Home News IEA warns on China’s dominance of solar panel supply chain

IEA warns on China’s dominance of solar panel supply chain

10
0


The International Energy Agency has warned that China’s dominance of the solar panel supply chain could slow the global transition to cleaner energy.

An IEA report on the issue, the first of its kind by the organisation, found that China’s share in the manufacturing stages for solar, from the production of polysilicon to the panels themselves, exceeds 80 per cent, and in some stages could reach as high as 95 per cent by 2025.

“The world will almost completely rely on China for the supply of key building blocks for solar panel production through 2025,” the agency said in the report. “This level of concentration in any global supply chain would represent a considerable vulnerability.”

The report found that high commodity prices and existing bottlenecks in the supply chain had already led to a rise of 20 per cent in panel prices over the past year, which has resulted in delays in their delivery across the world.

“One of the reasons we made this report is to highlight this important weakness in the solar PV supply chain, to call for the governments for diversification, to reduce the supply chain vulnerabilities,” Fatih Birol, head of the IEA, told the Financial Times.

The risks of a solar panel supply chain concentrated in China “is not only a geopolitical issue. It can be a fire in major facilities. It can be floods. Disruption of [the solar PV supply chain] has huge implications for our clean energy transition and energy security,” Birol said.

Solar energy is a key element in the IEA scenario of the world reaching net zero emissions by 2050. The energy source is scheduled to account for 33 per cent of global electricity generation by then.

A quicker shift to solar energy is a more pressing issue for the European Union, which is facing the need to wean itself off its dependence on Russian gas. Under the bloc’s “RePowerEU” plan, it is targeting to install more than 320GW of solar PV by 2025, and almost 600GW by 2030.

Birol has previously told the Financial Times that Europe needs to prepare for a total shutdown of Russian gas exports.

Countries and groupings like the EU “need to have tailor-made investment policies” to spur investment in solar panel manufacturing and build their own supply chains, Birol said. China currently enjoyed a major advantage on solar panel manufacturing, because of lower energy and labour costs, according to the IEA chief.

“Tax incentives for manufacturers, build a manufacturing facility in industry clusters to reduce land cost — those could be some concrete, quick implementable policies that could be introduced in order to provide a competitive edge vis-à-vis cheap cost of manufacturing in China,” Birol said.

The report also noted that China’s Xinjiang province accounted for 40 per cent of global polysilicon manufacturing. China has faced allegations of widespread human rights violations there, and the US in late June started enforcing a ban on imports from the region, including solar panel materials.

While the report did not mention the alleged use of forced labour in Xinjiang, it said the world needed to “strengthen international co-operation on creating clear and transparent standards, taking into account environmental and social sustainability criteria”.

Previous articleAlex Berenson has been reinstated on Twitter
Next articleDeem It Green – Noah Rothman, Commentary Magazine