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

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The Worldwide Vitality Company has warned that China’s dominance of the photo voltaic panel provide chain may sluggish the worldwide transition to cleaner power.

An IEA report on the problem, the primary of its type by the organisation, discovered that China’s share within the manufacturing phases for photo voltaic, from the manufacturing of polysilicon to the panels themselves, exceeds 80 per cent, and in some phases may attain as excessive as 95 per cent by 2025.

“The world will nearly utterly depend on China for the provision of key constructing blocks for photo voltaic panel manufacturing by way of 2025,” the company stated within the report. “This stage of focus in any international provide chain would characterize a substantial vulnerability.”

The report discovered that prime commodity costs and present bottlenecks within the provide chain had already led to an increase of 20 per cent in panel costs over the previous yr, which has resulted in delays of their supply the world over.

“One of many causes we made this report is to focus on this necessary weak spot within the photo voltaic PV provide chain, to name for the governments for diversification, to cut back the provision chain vulnerabilities,” Fatih Birol, head of the IEA, advised the Monetary Occasions.

The dangers of a photo voltaic panel provide chain concentrated in China “just isn’t solely a geopolitical situation. It may be a hearth in main amenities. It may be floods. Disruption of [the solar PV supply chain] has large implications for our clear power transition and power safety,” Birol stated.

Photo voltaic power is a key aspect within the IEA situation of the world reaching internet zero emissions by 2050. The power supply is scheduled to account for 33 per cent of worldwide electrical energy technology by then.

A faster shift to photo voltaic power is a extra urgent situation for the European Union, which is going through the necessity to wean itself off its dependence on Russian gasoline. Below the bloc’s “RePowerEU” plan, it’s concentrating on to put in greater than 320GW of photo voltaic PV by 2025, and nearly 600GW by 2030.

Birol has beforehand advised the Monetary Occasions that Europe wants to organize for a complete shutdown of Russian gasoline exports.

International locations and groupings just like the EU “have to have tailored funding insurance policies” to spur funding in photo voltaic panel manufacturing and construct their very own provide chains, Birol stated. China at present loved a serious benefit on photo voltaic panel manufacturing, due to decrease power and labour prices, in accordance with the IEA chief.

“Tax incentives for producers, construct a producing facility in trade clusters to cut back land price — these may very well be some concrete, fast implementable insurance policies that may very well be launched with a view to present a aggressive edge vis-à-vis low-cost price of producing in China,” Birol stated.

The report additionally famous that China’s Xinjiang province accounted for 40 per cent of worldwide polysilicon manufacturing. China has confronted allegations of widespread human rights violations there, and the US in late June began imposing a ban on imports from the region, together with photo voltaic panel supplies.

Whereas the report didn’t point out the alleged use of pressured labour in Xinjiang, it stated the world wanted to “strengthen worldwide co-operation on creating clear and clear requirements, making an allowance for environmental and social sustainability standards”.