Opposition to energy projects

OnDemand

27 February 2017

Energy & Natural Resources Brazil

Many new energy projects are supported and incentivised by national and regional governments, but meet with considerable opposition from the public due to safety, planning and environmental concerns. From fracking to wind farms, stakeholders must consider how best to secure buy-in from local communities to ensure that resistance does not delay crucial projects – or even scupper them altogether.

What types of energy project prove most contentious in your jurisdiction and why?

While all kinds of energy project may face opposition to some extent, hydropower dams have proven to be the most contentious. That said, hydropower is one of the main sources of energy in the country, with over 150 hydropower plants installed.

Opposition groups focus on the environmental and social impact of hydropower plants. As the construction of these plants commonly involves large dams, vast areas are often flooded, resulting in significant community displacement and environmental damage.

Although Brazil has the third-largest hydropower potential worldwide, most of this potential is located in environmentally sensitive zones, such as the Amazon basin, which is rich in fauna and flora. In addition, some of these regions comprise protected indigenous lands.

Another common argument is that hydropower plants contribute to the greenhouse effect due to their emission of carbon dioxide and methane.

Some of the common points of contention result from a failure to provide local communities with information regarding the importance of such projects. These communities are unaware of the benefits that the projects can provide to the country and the harm that may occur to Brazil as a whole if there is a lack of energy.

Another reason for dispute is the occasional failure to provide due compensation to affected communities.

Have any energy projects been delayed or frustrated in your jurisdiction following successful public opposition? If so, what lessons can be learned for future projects?

Many hydropower dam projects have been delayed in Brazil due to public opposition. One internationally known example is the Belo Monte Dam. The construction of this dam began approximately 35 years after the project was proposed.

Since the original 1975 proposal, stakeholders have undertaken significant research regarding the dam and the region, as well as the economic and technical viability of what was to be one of the biggest dams worldwide.

After years of conflict, the construction of the Belo Monte Dam began in 2011. That said, the dam is much smaller than it was initially intended and, to date, only partially complete.

The dam was important for Brazil, as the demand for electricity is continuously increasing. While the judicial battles concerning the project took place, Brazil faced a serious energy crisis, including blackouts. The lack of energy supply forced the Brazilian population to rationalise and reduce energy consumption for months.

Although the government is blamed for the blackouts due to inefficient planning, arguably, if the environmental authorities had been less bureaucratic regarding the licensing procedures and the judicial branch had been more efficient in trying the claims, the Belo Monte Dam could have been in operation much earlier and the blackouts could have been avoided. Hence, many lessons can be learned, including as follows.

First, local indigenous and community groups claimed that they were never informed of the project. While all projects are subject to public hearings, in which all citizens may participate, future projects must be preceded by a dialogue with the local community that will be displaced. These communities must be heard and ultimately compensated.

That said, compensation measures must be achievable. Environmental agencies commonly impose unrealistic measures. Moreover, it is important to define the 'local community', since there have been cases in which individuals have maliciously claimed compensation while living in other regions.

Second, information about the benefits of the project must be provided to the country and the local community. The government must participate in this task, as energy supply is a topic of public interest and an essential factor in social and economic development. The number of people affected by displacement was considerably less than those affected by the lack of energy in 2001.

Finally, the government and stakeholders should resist public pressure and ensure that specialists are fully heard regarding the viability and need for individual projects in order to decide whether opposition is reasonable and to ensure that the country's best interests are fulfilled.

Who should have standing to oppose new energy projects? Only parties that are directly affected, such as local communities, or also parties that are indirectly affected, such as environmental organisations?

According to Article 225 of the Constitution:

"Everyone has the right to an ecologically balanced environment, which is an asset of common use to the people and essential to a healthy life quality, imposing on the Government and the community the duty to defend and preserve it for the present and future generations."

This is a constitutional guarantee and duty.

The most common types of judicial opposition in relation to energy projects are civil actions for the enforcement of collective rights, which are regulated by Law 7,347. For this particular kind of claim, the parties with standing are:

  • public prosecutors;
  • public defenders;
  • the federal government, states, federal district and municipalities;
  • autonomous government agencies;
  • public companies, foundations and government-controlled private companies; and
  • associations constituted for at least one year which have among their institutional goals the protection of:
    • public and social property;
    • consumers;
    • economic order;
    • free competition;
    • racial, ethnic or religious groups; or
    • the artistic, aesthetic, historic, touristic and landscape heritage.

In addition, the law provides that:

"Anyone can and the public servant shall provoke the Public Prosecutor's Office's initiative providing information about the facts that are object of civil action indicating to the Public Prosecutor's Office the elements of belief."

Public civil actions may be filed when moral or property damages are caused to:

  • the environment;
  • goods and rights of aesthetic, historic, landscape or touristic value;
  • collective interests; or
  • the honour and dignity of racial, ethnic or religious groups.

Hence, hundreds of actions are filed against energy projects in different courts throughout the country, many of which are filed by public prosecutors.

Other than filing actions, any person may participate and submit his or her opinion in mandatory public hearings concerning energy projects.

What steps can government and stakeholders in your jurisdiction take to overturn successful public opposition to new energy projects?

Previous examples have shown that successful public opposition may be overturned and disputes can be settled.

One of the main complaints of local communities is that they are not consulted about projects beforehand. Indigenous and local populations want to be heard, and stakeholders must fulfil this need.

After these hearings take place, compensation must be provided to mitigate the impact of any projects, as provided for by the environmental reports issued by the Institute of the Environment and Renewable Natural Resources and other environmental authorities.

The Itaipu hydropower plant, for example, faced significant opposition. However, today it is one of the most important sources of electric energy in Brazil and Paraguay, as well as the world leader in clean and renewable energy. The Itaipu Dam pays royalties to all affected municipalities and the amount is distributed among the municipalities, states and federal government.

As for the government's participation, which is fundamental, a new legal framework needs to be introduced. Many provisions of the Constitution are too vague and must be regulated in order to provide interested parties with guidance. The loopholes in the law are more harmful than first meets the eye, and it is imperative that the legislative branch resolves these issues.

In addition, it is crucial that the government minimise bureaucracy. The complicated and unreasonable procedures for obtaining licenses are often the biggest hindrances to the implementation of new projects.

Further, a special system is needed for faster judicial response to public interest claims. The Brazilian court system is extremely slow and, in respect of energy projects, this delay is damaging to the country's interests. The government needs to establish task forces for the swift conclusion of energy claims.

Finally, providing clear information about a project's benefits may mitigate opposition. This in turn may enhance local support and attract positive media.

What strategies can governments and stakeholders adopt to promote local support, improve community engagement and better inform local communities of the potential benefits of new energy projects?

In addition to the above measures, pre-application consultation, providing awareness of the benefits of the projects, improving the laws and other strategies may be used to engage local communities in new projects.

Further, stakeholders may implement incentive programmes for local populations. For example, communities could be granted ownership over a share of the investment, or a part of the occupied area could be reserved to provide activities for the local community. Another incentive would be to provide cheaper electricity to the local community.

In addition, the government should make public hearings more accessible to the local communities affected by energy projects. The rigorous technical language is often a barrier for local communities and can preclude local participation and access to important information on projects.

It is wise not only to look for the reason why some projects were delayed or unsuccessful, but also to the projects that, despite opposition, prevailed and have proven their success and benefit to society, as exemplified by the Itaipu Dam.

For further information on this topic please contact Godofredo Mendes Vianna or Fernanda Gueiros at Kincaid | Mendes Vianna Advogados by telephone (+55 21 2276 6200) or email (godofredo@kincaid.com.br or fernanda.gueiros@kincaid.com.br). The Kincaid | Mendes Vianna Advogados website can be accessed at www.kincaid.com.br.

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