adding that when she explains the limited supply of solar products that do not touch China, people become “visibly ill.”“This is the big lesson,” Ms. Sullivan added. “You become dependent on China, and what does it mean? We have to swallow our values in order to do solar.”Chris Buckley More

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    Chinese Solar Companies Tied to Use of Forced Labor

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    AdvertisementContinue reading the main storySupported byContinue reading the main storyChinese Solar Companies Tied to Use of Forced LaborA new report shows some of the world’s biggest solar companies work with the Chinese government to absorb workers from Xinjiang, programs that are often seen as a red flag for forced labor.Solar panels in Clovis, Calif. Together, the solar companies named in the report supply most of the raw materials for solar panels on rooftops and utility energy projects in the United States, Europe and elsewhere.Credit…Chang W. Lee/The New York TimesAna Swanson and Jan. 8, 2021, 1:47 p.m. ETIn a flat, arid expanse of China’s far west Xinjiang region, a solar technology company welcomed laborers from a rural area 650 miles away, preparing to put them to work at GCL-Poly, the world’s second-largest maker of polysilicon.The workers, members of the region’s Uighur minority, attended a class in etiquette as they prepared for their new lives in the solar industry, which prides itself as a model of clean, responsible growth. GCL-Poly promoted the housing and training it offered its new recruits in photographs and statements to the local news media.But researchers and human rights experts say those positive images may conceal a more troubling reality — the persecution of one of China’s most vulnerable ethnic groups. According to a report by the consultancy Horizon Advisory, Xinjiang’s rising solar energy technology sector is connected to a broad program of assigned labor in China, including methods that fit well-documented patterns of forced labor.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.The Chinese government disputes the presence of any forced labor in its supply chains, arguing that employment is voluntary. The companies named in the report either did not respond to requests for comment or denied any role in forced labor.In a statement, a representative for the Chinese Embassy in Washington called forced labor in Xinjiang “a rumor created by a few anti-China media and organizations,” adding that all workers in Xinjiang enter into contracts in accordance with Chinese labor law. “There is no such thing as ‘forced labor,’” the representative said.The report adds to a growing list of companies that have been accused of relying on coerced labor from Uighurs and other ethnic minorities in China, either in their own factories or those of their suppliers.The United States and other governments have become increasingly vocal about forced labor in Xinjiang, including naming and shaming major corporations that operate in the region. The Trump administration has imposed sanctions on dozens of companies and individuals for their role in Xinjiang, including banning some exports from the region, which is also a major producer of cotton. On Dec. 2, it banned imports made with cotton produced by the Xinjiang Production and Construction Corps, a paramilitary group that American officials say uses forced labor.Congress is also considering sweeping legislation that would ban all products with materials from Xinjiang unless companies certify that the goods are made without forced labor.John Ullyot, the spokesman for the National Security Council, said that China’s campaign of repression in Xinjiang involved “state-sponsored forced labor” and that the United States would “not be complicit in modern day slavery.”“The administration has taken unprecedented actions to prevent China from profiting off of its horrific human rights abuses,” he said.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.Government announcements and news reports indicate that solar companies often take in assigned workers in batches of dozens or fewer, suggesting that the transfers are a small part of their overall work force. Still, the assertions from Horizon Advisory imply that much of the global solar supply chain may be tainted by an association with forced labor. Such charges could hurt its progressive image and risk product bans from Washington.GCL-Poly, Daqo New Energy, Xinte Energy and East Hope Group did not respond to multiple requests for comment.Ian McCaleb, a spokesman for Jinko Solar, said the company “strongly condemns the use of forced labor, and does not engage in it in its hiring practices or workplace operations.” He said that it had reviewed the claims in the Horizon report and “found that they do not demonstrate forced labor in our facilities.”Business & EconomyLatest UpdatesUpdated Jan. 7, 2021, 12:58 p.m. ETElon Musk has become the world’s richest person, as Tesla’s stock rallies.Simon & Schuster drops Senator Hawley’s book.Daimler responds: ‘We depend on a reliable and stable political framework.’China carries out a vast program of detention and surveillance of Uighurs, Kazakhs and other minorities in Xinjiang. Up to a million or more minorities may have been detained in indoctrination camps and other sites where they are forced to renounce religious bonds, and risk torture, assault and psychological trauma, Uighurs abroad and human rights groups say.The Xinjiang government has promoted the labor transfer programs in parallel with the re-education camps, efforts that have ramped up drastically under the current leader, Xi Jinping. The government has uprooted many from farms to work in factories and cities, in the belief that steady, supervised work can pull minorities out of poverty and break down cultural barriers. Workers may have little choice but to obey local officials who oversee their move to distant towns and industrial zones to fulfill government-set quotas.An internment camp in Xinjiang that local officials have portrayed as a vocational training center.Credit…Thomas Peter/ReutersThe growing scrutiny of the region has already prompted changes among some companies whose supply chains are entangled in these programs. Many textile and apparel companies that use cotton or yarn from Xinjiang have severed ties, including Patagonia, Marks and Spencer and H&M.The solar sector could face similar pressure. The industry has deep ties to Xinjiang, which accounts for about 40 percent of global polysilicon production, said Jenny Chase, the head of solar analysis at BloombergNEF. Xinjiang’s polysilicon production increased rapidly over the past decade, mostly because of cheap electricity from local coal plants and other government support, Ms. Chase said.That expansion has helped Chinese companies dominate foreign competitors, including in the United States. China produced 82 percent of global polysilicon in 2020, up from 26 percent in 2010, according to data from IHS Markit, while the U.S. share of production shrunk to 5 percent from 35 percent.“I am concerned that forced labor may have been used in Xinjiang,” said Francine Sullivan, the vice president for business development at REC Silicon, a Norwegian polysilicon manufacturer with operations in the United States. The company shut a facility in Washington State, despite surging overall U.S. demand.Xinjiang is known for low safety and environmental standards, Ms. Sullivan said, and forced labor “may be just part of the incentive package.”Xiaojing Sun, a senior research analyst at Wood Mackenzie, said solar companies were starting to investigate their exposure to Xinjiang and reconfigure their supply chains to avoid the region if possible.In a note to investors in October, analysts at Roth Capital Partners said the solar sector faced a “heightened risk of disruption” because of its ties to Xinjiang.“Investors are getting nervous,” Ms. Sun said.The Solar Energy Industries Association, the largest industry association in the United States, has called human rights abuses in Xinjiang “reprehensible” and strongly encouraged companies “to immediately move their supply chains out of the region.”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.The report documents GCL-Poly accepting “surplus labor” from a rural region of Xinjiang last year. In 2018, according to an article on China Energy Net, a local news site, one of GCL-Poly’s subsidiaries also accepted more than 60 such workers.A local subsidiary of Jinko Solar, Xinjiang Jinko Energy Co., received state subsidies for employing local Xinjiang labor, including at least 40 “poor workers from southern Xinjiang” in May, according to a local government announcement from July 2020 cited by Horizon Advisory.On its public WeChat account, East Hope Group said that it had “responded to the national Western Development Call and actively participated in the development and construction of Xinjiang,” including constructing a polysilicon project in Changji prefecture in 2016, the Horizon report said.That same year, according to a Chinese news report cited by Horizon, Xinjiang’s Yarkand County signed a “labor export cooperation framework agreement” with a subsidiary named East Hope Group Xinjiang Aluminum Company.Another subsidiary of East Hope, Xinjiang East Hope Nonferrous Metals Co., “accepted 235 ethnic minority employees from southern Xinjiang,” who were given training to make up for “low educational qualifications, weak national language skills and insufficient job skills,” according to a report on the company’s website.According to Horizon Advisory, several solar companies also have ties to the Xinjiang Production and Construction Corps, which has been penalized by the Trump administration. In its 2018 financial report, Daqo New Energy said its Xinjiang facilities benefited from a lower cost of electricity because the regional grid is operated by a division of the Xinjiang Production and Construction Corps.Amy Lehr, the director of the Human Rights Initiative at the Center for Strategic and International Studies, said that work programs that draw on Xinjiang minorities and offer companies subsidies for employing them are a “red flag” for forced labor.These programs may restrict workers from quitting, traveling or participating in religious services, pay less than minimum wage, and involve harsh or unsafe work conditions, as well as the threat of detention, according to Ms. Lehr’s research.“The concern is that there is a potential for coercion, because of the level of surveillance and fearfulness,” Ms. Lehr said. Companies that source products from the region have “no way of knowing that you’re not being connected to forced labor,” she said.Nathan Picarsic, a founder of Horizon Advisory, said what the firm had documented was likely “just the tip of the iceberg.” If Americans are buying solar panels made with materials from these Chinese companies, he said, “I would say you are complicit in perpetuating this Chinese industrial policy that suppresses and disenfranchises human beings.”AdvertisementContinue reading the main story More