Daniel Basurto
founder
IDEAS
/
Insight

Intricacies of New Energy and Environmental Laws

Wed, 02/19/2014 - 10:48

2008 was supposed to be the key year when the government moved to implement rules for the development of the renewable industry. However, Daniel Basurto González, founder of IDEAS, a firm that specializes in environmental law, claims that so far the operating environment just encourages the development of the renewable energy instead of providing a platform for real action.” He argues that “the law, as it stands right now, does not give enough resources or enough tools to allow developers to carry out their projects effectively.”

In order to help its clients avoid common mistakes that might delay a project, IDEAS has developed environmental audits that can be used to comply with norms. The targets include energy efficiency, water usage, and compliance with environmental law, which are three main pillars of concern for companies. “It is quite common for companies to have forgotten a particular regulation, not because they do not want to comply but because of the intricate nature of different laws,” explains Basurto González. IDEAS’ strategy when approaching different jurisdictions and helping clients comply with all requirements begins with a sales assessment. If a company wants to build a wind farm, for example, it needs to obtain permissions to change the use of the land. This is just the first step in IDEAS’ relationship with a client. Once the necessary permits have been acquired, IDEAS looks at the development plan, including the timeframe and the government entities that will be involved. “When a federal government entity is involved, the process tends to be more bureaucratic but easier overall. Locally, municipalities may have murky or unclear regulations, which can make things more difficult,” notes Basurto González. This, however, largely depends on the state where the project will be developed.

The recently enacted Amparo Law, concerning environmental litigation processes, is another issue that has to be taken into account. Basurto González emphasizes that the Mexican system highlights the maximum pollution levels. Therefore, anything under those levels is considered as permissible, he says, and it is the Environmental Responsibility Law that defines what is considered to be environmental damage. “This definition does not contemplate anything that is harmful for the environment as damage. Instead, the lack of compliance with permits, authorizations and general requirements is considered environmental damage,” he says. As far as handing down punishment, the law establishes penalties of around MX$600,000 (US$46,000) and/or to develop actions in order to restore the environment. The authorities that will deal with this are PROFEPA, the federal legal body for environmental protection, and district judges. “However, nowadays they are dealing with criminals in administrative matters, so dealing with environmental matters in a proper way will be difficult. While there are thousands of ongoing criminal investigations, nobody has gone to jail for environmental crimes,” argues Basurto González.

Interestingly enough, Mexico is a very important player in the international environmental sphere, as it has signed more than 120 treaties related with the environment. Basurto González argues that the country has a better reputation at the international level than at home. He emphasizes that in the last administration, Former President Felipe Calderón destined plentiful resources to fight climate change, pointing out that in 2008 some laws were enacted as starting points, along with related public policies that were designed to promote sustainable development.

Nowadays, the country is facing a conundrum: there are not enough financial resources to continue pushing these policies. “This is not just happening in Mexico but all around the world. If there is not enough financial capacity, acquiring new technology becomes a difficult task. There were initiatives destined to involve some entities in the financial schemes such as the British government and USAID. However, project developers face difficulties over the lack of certainty and clarity provided by current laws and regulations. In consequence, investors are hesitant to come to Mexico because the actual operating framework does not provide enough support for these types of projects,” Basurto González remarks.

On a happier note, Basurto González recognizes that Mexico has experienced many positive changes. Institutions such as the Mexican Bar Association, COPARMEX (Mexican Confederation of Business Owners), and CONCAMIN (Confederation of Industrial Chambers of Mexico) have developed energy commissions. “Energy efficiency has taken an important role in corporate schemes mainly because energy costs account for a large part of companies’ overall costs,” he says. “But I believe President Enrique Peña Nieto thinks all matters related to energy generation should be part of the open market. Realistically, the private sector will clearly play an important role in taking electricity to places where it is inexistent.” The current operating framework may not be perfect, but Basurto González does not think it is necessary to eliminate what has been worked on so far, stating that the existing laws and regulations simply require a few changes to fit Mexico’s new needs.