Wind Energy Development in Mexico: at What Cost?

Wind Energy Development in Mexico: At What Cost?

Investigating social acceptance of wind farms in Oaxaca and Yucatán, Mexico

Elizabeth Kim Harvard Kennedy School Master in Public Policy (MPP) Candidate

This Policy Analysis Exercise (PAE) is being submitted in partial fulfillment of the requirements for the degree of Master in Public Policy. Expected graduation date: 5/24/2018

March 27, 2018

Clients: Maria V. Arsenova, International Finance Corporation Carlos Tomas Perez-Brito, World Bank (Joint advisory team to Government of Mexico)

PAE Advisor: Professor Michael Woolcock, Harvard Kennedy School Seminar Leader: Professor Julie Boatright Wilson, Harvard Kennedy School

This document reflects the views of the author and should not be viewed as representing the 1 views of Harvard University, its faculty, or International Finance Corporation and World Bank.

2 Acknowledgements

My Harvard Kennedy School Advisors Professor Michael Woolcock and Professor Julie Wilson have been instrumental in guiding me through the PAE process, providing expertise and advice, and challenging me to dig deeper in exploring a meaningful public policy challenge. My deepest gratitude to Professors Woolcock and Wilson.

I especially thank Dorothee Georg, Sergio Oceransky, Carlos Tornel and Naín Martinez, Ivet Maturano, Rodrigo Patiño, Jazmín Sánchez, and Shalanda Baker for your thought partnership and support, and the community leaders and people who offered their time and granted interviews.

I would like to thank Sergio Tellez and Fidel Florian (HKS MPAID ’17), and Kamran Hakiman (HKS MPP ’18) for your encouragement and helpful feedback throughout my research process. I offer sincere thanks to my friends Susie Park, Diana Sheedy, and Diana Park for your support in achieving this PAE.

I am grateful for the enduring support of my late father Moon Kim, mother Duk Kim, and sisters Deborah and Kathy.

Special thanks to the Carr Center for Human Rights and Women in Public Policy Program at Harvard Kennedy School for the funding that enabled my travel to Mexico and field research.

Visiting a wind farm in 3 Yucatán, Feb. 2018 Acronyms

AMDEE: Asociación Mexicana de Energía Eólica (Mexican Wind Energy Association)

BSMs: Benefit Sharing Mechanisms

CFE: Comisión Federal de Electricidad (Federal Electricity Commission)

CRE: Comisión Reguladora de Energía (Energy Regulatory Commission)

EIA: Environmental Impact Assessment

FPIC: Free, Prior, Informed Consent

GoM: Government of Mexico

GW/GWh: Gigawatt/Gigawatt-hour (1GW=1,000MW=1,000,000KW)

ICM: Iniciativa Climática de México

KW/KWh: Kilowatt/Kilowatt-hour

MW/MWh Megawatt/Megawatt-hour

MXN: Mexican peso

SEGOB: Secretaría de Gobernación (Ministry of the Interior)

SEMARNAT: Secretaría de Medio Ambiente y Recursos Naturales (Ministry of the Environment and Natural Resources)

SENER: Secretaría de Energía (Ministry of Energy)

SIA: Social Impact Assessment

4 Table of Contents

Executive Summary - 6 I. Context of Wind Energy Development in Mexico - 9 1. Energy Sector Transformation - 9 • National Legal Reforms - 9 • High Hopes for Wind Power - 10 • Auction Schemes Facilitating Megaprojects - 12 2. Isthmus of Tehuantepec and Yucatan Context - 12 • Key Stakeholders - 13 • Socioeconomic Characteristics Contributing to Power Disparity - 14 • Indigenous Community Rights and Communal Land Ownership - 15 3. Mounting of Community Resistance - 16 • Wind Development Impact - 16 • Mareña Renovables to Eólica del Sur: Project Halt - 17 • Ixtepec, Oaxaca: Continued Rejection of Megaproject Model - 18 • Mérida, Yucatán: Multi-Stakeholder Efforts - 19

II. Methodology and Framework - 21 1. Overview - 21 2. On Local legitimacy and Social Acceptance - 21 3. Energy Democracy Framework - 22

III. Mapping the Engagement Process - 24

IV. Findings from the Isthmus of Tehuantepec and Yucatán: Substantive Rights - 30 1. Voices at the Table: Considering Community Perspectives - 30

V. Findings from the Isthmus of Tehuantepec and Yucatán: Procedural Rights - 34 1. Initial Negotiations and Contractual Abuses- 34 2. Environmental Impact Assessments - 36 3. Social Impact Assessments - 37 4. “Free, Prior, and Informed Consent” mechanism - 38 5. Distributive Justice - 40

VI. Closing - 42 1. Recommendations - 42 2. Conclusion - 48 Appendices – 50 APPENDIX A: Methodology and Limitations - 50 APPENDIX B: Stakeholders Interviewed and Sample Interview Questions - 51 APPENDIX C: On Legitimacy and Social Acceptance - 54 APPENDIX D: National Climate Change Strategy and Recent Auction Results - 57 APPENDIX E: Indigenous Rights - 62 APPENDIX F: Sample Environmental Impact Assessment - 63 Bibliography - 64

Executive Summary

The Problem: Lack of Social Acceptance and Resistance to Wind Farm Megaprojects In 2012, the Government of Mexico (GoM) began enacting a series of legal and regulatory reforms to transform their energy sector, a heavily fossil-fuel dependent and state-owned system. The GoM aimed to catalyze an energy transition that would attract greater private investments and enhance economic growth, harness diverse sources of energy to meet Mexico’s energy demands and generate 35% of energy from renewables by 2024, and reduce greenhouse gas and black carbon emissions by 24% compared with business as usual levels by 2030.

In this vein, the GoM has sought to leverage the country’s wind energy potential – particularly in the Isthmus of Tehuantepec, in the southern state of Oaxaca. Known as one of the windiest regions in the world, Oaxaca is also the second poorest state in Mexico with a large proportion of indigenous populations. GoM and private sector interest in wind energy development has also heightened in the Yucatán, home to indigenous Mayan communities and characterized by sensitive environmental features such as cenotes (sinkholes providing freshwater).

Some local community members, largely indigenous, are actively opposing the development of wind farm megaprojects in communities throughout Mexico. Conflicts with private developers and government agencies have led to multiyear lawsuits and protests, halting nearly billion-dollar projects. Intra and inter-community confrontations have spurred violence and death threats against individuals opposing the megaprojects. Private developers are wary of investing in potentially high-risk environments and struggle to navigate legal ambiguities regarding indigenous community engagement. The GoM continues to seek renewable energy expansion while recognizing the need to address resistance from community factions.

Method: Literature Review and Stakeholder Interviews This Policy Analysis Exercise (PAE) seeks to understand local communities’ lack of social acceptance of wind farm development projects, particularly in the Isthmus of Tehuantepec and Yucatán. Gaining a deeper understanding of why and how social acceptance levels are low is crucial to protect the constitutional and internationally recognized rights of indigenous peoples and to sustain the viability of wind energy development in Mexico.

Therefore, a central question for the International Finance Corporation and World Bank team advising the GoM to consider is: Do wind farm megaprojects lack social acceptance with certain local communities because those communities believe the engagement process with companies and the GoM lacks legitimacy? If so, what points of interaction do these communities perceive as illegitimate, and why? What alternative policy options can the GoM implement to address underlying community concerns, and gain social acceptance with local communities for wind farm development?

To investigate this question, we mapped key steps in the engagement process between community members, and government officials and private developers in wind farm development, and identified

6 “pain points” that local stakeholders viewed as lacking legitimacy. We interviewed 35 indigenous community leaders, state and federal government officials, and academics and advocates throughout Mexico and the US. Our interview findings are supported by a literature review.

Findings: Communities are not opposed to wind farm development in and of itself, but rather the way in which current development processes violate the substantive and procedural rights of indigenous people Our findings revealed that the lack of social acceptance of wind farm projects is tied to:

(1) The failure to meaningfully include indigenous communities in the energy policy design and wind farm development processes that impact their livelihoods, cultural identities, and connection to indigenous lands. This violation of substantive rights leads to a perceived lack of legitimacy for Mexico’s energy transition and auction system, which sets the stage for the interactions between community members and private developers and government agencies.

(2) Perceived procedural injustice regarding the Environmental and Social Impact Assessments; failure to implement the Free, Prior, and Informed Consent (FPIC) mechanism; inequitable contractual arrangements with private developers; and regulatory exclusion of community- owned projects.

(3) Perceived distributive injustices in wind farm megaprojects benefiting some community members at the expense of others.

Essentially, our findings reveal that a key factor influencing community opposition is the top-down way in which the wind farm projects are being developed, rather than wind farm development in and of itself. Community stakeholders seek wind project development models and a renewable energy transition that (1) meaningfully involve indigenous communities’ values, interests, and concerns, and upholds their right to self-determination; (2) allow for community participation in project development and public policy design processes; and (3) ensure a sense of fairness and procedural justice in the engagement process for wind farm development. It is important to note the heterogeneity of community views, and our findings are not an exhaustive representation of different community stakeholders’ perspectives.

Recommendations To more effectively create conditions that target and address communities’ perceived lack of procedural, distributive, and recognition justice (substantive rights), and leverage the IFC and World Bank’s influence as impartial authority, we propose three recommendations for the IFC and World Bank team’s consideration:

1. Promote and enable the Secretariat of Energy (SENER) to design a “listening tour” or series of participatory workshops with diverse community stakeholders to gather actionable data on (1) how to develop inclusive, participatory mechanisms that enable a just energy transition, and (2) how to improve wind farm development processes that respect indigenous communities’ substantive and procedural rights.

2. Strengthen IFC’s Performance Standards provisions on FPIC, and the IFC/World Bank provide targeted assistance to the Government of Mexico on FPIC implementation.

3. Support SENER in creating a separate tender process for community-owned wind farms, or otherwise promoting community-driven wind farm models in Mexico. 7

I. The Context of Wind Energy

Development in Mexico

Key Takeaways 1. Energy Sector Transformation National Legal Reforms • Mexico has embarked on an In 2012, the Government of Mexico (GoM) launched a historic effort to ambitious energy transition that establish comprehensive climate change and energy laws. Mexico’s aspires to combat climate change petroleum and electric sectors had, for 75 years, become monopolized by and increase competition in the the state-owned firms Petroleos Mexicanos (Pemex) and the Federal energy sector. Commission for Electricity (CFE).1 Although Mexico’s oil reserves were the • Wind power in the Isthmus of Tehuantepec in the southern region 8th largest in the world as of 2015, oil production had declined over the last of Oaxaca is particularly attractive decade, and Mexico’s largest oil field, Cantarell, yielded 20% of their 2004 2 to the Government of Mexico output levels. Allegations of rampant corruption within PEMEX and CFE, (GoM) and investors. Interest in high profile oil spills, and rig worker accidents eroded public confidence in harnessing wind power in additional these firms.3 Decreasing productivity, increasing debts, and dropping oil regions like Yucatán is growing. prices in 2008-2013 heightened the GoM’s urgency to increase competition • The communities most affected by in the energy sector and harness underdeveloped alternative energy wind power projects consist of sources like solar, wind, and geothermal power.4 indigenous populations, who experience vulnerabilities such as With the passage of the 2012 General Law on Climate Change (Ley General poverty and low education rates. de Cambio Climático)5 and the 2013 National Strategy on Climate Change • An intricate property rights scheme, and laws and conventions (Estrategía Nacional de Cambio Climático), the GoM set forth a vision for a protecting indigenous peoples’ green, low-carbon emissions economy where ecosystems and populations rights, add complexity to wind are resilient to the effects of climate change, where people live in power development efforts sustainable cities, and Mexico becomes a “prosperous, competitive, socially • Community resistance and activism 6 inclusive and globally responsible country.” Currently, the GoM aims to against wind farm megaprojects produce 25% of the nation’s electricity from renewable energy sources by continues. 2018, 30% by 2021, and 35% by 2024.7 These plans are ambitious: in 2017, renewable energy (excluding natural gas) sourced 12% of Mexico’s electricity.8

1 The Mexican oil industry was nationalized through a 1938 decree creating Petróleos Mexicanos (PEMEX). PEMEX gained exclusive rights to explore, extract, and commercialize Mexico’s oil and natural resources. CFE was created in 1938 as the state-owned electricity firm. CFE was responsible for regulating private monopolies. 2 Sheldahl-Thomason, Haviland. Mexico's Energy Reform. Harvard Business School Publishing, 2017, pp. 3, Mexico's Energy Reform. 3 Shalanda H. Baker, Mexican Energy Reform, Climate Change, and Energy Justice in Indigenous Communities, 56 Nat. Resources J. 369, pp. 374 (2016). 4 Sheldahl-Thomason, Haviland. Mexico's Energy Reform. Harvard Business School Publishing, 2017, pp. 13, Mexico's Energy Reform. 5 Set the national voluntary targets to reduce their 2000 emissions levels by half by 2050, and to get more than 30% of its electricity from renewables by 2024 6 NCCS (2013) National Climate Change Strategy. 10-20-40 Vision. Pp. 9. Mexico: Federal Government of Mexico. 7 “REGLAMENTO De La Ley De Transición Energética.” DOF - Diario Oficial De La Federación, 2015, dof.gob.mx/nota_detalle.php?codigo=5481526&fecha=04%2F05%2F2017. 8 Shalanda H. Baker, Emerging Challenges in the Global Energy Transition: A View from the Frontlines, Draft, pp. 5 (2019 forthcoming).

9 The GoM enabled greater private and foreign investments in the energy sector as part of the sweeping 2013 Energy Reform Bill.9 The 2014 Electricity Industry Law, part of the energy reform legislation package, set forth key provisions that impact the way wind energy development is driven today. The law disaggregated CFE’s regulatory functions10, established a power auction system and facilitated private sector participation, required that a Social Impact Assessment (SIA) be conducted for any plant construction11, and provided guidelines on land use.12 According to this law, if an “industry participant” interested in purchasing or occupying a territory for electricity generation purposes cannot reach an agreement with a landowning community member, the developer can request a legal easement13 against the community member. The Electricity Industry Law underscores the prioritization of energy development projects and Mexico’s approach to energy development as one that “centralizes political, social, and economic power in the hands of a few multinational corporations, and favors incumbents over new market entrants, including small and community led enterprises.”14

High Hopes for Figure 1: Electricity capacity and generation in 41 wind power plants, 2016 Wind Power The GoM has been interested in harnessing wind power at least since the 1990s,15 and wind power development has increased in recent years. In 2016, Mexico generated 319,364 GWh of electricity energy, (Yucatán) 79.7% (254,496 GWh) of which came from (Isthmus of conventional Tehuantepec) technologies and 20.3% (64,868 GWh) from clean energy technologies.16 3% (10,463GWh) of total energy generation (Source: Programa de Desarrollo del Sistema Eléctrico Nacional (PRODESEN). “Programa de Desarrollo del Sistema Eléctrico came from 41 wind Nacional 2017-2031.” Pp 177, 2017.) farms with a total

9 Enriquez, David, Mexico’s Energy Reform: A Game Changer in the Nation’s History, Wilson Institute Center, pp 1. 10 The Department of Energy (SENER) would manage Mexico’s energy policy; Energy Regulatory Commission (CRE) authorize permits required for power plant construction, ownership, and operation; and National Energy Control Center (CENACE) manage the power grid and wholesale electric market) to three different government agencies; Mayer Brown, Analysis of Mexico’s New Electric Industry Law, pp. 1, 2014. 11 “REGLAMENTO De La Ley De Transición Energética.” DOF - Diario Oficial De La Federación, 2015, dof.gob.mx/nota_detalle.php?codigo=5481526&fecha=04%2F05%2F2017. 12 Whereby the law “contemplates the right of occupation and use of land owned by third parties for the location, construction [sic] and operation of site-specific generation projects . . . and transmission and distribution activities.”Mayer Brown, Analysis of Mexico’s New Electric Industry Law, pp. 3, 2014. 13 “An easement is the grant of a nonpossessory property interest that grants the easement holder permission to use another person's land.” Ryan, Meghan. “Easement.” LII / Legal Information Institute, 24 Sept. 2009, www.law.cornell.edu/wex/easement. 14 Shalanda H. Baker, Emerging Challenges in the Global Energy Transition: A View from the Frontlines, Draft, pp. 3 (2019 forthcoming). 15 La Venta I, first wind farm project established in 1994 in Oaxaca 16 “Programa de Desarrollo del Sistema Eléctrico Nacional (PRODESEN).” Secretary of Energy. Pp. 27, 2017.

10 installed capacity of 3,735MW, 5% of Mexico’s total energy capacity.17 According to a February 2018 Mexican Business Review report, 52 wind power plants (total installed capacity of 6025MW) are currently in operation and represent a total investment of US $11 billion by private companies.18 Wind power has shown the greatest increase in energy generation rates among renewable energy technologies in recent years— 36.1% increase in wind power generation from 6,462GWh in 2014 to 8,745.1GWh in 201519 — and government and private sector interest is growing. According to government energy planning schemes, of the 55,840MW energy capacity to be installed in Mexico between 2017 and 2031, 24% of the capacity will be invested into wind power, second only to combined cycle20:

Figure 2: Additional capacity for wind power plants, 2017-2031

(Yucatán)

(Isthmus of Tehuantepec)

(Source: Programa de Desarrollo del Sistema Eléctrico Nacional (PRODESEN). “Programa de Desarrollo del Sistema Eléctrico Nacional 2017-2031.” Pp.271, 77, 2017.) Our PAE will focus on two high wind energy potential regions in Mexico currently experiencing substantial project-related conflict: Isthmus of Tehuantepec, in the southern state of Oaxaca, and the Yucatán. Oaxaca is the windiest region in Mexico21 and one of the windiest places in the world. Oaxaca has 70.83% of total wind installed capacity (5,792MW) and 71.8% of annual electricity generation in Mexico through wind.22 Our report will also focus on the Yucatán where, according to the results of the most recent Long-Term Auctions of Wholesale Electricity23, private sector interest in wind energy development is growing rapidly. Nine out of 18 winning renewable energy projects from the first two Long-Term Auction rounds (conducted in 2015 and 2016) are planned for installation in the Yucatán

17 “Programa de Desarrollo del Sistema Eléctrico Nacional (PRODESEN).” Secretary of Energy. Pp. 27, 2017. 18 “Mexico Energy Review 2018.” Issuu, 2018, issuu.com/mexicobusinesspublishing/docs/mer_2018_to_show. 19 increased most from 2014-2015 (GWh à from 6,462 GWh to 8,745.1 Gwh, or 36.1%).https://www.gob.mx/cms/uploads/attachment/file/236866/Electricity_Sector_Outlook_2016-2030_P.compressed.pdf, pg. 16 20 “Programa de Desarrollo del Sistema Eléctrico Nacional (PRODESEN).” Secretary of Energy. Pp. 79, 2017. 21 In 2002, USAID sponsored a survey to assess wind energy resources in Oaxaca and the study confirmed that the Isthmus is the region with the greatest wind potential in Mexico. Romero-Hernández , Sergio, editor. “Renewable Energy in Mexico: Policy and Technologies for a Sustainable Future.” Wilson Center, 2013, p. 22., www.wilsoncenter.org/sites/default/files/Renewable_Energy_in_Mexico.pdf. 22 “Mexico Energy Review 2018.” Issuu, 2018, issuu.com/mexicobusinesspublishing/docs/mer_2018_to_show. 23 Introduced by the energy reforms and initiated in 2015; Mayer Brown, Mexico’s Clean Energy Auction: Material Provisions of the Power Purchase Agreements, pp. 1, 2016.

11 within 24 months.24 In interviews, local stakeholders in Yucatán highlighted the “overwhelming” pace of the influx of renewable energy projects.25

Auction Schemes Facilitating Megaprojects The current power auction system shapes market dynamics that enable behemoth firms and megaproject models to thrive and leave little room for alternative community-driven models. Since the 2006 launch of La Venta Ii26, the first large-scale wind project in the Isthmus of Tehuantepec, wind project development in the Isthmus has grown primarily via two energy auction schemes: self-supply (SS or autobastecimiento27) and independent power production (IPP). Approximately 66.5% of total installed capacity of wind farms in Mexico followed the self-supply scheme in 201628. Through the IPP scheme, a private wind developer sells the energy produced to the CFE, while in the SS scheme, the developer contracts with large national and transnational clients (examples include Wal-Mart, Nestlé, Nissan, and Coca-Cola) and sells energy produced directly to the firm, not to third parties. The SS scheme is a lucrative and secure long-term energy source for these client companies, benefiting from lower-than-market energy prices and carbon emission credits, and wind developers can access green financing from groups like the Inter-American Development Bank. Meanwhile, communities hosting the wind farms may not benefit beyond land rental payments paid to individual landholders or landowners, and economic inequality in communities increases.29 Results from recent Long-Term Auctions of Wholesale Electricity (enacted by Mexico’s Energy Reforms and the first mechanism for exclusively clean energy technology competition30) show continuing trends where wind energy is an attractive resource.31 The largest power auction winners are multi-billion dollar firms like ACCIONA and Enel, and average prices per megawatt hour for renewable energy are decreasing – making competition more difficult for models such as community-owned wind projects.32

Over the years, community resistance against wind farm megaprojects has not abated. Given the high potential for wind power and continued conflict, the GoM must seek to understand and address the community resistance to achieve Mexico’s climate change and energy transition aims. Interested countries around the world are also looking to Mexico’s energy reform, an ambitious platform with potential for replication.33

2. Isthmus of Tehuantepec and Yucatan Context Key stakeholders For the purposes of this PAE, the key stakeholders of concern are community-based groups such as community representatives, NGOs, and civic groups; private developers; and federal government

24 “Yucatán, a Hub for Renewable Energy in México.” The Yucatan Times, 3 Aug. 2017, www.theyucatantimes.com/2017/08/yucatan-a-hub-for- renewable-energy-in-mexico/. 25 Interview, Articulación Yucatán. Feb. 2018. 26 World Bank. “PROJECT APPRAISAL DOCUMENT ON A PROPOSED PURCHASE OF EMISSIONS REDUCTIONS BY THE SPANISH CARBON FUND AND THE BIO CARBON FUND. WIND UMBRELLA (LA VENTA II) PROJECT.” Report No: 52920-MX, 2006. 27 “Programa de Desarrollo del Sistema Eléctrico Nacional (PRODESEN).” Secretary of Energy. Pp. 184, 2017. Artíulos 36, fracción I, de la LSPEE, 78 y 101 de su Reglamento. 28 Avila-Calero, Sofia. “Contesting energy transitions: wind power and conflicts in the Isthmus of Tehuantepec.” Universitat Autònoma de Barcelona Journal of Political Ecology. 2017. 29 Shalanda H. Baker, Emerging Challenges in the Global Energy Transition: A View from the Frontlines, Draft, pp. 8 (2019 forthcoming). 30 “Mexico Energy Review 2018.” Issuu, 2018, issuu.com/mexicobusinesspublishing/docs/mer_2018_to_show. 31Winers of the third auction will provide “5.5 million megawatt hours per year of clean energy, 55% of which is solar power and 45% wind- generated electricity”; Harrup, Anthony. “Mexico Secures Even Lower Prices for Clean Energy in Auction.” 32 The average price “per megawatt hour for renewable energy plus a corresponding clean energy certificate was $20.57, down sharply from $33.47 in September 2016 and $41.80 in the first auction held in March of last year.”; Harrup, Anthony. “Mexico Secures Even Lower Prices for Clean Energy in Auction.” 33 Romero-Hernández , Sergio, editor. “Renewable Energy in Mexico: Policy and Technologies for a Sustainable Future.” Wilson Center, 2013, www.wilsoncenter.org/sites/default/files/Renewable_Energy_in_Mexico.pdf.

12 agencies. The chart below seeks to outline stakeholders and their roles, and to provide a glimpse into the heterogeneous views within stakeholder groups.

Stakeholders and Roles (Source: Elaboration based on Mendez & Vargas, “Local Communities Do Matter.” SYPA 2017) Private Private National or foreign private sector firm interested in building a wind farm to produce electricity Sector Developer for self-consumption or to sell to the government. Developers carry out the Social and Environmental Impact Assessments and must abide by the results of the Community Consultation. Some developers accuse other developers of not knowing how to localize their interactions with communities and not using culturally sensitive methods of engagement. Federal CFE Electricity sale company. Buys electricity produced by private wind farms since it keeps Government monopoly on the distribution. It is in charge of expanding transmission lines. CRE Energy Regulatory Commission; grants permit to the private sector companies to produce electricity (wind farms in this case). By law, it can also withdraw the permit if company does not comply with the requirements stipulated by the law (social, environmental, or community consultation). SENER Secretariat of Energy manages the energy policy of Mexico. SENER is charge of achieving the 2030 clean energy production goals set by the government. In the case of wind farms, it is in charge of looking over the “Free, Prior, and Informed Consent” process, evaluating the correctness of the Social Impact Assessment, and making recommendations. SEMARNAT Secretariat of Environment and Natural Resources is in charge of evaluating the correctness of the Environmental Assessment and make recommendations State Executive Power Has the power to apply the Indigenous Law of the State of Oaxaca, which stipulates abiding by Government the opinion of the community regarding the desirability of the project. Local Congress Has the power to regulate on further requirements that wind farms need to comply. Furthermore, it could legislate on the amount of local tax benefits municipalities would receive from wind farm companies Local Municipality Has the power to propose a local tax but it is subject to State Congress approval. It is the level Government of government level with less decision power. Its power is limited to (and revenues come from) process permits to change land use from agricultural to industrial purposes. While there are local government officials who express a desire to play an intermediary role between communities and the federal government in addressing wind farm development-related challenges, local authorities have lost credibility and trust with many community stakeholders. Community Direct-benefited: Ejido landholders or landowners who have wind farm infrastructure in their lands and receive ejido landholder a payment as rent. Some beneficiaries oppose wind projects because they consider payments or land owner too low. Although private developers usually first approach landowners or ejido landholders in negotiations because they have formal authority to decide on land use, some ejido landholders have lost informal authority with community members who perceive ejido landholders as not representing broader community interests. Indirect- Residents of the community that have no wind farm infrastructure in their lands; but receive benefited an indirect benefit by in-kind transfers made by the firm to the community (e.g. roads, schools, and cultural center).

Women, youth Often the more marginalized and vulnerable members of communities who are not included in community decision-making processes or among the last to receive relevant information Community/ Workers Union Residents that belong to a union and get hired temporarily for the construction of wind parks. Neighbor Given their potential benefit, they exert pressure on residents who oppose wind community megaprojects. In some cases, construction unions have been known to use violence and threats against community members who oppose large-scale wind farm developments. NGOs, Civic and Diverse groups that are conducting research, community organizing and advocacy efforts, Academic actively protesting, and/or conducting other activities around wind farm development issues. Groups Organizations vary in their views, and there is distrust between some groups. Neighbor Residents Residents of neighboring communities with no land or access to “communal land areas” that Community receive no benefits. These residents do experience negative externalities of wind farms.

13 Socioeconomic Characteristics Contributing to Power Disparity Understanding the socioeconomic contexts in which many of the community members who are contesting wind farm projects helps to further illuminate the power disparity underlying the engagement processes between community members and private developers and government officials. In the two regions where there is significant private sector and government interest for wind power, there is also great socioeconomic vulnerability. The state of Oaxaca is the second poorest state in Mexico. According to the Mexican National Institute of Statistics and Geography (INEGI), 70.4% of the approximately 4 million people in Oaxaca lived in poverty (as compared to the national poverty rate of 43.6%) and 26.9% in extreme poverty (7.6% nationally) in 2016.34 Oaxaca had the lowest education levels out of all 32 states in Mexico in 2015.35 Additionally, basic health, education, cash transfer, and reconstruction needs have increased after two deadly earthquakes struck the region in September 2017.36 Towns in the Isthmus like Juchitán, attractive to wind developers, were some of the worst hit37, and interviewees expressed frustration of being “trapped between a sword and the wall (“estar entre la espada y la pared”) in inequitable negotiations with wind developers offering benefits.

In the Isthmus of Tehuantepec, wind projects are concentrated in the municipalities of Asunción Ixtaltepec, El Espinal, Juchitán de Zaragoza, San Dionisio del Mar, Santo Domingo Ingenio and Unión Hidalgo (combined population of 150,000 people). Excluding Santo Domingo Ingenio, 72-93% of these municipalities consist of Rebuilding after the earthquake, photo taken in Ixtepec, Isthmus of indigenous populations, three of which the Tehuantepec, January 2018 most numerous are the Zapoteco, Huave, and Chontal.38

Poverty rates in the Yucatán are closer to the national average: 41.9%39 out of approximately 2.15 million inhabitants40 in poverty and 6.1% in extreme poverty in 2016. Indigenous populations comprise 51.8% of the population in Yucatán. 41 Indigenous people in the Yucatán in Mexico have faced significant economic, cultural, and gender-related barriers in accessing formal education42, and these realities influence the experiences of indigenous communities who engage private developers and government officials.

34 Instituto Nacional de Estadística, and INEGI. “Datos Por Entidad Federativa.” Instituto Nacional De Estadística y Geografía (INEGI), www.beta.inegi.org.mx/app/bienestar/?ag=20. 35 Id. 36 “Mexico: Earthquakes - Sep 2017.” ReliefWeb, reliefweb.int/disaster/eq-2017-000138-mex. 37 Id. 38 Fidel Mendez and Sergio Vargas. “Local Communities Do Matter,” Harvard Kennedy School SYPA, pp 12, 2017. 39 Instituto Nacional de Estadística, and INEGI. “Datos Por Entidad Federativa.” Instituto Nacional De Estadística y Geografía (INEGI), www.beta.inegi.org.mx/app/bienestar/?ag=20. 40 “ProMexico Trade and Investment, Yucatan,” Secretary of Economy, 2016. http://mim.promexico.gob.mx/work/models/mim/Documentos/PDF/mim/FE_YUCATAN_vfi.pdf 41 Vazquez, Maria Cristina Osorio. “Understanding Girls’ Education in Indigenous Maya Communities in the Yucatán Peninsula Implications for Policy and Practice, pp. 5, 2017. 42 Id. 14

The Yucatán also has unique land features with environmental, economic, and cultural significance. Cenotes (large natural wells), for example, have spiritual significance to the Mayan people historically. The Yucatán has an extensive underground aquifer system that hosts groundwater resources and may be sensitive to the installation of wind turbine foundations. The Yucatán is a strategic location for migratory birds, and ecotourism is a priority for local government. The region is also impacted by hurricanes43, increasing vulnerability in livelihoods and causing concerns about wind turbine safety.44 45

Indigenous Persons Rights and Land Ownership Complicating Wind Farm Development Two other key considerations in assessing the lack of social acceptance for wind farm projects are (1) a contentious schema of land ownership in Mexico, and (2) national laws and international conventions afforded to indigenous people.

The land ownership schema in Mexico has further embroiled community members in intra-community conflicts around wind farm projects, as well as conflicts with private developers. In Mexico, three types of land ownership exist: individual ownership or pequeños propietarios (small land owners), ejidos (government-sponsored, common lands that are managed by groups of individuals)46, and bienes comunales (common lands preserved for or restored to indigenous populations). In an ejido, decisions around land use need to be decided by everyone in the ejido membership, called asamblea. A 1992 Constitutional reform allows for ejido landholders to sell, rent, or mortgage their individual plots given the approval of the other ejido members.47 In the bienes comunales, all members have a legal right to equal shares of the land, and decisions about the collectively owned land are also made together by members of the community.48 Thus, in negotiations with landowners, developers can negotiate land rental agreements individually for private land use, but 78% of the land in Oaxaca are common lands49, which means decision-making must occur with the entire community, or the asamblea50. Much of the lands inhabited by Mayan communities in the Yucatán are also common lands, and decision-making about land use with regards to wind farm development should also occur with the asamblea.

Additionally, the GoM has ratified national laws and signed on to international conventions that recognize and protect substantive rights of indigenous people. These include the 1991 International Labor Organization Convention 169 (ILO 169), the Indigenous and Tribal Peoples Convention of 1989, Article 2 of the Mexican Constitution, the 2003 Act for Linguistic Rights of the Indigenous People, the 2016 American Declaration on the Rights of Indigenous Peoples, and Article 32 of the 2007 UN Declaration on the Rights of Indigenous Peoples (UNDRIP). According to the widely cited ILO 16951, indigenous peoples have the right to

43 “Warning on Wind Farm Negative Impacts to Bravo Dzilam.” National Wind Watch, 15 Sept. 2013, www.wind- watch.org/news/2013/09/15/warning-on-wind-farm-negative-impacts-to-bravo-dzilam/. 44 Audefroy, Joel. “Integrating local knowledge for climate change adaptation in Yucatan, Mexico.” International Journal of Sustainable Build Environment. 2017. 45 Foster, Robert E. “Renewable Energy for Protected Areas of the Yucatan Peninsula,” American Solar Energy Society. 2003. 46 The GoM gave ejidos communal lands to landless mestizo peasants after the Mexican Revolution in 1910. 47 Program for the Certification of Ejido Land Rights and the Titling of Urban House Plots, NAFTA, Agrarian Law Reform, Procede, and 1992 Electricity Energy Public Service Law 48 Wilson Center. “Enticed by the wind.” Pp. 17, 2016. 49 Cámara de Diputados. 2015. Boletín Numero 0175. En México, 52 por ciento de la superficie es ejidal y comunal; de 1992 a 2014 aumentó en 2 mil has. URL: http://www5.diputados.gob.mx/index.php/esl/Comunicacion/Boletines/2015/Octubre/10/0175-En-Mexico-52-por-ciento-de-la- superficie-es-ejidal-y-comunal-de-1992-a-2014-aumento-en-2-mil-has 50 According to the Article 27 of the 1917 Mexican Constitution 51 “C169 - Indigenous and Tribal Peoples Convention, 1989 (No. 169).” Convention C169 - Indigenous and Tribal Peoples Convention, 1989 (No. 169), www.ilo.org/dyn/normlex/en/f?p=NORMLEXPUB%3A12100%3A0%3A%3ANO%3A%3AP12100_ILO_CODE%3AC169.

15 “…Decide their own priorities for the process of development as it affects their lives, beliefs, institutions and spiritual well-being and the lands they occupy or otherwise use, and to exercise control, to the extent possible, over their own economic, social and cultural development,” and

the “right to self-determination…. the right to participate in decision-making in matters which would affect their rights, through representatives chosen by themselves in accordance with their own procedures, as well as to maintain and develop their own indigenous decision making institutions.”52

ILO 169, UNDRIP, and World Bank’s updated Environmental and Social Framework call for states to conduct consultations with indigenous communities through a “Free, Prior, and Informed Consent (PFIC)” mechanism.53 Failure to conduct FPIC has contributed to a lack of social acceptance for projects.

3. Mounting of Community Resistance Wind Development Impact A European Commission study on wind energy projects and social acceptance in European countries from 1995-2015 revealed five categories of influences on social acceptance of wind energy projects (figure below). Some of these concerns are echoed in recent and highly visible cases of indigenous communities resisting wind farm megaprojects in Mexico – namely, the case of Mareña Renovables, the Ixtepec community, and organizing activity in Mérida, Yucatán.

“Summary of Influences on Social Acceptance of Wind Energy Projects”

(Source: Geraint, Ellis. “The Social Acceptance of Wind Energy.” JRC Science for Policy Report, European Commission. Pp. 4, 2016.)

52 United Nations. “UN Declaration on the Rights of Indigenous Peoples.” Pp. 4. 2008. 53 United Nations Human Rights, Office of the High Commissioner. “Free, Prior and Informed Consent of Indigenous Peoples.” 2013. http://www.ohchr.org/Documents/Issues/IPeoples/FreePriorandInformedConsent.pdf 16

Case #1: Mareña Renovables to Eólica del Sur – Project Halt In 2013, community members halted an approximately USD $72 billion54 wind farm development project backed by a consortium of Mexican and international investors including Macquerie Mexico and Japan’s Mitsubishi Corporation. The Mareña Renovables development boasted a total installed capacity of 396MW. It would have been the biggest single- phase wind power project in Latin America with 132 turbines installed in Barra de Santa Teresa and Santa Maria del Mar, in the Isthmus of Tehuantepec.55 Heineken-owned brewery Cervecería Cuauhtémoc Moctezuma and FEMSA, the largest beverage company in Latin America, would receive the electricity produced for the 20-year term of the self-supply contract.56 This region, however, is also home to indigenous people who use the lagoon for subsistence fishing and religious rituals.57

Conflicts began as fishermen were prevented from accessing lagoon areas during construction hours.58 Allegations arose against presidentes municipales (mayors) and comisariados (collective land commissioners) who had been bribed with cash or trucks for land use permissions 59, and community members complained about inaccurate or insufficient benefits. They were concerned about the wind project for threatening their fishing livelihood and harming their local

(Source: Alexander Dunlap (2017): “A Bureaucratic Trap:” Free, environment. Community members filed a lawsuit, Prior and Informed Consent (FPIC) and Wind Energy Development mobilizations blocked railways and streets, and 10 months in Juchitán, Mexico, Capitalism Nature Socialism, DOI: after the project had reached financial close in February 2012, 10.1080/10455752.2017.1334219) a federal judge issued an injunction on December 2012. After 7 indigenous communities filed a grievance complaint to the Inter-American Development Bank60, the Mareña Consortium put the project on hold in 2013. Community members were divided between those for and against the project, and community distrust against the private sector and government grew. Mareña Consortium changed their name to Eólica del Sur and sought to move their wind farm project to a new site, the municipality of Juchitán, in 2014. This time, the Ministry of Energy implemented a Free, Prior, and Informed Consent process – for the first time after the passage of the Energy Reforms – and initiated a consultation with government, private sector, and diverse community stakeholders.61

According to local reports, however, local authorities recruited golpeadores (thugs) to threaten or use violence against resistant community members and signed agreements permitting construction without

54 https://www.iadb.org/en/news/news-releases/2011-11-24/mexicos-marenas-renovables-wind-farm%2C9708.html 55 Howe, Cymene and Dominic Boyer. 2015. “Aeolian politics.” Scandinavian Journal of Social Theory, 2015 http://dx.doi.org/10.1080/1600910X.2015.1022564. 56 Howe, Cymene. 2019. Ecologics: Wind and Power in the Anthropocene. Durham, NC: Duke University Press. Pp. 98. 57 Fidel Mendez and Sergio Vargas. “Local Communities Do Matter,” Harvard Kennedy School SYPA, pp 17, 2017. 58 Id. 59 Howe, Cymene. “Contested Powers.” The Politics of Energy and Development in Latin America. 2015. 60 Business & Human Rights Resource Centre. “INVESTOR BRIEFING: RENEWABLE ENERGY IMPACTS ON COMMUNITIES.” pp. 11, 2017. 61 Fidel Mendez and Sergio Vargas. “Local Communities Do Matter,” Harvard Kennedy School SYPA, pp. 18, 2017.

17 community consultations.62 Although community members complained that the consultation was not “free” of manipulation and threats, was not “prior” to major project decisions begin made, nor was “consent” given the level of discord and conflict63, the GoM closed the consultation in June 2015 saying that FPIC had been granted. Over 1,200 community members from Juchitán filed a lawsuit, and a second court issued an injunction.64 The project was still halted as of January 2018.65

Case #2: Ixtepec, Oaxaca – Continued Rejection of Megaproject Model Ixtepec, a small city in the Juchitán district of Oaxaca, is home to the indigenous Zapotec community. In 2008, community members decided to build their own community wind farm as part of a territory planning process.66 The Ixtepec community partnered with a non-profit organization, Yansa, who would provide financing, technical, and capacity-building assistance. The Ixtepec community sought to participate in a public tender organized by CFE and bid for access to the Ixtepec substation. The community and Yansa would form a Community Interest Company that would own the wind park (44 wind turbines with a 100MW production capacity67). The wind park would create jobs for community members and sell its electricity to CFE, resulting in an estimated annual surplus of US$3.81 million.68 This money was to be split 50/50 between Yansa and the community. The community aimed to create a pension fund, community trust, and invest in social development projects involving women and youth. Yansa sought to use the remaining funding to create a project-specific guarantee fund and a mutual guarantee fund, and to invest in developing additional community-owed projects.69

CFE rejected the Ixtepec project and blocked access to the grid in 2012. CFE had a condition that an entity participating in the tender must show financial proof of $50M USD of working capital over the previous three fiscal years. Yansa had financial backing from national and international impact investors, private foundations, and development banks, and the community could prove they had commitments from investors who would provide this equity equivalent if and when the community won the tender and access to the substation. CFE, however, wanted to see proof of sufficient capital before the tender or see evidence that investors had at least a 20% stake in the community interest company. The Ixtepec community and Yansa refused this because these changes would make the project no longer fully community-owned.70 Despite their robust company plan and financial support garnered, the Ixtepec community faced a catch-22: “They can’t get the money [from investors] until they [win the tender and] have access [to the substation], and they can’t get the access [to participate in the tender and access the substation] without the money [from investors],” said scholar Cymene Howe in an interview. The Ixtepec community project is still on hold pending a lawsuit the community filed against CFE in 2012, and additional communities are approaching Yansa for assistance in developing their own wind farm projects. Interviewees in Ixtepec insisted on a community-owned wind farm development model and reject the “megaprojects of death.”71 Yansa staff and federal government interviewees reported ongoing inter-departmental conflict between federal officials supportive of community-owned models and federal officials actively opposing community-owned projects due to likely competing political and financial interests.

62 Howe, Cymene. “Contested Powers.” The Politics of Energy and Development in Latin America. 2015. 63 halanda H. Baker, Emerging Challenges in the Global Energy Transition: A View from the Frontlines, Draft, pp. 13 (2019 forthcoming). 64 Business & Human Rights Resource Centre. “INVESTOR BRIEFING: RENEWABLE ENERGY IMPACTS ON COMMUNITIES.” pp. 11, 2017 65 “Supreme Court Orders Halt to Juchitán Wind Farm Project.” Mexico News Daily, 11 Jan. 2018, mexiconewsdaily.com/news/court-orders- halt-to-juchitan-wind-farm/. 66“ “Community Wind and Indigenous Rights in Mexico.” The Yansa Group Presentation for World Wind Energy Association. http://www.wwindea.org/download/community_power/sysmposium-bonn/Community-Wind-and-Indigenous-Rights-in-Mexico.pdf 67 “The Ixtepec Project.” Yansa, www.yansa.org/wind/ixtepec-project/. 68 “Corporate Wind Farms in Ixtepec vs Community's Inititiative, Oaxaca, Mexico | EJAtlas.”Environmental Justice Atlas, ejatlas.org/conflict/communal-members-of-ixtepec-contending-to-develop-a-wind-farm-cooperative. 69 Sergio Oceransky, Yansa, Interview. Feb. 2018. 70 Id. 71 Daniel Gonzalez and seven community leaders interview. Jan. 2018. 18

Case #3: Mérida, Yucatán – Current Multi-Stakeholder Efforts Fact-finding and advocacy efforts confronting wind farm megaprojects are also underway in the Yucatán, where 9 out of 18 projects approved in the most recent Long-Term Auctions will be built. Although the Secretariat of Energy (SENER) has recognized the Yucatán as Mayan territory and began FPIC processes in the region in 2017, community stakeholders who are tracking ongoing cases say FPIC procedures do not meet international standards, as in the Mareña Renovables case.72 According to researchers at Articulación Yucatán – an interdisciplinary group of rural and urban community members, Mayan organizations, specialists, academics and students promoting a just energy transition – only 3 out of the 9 projects slated for construction in the Yucatán have started undergoing the FPIC process, even though all 9 localities include indigenous people who have the right to be consulted prior to project development. SENER has the authority to select communities for FPIC consultation, however, and communities have no means to initiate the FPIC process on their own. In information sessions, people who oppose megaprojects have also faced threats and violence – for instance, one youth received threats to be “macheted” after calling a project into question at an academic event in Mérida, Yucatán.73 As private developers and the SENER seeks to promote wind farm and other major renewable energy projects in the Yucatán, diverse community stakeholders are collaborating and leveraging the mechanisms available to call for a form of renewable energy development that will inform and empower communities.

72 “Resumen Ejecutivo Talleres EAE,” Articulación Yucatán. January 2018. 73 Patiño, Rodrigo. “Una Consulta Pendiente.” El Diario De Yucatán, 19 Mar. 2018, www.yucatan.com.mx/editorial/una-consulta-pendiente.

II. Methodology and Framework

1. Overview This Policy Analysis Exercise (PAE) will be submitted to a joint International Finance Corporation and World Bank Team that is working to advise the Mexican Government. Our hope is to contribute further insight into the challenge of the lack of social acceptance for wind farm projects in Mexico, and inform the team’s work moving forward. To investigate the lack of social acceptance more deeply, we focused on the following question:

Do wind farm megaprojects lack social acceptance with certain local communities because the communities believe the engagement process with companies and the GoM lacks legitimacy? If so, what specific points of interaction do these communities perceive as illegitimate, and why? What alternative policy options can the GoM implement to address underlying community concerns, and gain process legitimacy and social acceptance with local communities?

We conducted an extensive literature review and primary interviews from January 2018 – February 2018 in Mexico City, Oaxaca City, Ixtepec (Oaxaca), Mérida (Yucatán), and the US. A total of 35 individuals were interviewed, some in groups, for an average of 1-2 hours. Interviewees were identified through snowball sampling and included: 2 group interviews with indigenous community leaders in Oaxaca and in Yucatán, 1 group interview with academics in Yucatán, 2 private wind farm development companies, 5 federal and state government officials, and 4 NGO stakeholders.

2. On “Legitimacy” and “Social Acceptance” Our PAE seeks to understand specific nodes of interaction that some local community stakeholders perceive as lacking legitimacy – commonly defined in scholarship as the perception or assumption that an entity’s actions are “desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions.”74 World Bank Lead Social Scientist and Harvard professor Michael Woolcock argues that local legitimacy for change processes in development are crucial to the development’s long-term viability and to conferring agency on the people most affected by the change.75 Local legitimacy serves as a type of “stock” or “surplus” of credibility and trust that is formed by active or passive judgment (relying on cues from opinion shapers) of an entity or development process, and can broaden the sphere of social acceptance or social license to operate for that entity.76

The topic of “social acceptance” is key to consider in addressing community resistance against wind farms because wind power is not simply a technological concern. Wind energy development is a

74 Gehman, Joel, et al. “Social license to operate: Legitimacy by another name?” New Frontiers. CANADIAN PUBLIC ADMINISTRATION VOLUME 60, NO. 2. Pp. 302. (JUNE/JUIN 2017). 75 Woolcock, Michael. “Social Institutions and the Development Process: Using Cross-Disciplinary Insights to Build an Alternative Aid Architecture.” Pp. 6, 2017. 76 Gehman, Joel, et al. “Social license to operate: Legitimacy by another name?” New Frontiers. CANADIAN PUBLIC ADMINISTRATION VOLUME 60, NO. 2. Pp. 305. (JUNE/JUIN 2017). 21 sociotechnical system (STS) 77 that is “co-determined” by social, economic, and cultural factors and requires “extensive social learning” by diverse stakeholders impacted by the new wind power technology. According to renewable energy development scholars, “all aspects of a new STS featuring a substantial amount of wind power are subject to social acceptance.”78

Our PAE focuses on two forms of social acceptance: community acceptance (acceptance of a technology or project at a local stakeholders) and socio-political acceptance (acceptance of policies that promote wind power projects). Our report recognizes social acceptance in a diverse spectrum (figure below) 79 and focuses on social acceptance in a positive attitudinal characterization rather than social acceptance as the absence of rejection for a wind farm project.80

3. Energy Democracy Framework In assessing the lack of social acceptance, we use the “Energy Democracy” policy framework to support our analysis. This framework promotes just energy transitions, and links energy innovations like wind power with social justice and equity aims.81 Our investigation revealed that energy democracy principles of procedural and distributive justice – and “recognition justice”82 related to recognition of indigenous peoples’ substantive rights to self-determination and full participation in activities that directly impact them – play a significant underlying role in some community members’ lack of social acceptance of wind farm projects on their lands. Recognition Justice / Recognition of Substantive Rights: “…The social, cultural, religious and spiritual values and practices of these [indigenous] peoples shall be recognised and protected.” (ILO 169, Article 5)

Indigenous people have “the right to decide their own priorities for the process of development as it affects their lives, beliefs, institutions and spiritual well-being and the lands they occupy or otherwise use, and to exercise control, to the extent possible, over their own economic, social and cultural development. In addition, they shall participate in the formulation, implementation and evaluation of plans and programmes for national and regional development which may affect them directly.” (ILO 169, Article 7)

Procedural Justice: fairness in decision-making process; “manifests as a call for equitable procedures that engage all stakeholders in a non-discriminatory way. It states that all groups should be able to participate in decision making, and that their decisions should be taken seriously throughout. It also requires participation, impartiality and full information disclosure by government and industry and appropriate and sympathetic engagement mechanisms. (European Energy Justice Network)

Distributive Justice: fairness in distribution process, how costs and benefits of wind energy turbines are allocated

77 “A STS is a system with new scientific and technological as well as socioeconomic and organizational components, which is reflecting new ideas and concepts on the proffered design of such new systems.” Wolsink, Maarteen. “WIND POWER: BASIC CHALLENGE CONCERNING SOCIAL ACCEPTANCE.” The Volcanoes of Mexico. Pp. 1787, 2012. 78 Id. 79 Langer, Katharina, et al. “Factors influencing citizens’ acceptance and non-acceptance of wind energy in Germany.” Journal of Cleaner Production. Pp. 136. 2018. 80 Sonnberger, Marco, and Michael Ruddat. “Local and socio-political acceptance of wind farms in Germany.” Technology in Society.” Pp. 57, 2017. 81 Burke, Matthew, and Jennie Stephens. “Energy democracy: Goals and policy instruments for sociotechnical transitions.” Energy Research & Social Science. Pp. 1, 2017. 82 “Although often seen as a core element of procedural justice, recognition entails more than fair and effective participation. Drawing on Fraser (1997), Schlosberg (2007: 18) conceptualises recognition injustice as (1) practices of cultural domination, (2) patterns of nonrecognition (invisibility of people and their concerns), and (3) disrespect through stereotyping and disparaging language.” Jenkins K, McCauley DA, Heffron RJ & Stephan H (2014) Energy Justice, a Whole Systems Approach, Queen's Political Review, II (2), pp. 74-87.

III. Mapping the Process

The issue of community resistance against wind farms in Mexico is complex and shaped by multiple determining factors including83:

o Government and institutional inefficiencies: Lack of vertical and horizontal government coordination, limited government capacity, perception of corruption o Weak regional economies: Poverty, and economic needs heightened by recent earthquakes; lack of local economic opportunities; rent-seeking; inequality o Unclear private property rights: Difficult for authorities and community members precisely determine lands that are privately owned verses communal; ongoing land title disputes

While these factors are important drivers to consider in understanding community resistance against wind farm development, for the purposes of our report, we aim to understand the specific substantive, procedural, and distributive rights concerns conveyed by stakeholders in our interviews.

We have created a “process mapping” that highlights key points of engagement between government and private developers, and community members. We identify the “pain points” or steps which interviewees perceived as lacking credibility and local legitimacy – and thereby contributing to the lack of social acceptance of wind development projects in their communities. This mapping is not an exhaustive detailing of the legal and regulatory steps required for a project developer to establish a wind farm, but rather, aims to provide a snapshot into the experience of the project development process from the position of local community stakeholders. First, we provide a mapping of the preliminary project development and community engagement steps as outlined in laws and regulations. Then, we detail an analysis of the “pain points” that local stakeholders experience in practice and perceive as lacking legitimacy.

It is important to note that “social acceptance” in the preliminary phases of wind farm construction may not guarantee either project development or social acceptance of the project throughout its 20 to 30- year life cycle of wind farm construction, operation, and disassembly. However, we heavily focus on the preliminary stages in our mapping because the initial stages lay the foundations for future engagements, and recent opposition towards the wind projects has largely concerned preliminary stage interactions such as the FPIC process.

83 Fidel Mendez and Sergio Vargas. “Local Communities Do Matter,” Harvard Kennedy School SYPA, pp. 28, 2017. 24

Process Mapping: Community Engagement in Initial Stages of Wind Farm Development, Mexico (Source: own elaboration)

Specific points in wind farm development 1 Private sector wind farm developer scouts land of • Lack of inclusive, engagement process identified as lacking interest for wind farm. Developer approaches participatory approaches in local legitimacy due to substantive and Measurements procedural rights concerns. Based on landowner of a parcel of land, and negotiates payment Energy Reform and auction interviews with community to set up a measurement tower(s) on land. The tower taken for 12-18 processes; not recognizing representatives, NGOs, civic organizations, will measure wind energy generation potential. months indigenous peoples in their and academics in Oaxaca and Yucatan, capacity as “knowers” and and supported by literature review potential partners • Communities not involved in 2 Once developer establishes • Lack of recognition and site selection process interest in using the land for protection of indigenous wind production, developer rights • Majority of community members not negotiates with aware landowners/landholders on use • For community members in negotiations, of the land. Developer and often experience lack of adequate and landowners begin negotiating clear information, not in indigenous contracts, land rental language agreements, and voluntary • May experience pressure, bribery, threats benefits to community from to lease land developer or wind farm. • Developer initiates offer, low payments, no minimum standards for contracts

• Robustness of study 3a Developer conducts 3b Developer also Environmental Impact conducts Social methodology and • Robustness of SIAs Assessment (EIA) and Impact Assessment quality questionable questionable submits to the Ministry of (SIA) and submits to • Qualifications of external consultancy the Environment and the Ministry of services not clearly Natural Resources Energy (Secretaría defined in the law (Secretaría de Medio de Energía, SENER). • Strategic Environmental Ambiente y Recursos SIA is usually 3c Evaluations legally Naturales, SEMARNAT). implemented by mandated (EAE), but EIA is usually external consulting SEMARNAT does not implemented by external services. This is the After negotiations, Developer begins application enforce. Developers able consulting services. first time that process for a permit to generate electricity from to submit EIAs on a Strategic/Regional SENER is made the Energy Regulatory Commission (Comisión project-by-project basis, Environmental Impact aware of potential Reguladora de Energía, CRE). Processes 3a, 3b, so cumulative impact of Assessments (EAE) are project and 3c can be performed at the same time or in also required by the development in a any order. It is not necessary to have a permit wind farms on region 25 not assessed Energy Transition Law community. from CRE before conducting the EIA and SIA, but 2015. SIA and EIA are needed to authorize the permit.

4a SEMARNAT discloses summary 4b Within 90 working days of • EIAs important key in allowing of projects on Ecological receiving SIA, SENER for public participation, but Gazette. Within 10 days, any evaluates SIA and returns to accessing EIAs online is citizen can request that developer if changes needed. difficult for some community SEMARNAT make the EIAs Developer has 20 working members available publicly for a given days to update SIA. SIA is not • EIAs can be hundreds of pages project and solicit a public publicly available. In SIA, long, include technical jargon, information meeting. After EIA company identifies indigenous produced in Spanish – barriers disclosed, public has 20 working communities directly or for some indigenous days to respond with feedback. indirectly influenced by the community members to SEMARNAT not required to project, assesses potential access and understand respond to feedback. social impacts, and outlines • Limited time to verify content mitigation measures. • EIA and SIA for a project are of EIA and provide feedback to evaluated separately with no SEMARNAT with community communication or coordination concerns between SEMARNAT and SENER • Lack of information on • SIAs are not public, so no whether and how community information on which feedback was considered by 5a SEMARNAT 5b SENER communities are being assessed authorizes EIA? authorizes SIA? SEMARNAT and no opportunity for communities to respond with feedback or correct information • SENER’s capacity to fairly evaluate Yes✓ No Yes✓ No× SIAs given mandate to promote × renewable energy questioned by local stakeholders • SENER capacity limited No project No project

6 CRE receives paperwork and reviews to ensure forms are sufficiently completed. If forms not considered complete, CRE may 26 deny permit. CRE grants permit to use wind and generate • SENER determines which 7 electricity? communities will undergo FPIC; no input from Yes No communities that may have ✓ indigenous populations with × right to FPIC • Reportedly no consideration No project for indigenous customs of deliberation and negotiation • Not “free”: experiences of 8 Indigenous land? (Identified manipulation, intimidation, by SENER) coercion • Not “prior” or real opportunity Yes No to deny “consent”: consultations take place after auction is won, project approved for financing, and No community after SIA and EIA conducted. consultation required Developers have made significant investments. • Not informed – lack of clear and complete information 9 If land known to have indigenous Project about character of projects, populations, SENER requires Development potential social and developer to conduct free, prior, and environmental impacts, informed consent (FPIC) process with benefits and logistical communities. concerns throughout 20+ year project life cycle, lack of FPIC is organized by SENER in indigenous language support coordination with the Ministry of the (written or oral), women and Interior (SEGOB), CRE, National youth often receive Commission for the Development of information later Indigenous Peoples, and potentially • Logistics – depending on size other federal, state, or municipal of community, difficult to offices. schedule meetings at times when everyone can attend, last minute cancellations, late meeting start times 27

(See next page for FPIC guidance, according to international conventions, in detail) “Steps to ensure an effective ‘Free, prior and informed consent’ process” (Source: REN 21 and Conservation International, based on UN guidelines.)

10 Active Non-Acceptance Ambivalence Active acceptance

Active Opposition Rejection Undecided Indifferent Tolerant Conditional Acceptance Approval Enthusiastically Engaged (Adopted from https://doi.org/1 0.1016/j.jclepro.

No Project Project Development: Construction • Set up of current auction Operations (20-30 year life cycle) system makes it difficult for community-owned wind farms Decommissioning and alternative models of wind energy development to succeed, despite communities’ • “Social acceptance” is not a interest static state: it can change over • Allegations of some time, depending on who in the government officials actively community is being asked to undermining community - accept a particular aspect of owned schemes project development throughout the project life cycle.

IV. Findings from the Isthmus of Tehuantepec and Yucatán: Substantive Rights Concerns

Key Takeaways Voices at the table: Including community perspectives • Substantive rights concerns form the basis of communities’ lack of social Our findings revealed that a lack of indigenous community inclusion acceptance for wind farm projects, even in the Energy Reform design and auction process84 has hindered the before a developer approaches their inclusion of community members’ interests, values, and concerns. lands This exclusion engenders a loss of legitimacy from the outset of Some government authorities and community members’ engagement with private developers. Rather • private developers do not view than opposing wind farm development in and of itself, community indigenous peoples as “knowers,” stakeholders found the way in which development processes are furthering the exclusion of indigenous driven to be problematic. To quote a Mayan community leader in interests, values, and concerns. Yucatán whose view is representative of the driving message behind many of our interviews in Oaxaca and the Yucatán: • Not including indigenous people at the deliberation and decision-making table “What we want is the establishment of a model of energy may ultimately hinder GoM’s goals of transition that guarantees the sustenance and livelihood of growing wind energy development. indigenous communities – why? The way they’re doing the • Community stakeholders can be work isn’t correct. They’re robbing the people of the little included meaningfully as “partners” they have, of their identity. There are ways to develop • Community stakeholders interviewed renewable energy without negatively impacting the are not opposed to wind farm interests of indigenous communities. We’re looking for a development, but the top-down way in guarantee of this harmony that exists with nature.”85 which wind farm development is driven. • Communities seek an inclusive, In interviews and recent literature review, we found that some participatory energy transition and wind government officials and private developers tended to view farm development process that respects community members who opposed wind farm development indigenous peoples’ substantive rights as projects as “anti-development,” or rent-seekers with a “you owe afforded by the Mexican constitution me money mentality,” seeking “Christmas bonuses,” and and international conventions. exaggerating their connections to the land”86 as puppets to left wing political groups and extremist NGOs; community members

84 Lucas, Hugo, et al. “RENEWABLE ENERGY TENDERS AND COMMUNITY [EM]POWER[MENT].” REN21, pp. 9, 2017. 85 Pedro Uc Be, Eliceo Ek Yah, Aaron Sanchez Cortes, and Bernardo Caamal Itza Interview. Feb. 2018. 86 Anonymous. Private Sector Interview. Jan. 2018. 30 needed to be appeased with additional benefit, more money.87 Given the high levels of poverty, community members did seek economic development assistance, but interviewees said that more benefits are not a sufficient response to their underlying concerns. By making such assumptions about community members’ preoccupations and desires, government officials and private developers fail to acknowledge the diversity of community experiences – and fail to include and extend legitimacy to the voices of community members who may have reasonable cause for resistance. Social acceptance is assumed to be the norm, but “the objection to any wind power development must be considered as a potentially legitimate, rational, and informed position…. [All attitudes] are equally important for obtaining a good understanding of the acceptance of wind power.”88

These instances reveal a lack of recognition and respect for community stakeholders as “knowers” – or as having the capacity to serve as “knowers,” offering valuable information for public learning and collective understanding.89 This is problematic because it not only (1) facilitates indigenous communities’ exclusion and leads to the violation of substantive rights, but also (2) undermines the potential for wind farm development in Mexico because wind is a sociotechnical system that requires extensive social learning, (3) leads to a lost opportunity to leverage diverse community stakeholders as meaningful partners in development efforts, and (4) prevents the GoM and private sector developers from gaining deeper insight into root causes of the resistance against wind farm projects.

1) Importance of indigenous community inclusion to uphold substantive rights When communities consider wind farm development projects on their lands, they are not considering the application of wind power in principle – thinking about the environmental benefits or price points – but rather confront whether to accept the daily lived experiences and implications of a wind project – questions about the location and site, impact on landscape and community identity, indirect and direct effects on the ecosystem, opportunity costs with utilizing space; about the consequences of investors or co-ownership schemes on community identity; or what decision-making processes about the wind farm entail.90 Many community members expressed concern about the wind energy development’s threat to their way of life and connection to the land, for themselves, their children, and grandchildren. In addition to depending on land for sustenance (as in the case of fisherfolk in the Mareña Renovables case), some community members may have an affective bond or “place attachment” of cultural and spiritual significance that is disturbed by wind turbines impacting the landscape. For some indigenous community members, their vision for development and of the world is based on maintaining harmony the land, and their cultural identities are tied to the land.91

In interviews, community stakeholders asked what price indigenous communities would need to pay to achieve Mexico’s renewable energy and climate change mitigation goals.92 For community members, the way in which wind farm development processes are driven is a “total plundering [of the communities,” a “genocide,” the “new Spanish inquisition.”93 For some indigenous community members, particularly in the Isthmus of Tehuantepec, resistance against wind farms is a continuation of a history of resistance against marginalization and displacement by external powers – from battles against the Aztecs to the French invasion of Mexico 94 For some community members, the stakes are high, and technical solutions like providing more financial benefits has thus far proved to be an insufficient solution to their concerns.

87 Anonymous, Government official interview. Jan. 2018. 88 Wolsink, Maarteen. “WIND POWER: BASIC CHALLENGE CONCERNING SOCIAL ACCEPTANCE.” The Volcanoes of Mexico. Pp. 1790, 2012. 89 Holifield, Ryan, et al. Ed. The Routledge Handbook of Environmental Justice, 2018. 90 Wolsink, Maarteen. “WIND POWER: BASIC CHALLENGE CONCERNING SOCIAL ACCEPTANCE.” The Volcanoes of Mexico. Pp. 1794, 2012. 91 http://dx.doi.org/10.1016/j.techsoc.2017.07.005 92 Howe, Cymene. “Contested Powers.” The Politics of Energy and Development in Latin America. 2015. 93 Pedro Uc Be, Eliceo Ek Yah, Aaron Sanchez Cortes, and Bernardo Caamal Itza Interview. Feb. 2018.; Yansa staff interview Jan. 2018. 94 Howe, Cymene. “Contested Powers.” The Politics of Energy and Development in Latin America. 2015.

Therefore, the call for recognition of the substantive rights of indigenous persons – including the right to self-determination, ability to have veto power over projects, and full and effective participation – resounded throughout our interviews with community leaders, NGOs, and academic/civic organizations who have led or participated in activities to protest or question wind farm megaprojects. However, community stakeholders have continued to be unintentionally or intentionally excluded from energy- related public policy design processes. For example, in 2016, the Department of Energy (SENER) hosted a “First National Meeting of Shared Social Benefits for Energy Projects” in Mexico City. SENER invited government officials, academics, engineers, and developers, but no community members.95 A member of the Ixtepec community and staff of local organization Yansa was one of the approximately 25 people who travelled 12 hours to enter the First National Meeting uninvited. She said,

“How can they talk about benefiting communities without having community voice represented in an event of this magnitude? They didn’t forget to invite communities. They wanted to decide what the benefits are for us. We’re not in accord with a model that doesn’t take us into account, a model that just wants to give us “a little bit more.” That’s not what we want. It’s not a little more. It’s about the possibility to decide over lands that are ours.”96

2) Importance of indigenous community inclusion to enable success of wind power as a new sociotechnical system Engaging and including communities is also crucial to establishing sustainable wind power as a new sociotechnical system (STS). Recent literature suggests that wind power is “a technology whose acceptance is socially embedded and affected by fairness concerns.”97 If the GoM is to meet the nation’s objectives of increasing competition in the energy sector, driving economic growth, and encouraging “effective social participation and co-responsibility” as outlined in Mexico’s 2016 Climate Change Mid- Century Strategy,98 valuing and including many forms and sources of knowledge is key.

3) Opportunity to leverage community stakeholders as partners Not including community voices and perspectives hinders opportunities to create shared value and approach local community stakeholders as “partners.” While government officials and corporate representatives in Mexico may refer to local community members as “partners,” their understanding of “‘partner” often amounts to an elite community member who receives land rental payments.99 A recent survey by REN21, however, underscores the potential of engaging citizens and communities as more active participants – as “conscious purchasers of renewable energy, as financiers of projects, and as producers… in community-driven projects.”100 GoM and private developers are missing an opportunity to leverage local knowledge. Different ethnolinguistic groups in the Isthmus have existed in the Isthmus region for over 3,500 years, and communities have developed an intimate knowledge, understanding, and relationship with the land.101

Opening up participation and inclusion is also beneficial because many of the formal authorities and ejidatarios (community members who manage the common ejido land), whom private developers and

95 Shalanda H. Baker, Emerging Challenges in the Global Energy Transition: A View from the Frontlines, Draft, pp. 1 (2019 forthcoming). 96 Yansa staff interview, Jan. 2018. 97 Liebe, Ulf, et al. “A turbine is not only a turbine: The role of social context and fairness characteristics for the local acceptance of wind power.” Energy Policy. Vol 107, 2017. 98 “Mexico’s Cimate Change Mid-Century Strategy.” Ministry of Environment and Natural Resources. Pp. 21, 2016. 99 Howe, Cymene and Boyer, Dominic. "Aeolian Extractivism and Community Wind in Southern Mexico." Public Culture, 28, no. 2 (2016) 215- 235. http://dx.doi.org/10.1215/08992363-3427427. 100 Lucas, Hugo, et al. “RENEWABLE ENERGY TENDERS AND COMMUNITY [EM]POWER[MENT].” REN21, pp. 18, 2017. 101 “The Dark Side of Clean Energy in Mexico.” Atavist, 20 Feb. 2016, darktracesofcleanene.atavist.com/dark-traces-of-clean-energy-f1xd6.

32 GoM seek to engage in gaining social acceptance with communities, have lost social currency with community members. Interviewees repeatedly expressed concerns that although ejidatarios have formal authority to decide on land use, they had not been democratically elected to represent the community concerns regarding wind farm development, did not fully understand the wind power technologies, and often did not understand negotiation terms of agreement.102 Studies have shown that when individuals lack knowledge and practical experience with wind energy, their acceptance of wind energy projects is influenced by their trust in decision-makers such as local authorities.103 This lack of trust in decision-makers degrades perceived legitimacy and social acceptance. Additionally, international conventions protecting the rights of indigenous people extend FPIC and protections to all indigenous people in a community, not just community members with formal land holdings.104

4) Including and engaging community stakeholders allowing for deeper understanding of community interests, values, concerns, and low levels of social acceptance Including community voices is also important to gaining insight into their underlying concerns and root causes of wind megaproject rejection. According to the “mutual gains” approach to negotiations, the most effective way the GoM or private developers can achieve their interests is to meet the core interests of community members, counterparts on the other side. This approach involves bringing affected stakeholders together and enabling interactions that allow for shared understanding about the nature of the problem, about each other’s needs, and collaboratively crafting and implementing actions to address their mutual underlying interests.105 From case studies around the world, this participatory and inclusive approach has been shown to foster a sense of fairness in interactions and lead to better outcomes for parties. Our interviews highlighted the importance of using such an approach to the renewable energy public policy design and auction development process, even before community members approach the negotiating table with private developers and government officials – to uphold the substantive rights of indigenous peoples, produce better possibilities for creating value for all parties, and facilitate a sense of fairness in gaining social acceptance.

102 Pedro Uc Be, Eliceo Ek Yah, Aaron Sanchez Cortes, and Bernardo Caamal Itza Interview. Feb. 2018. 103 Sonnberger, Marco, and Michael Ruddat. “Local and socio-political acceptance of wind farms in Germany.” Technology in Society, 2017. 104 Patiño, Rodrigo. “Una Consulta Pendiente.” El Diario De Yucatán, 19 Mar. 2018, www.yucatan.com.mx/editorial/una-consulta-pendiente. 105 Trejo, B. V..Winning Together: The Natural Resource Negotiation Playbook. Pp. 7. Cambridge: The MIT Press, 2017.

V. Findings from the Isthmus of Tehuantepec and Yucatán: Procedural and Distributive Rights Concerns

Key Takeaways

Indigenous community members and local stakeholders from Oaxaca • Perceived procedural injustice also and Yucatán consistently identified several points in the engagement contributes to lack of social process that were perceived as lacking procedural justice. Studies acceptance. have shown that “perceived fairness of energy-related decision- • Initial negotiations and contracts making processes is an important driver of acceptance.”106 Fairness created between project developers of process and outcomes is key. In the section below, we detail and community stakeholders lack components of the procedural steps that lacked credibility and legitimacy because communities are legitimacy with local community stakeholders. often not informed, not given information that is complete and accurate, or in indigenous languages of [refer to process mapping] Steps 1 and 2 : understanding. Experiences and Initial Negotiations & Contract Abuses reports of manipulation, coercion, and The first point of contact between a private wind energy developer corruption deteriorate credibility. and a community member is when the developer, interested in • Environmental and Social Impact scouting the wind potential in an area of land, approaches a Assessments lack robustness, landowner or landholder of a parcel of land and negotiates a transparency, and mechanism for payment to erect one or more freestanding measurement towers on community participation and input the land. Measurements are taken over 12-18 months – first • “Free, Prior, and Informed Consent” measuring the potential of the wind resource, and then verifying the mechanism afforded to indigenous wind measurements to ensure there are no significant variations. people is perceived as being neither free, prior, nor informed consent Once a developer has determined the viability of the wind potential • Community stakeholders emphasized and interest in developing a wind farm project, the developer the value of distributive justice, of negotiates with landholders on the use of the land. According to ensuring that all members of the interviewees, developers approach landholders individually to community and shared land – not just negotiate about the use of the land, create contracts, and determine landowners and local authorities – any voluntary benefits the wind company will provide to the could benefit from projects. landholder or community members directly impacted by the project.

Several aspects of this initial phase are perceived to be problematic.

106 Sonnberger, Marco, and Michael Ruddat. “Local and socio-political acceptance of wind farms in Germany.” Technology in Society, 2017.

34 First, the developer scouts and picks the location of a potential wind farm without input from the community. When the developer approaches a community to negotiate terms, communities are disadvantaged by a lack of information. Community members not directly impacted by the wind farms are largely unaware of developer interest, although for the common lands on which the projects are built, all of the members of the ejido or asamblea need to be consulted about changes in use of land. There is also often unclear or incomplete information about the project characteristics. Companies may say they will use the land in one way but then use it for another. Information may be conveyed in such technical terms that even academics and NGO representatives have a hard time understanding.107 Companies do not share information about the electricity price and distribution, thereby making it difficult for landowners to negotiate more equitable terms. Some companies also try to dismiss or avoid discussing potential adverse effects.108 Studies have shown, however, that “transparent and clear communication of risks and benefits” is important to successful implementation of wind energy projects.109

Contracts are often not translated into indigenous languages110 and information not delivered through oral communication for illiterate community members. Communities have accused companies of falsifying the negotiation processes or contracts (e.g., by presenting blank contracts and asking for signatures, or creating false individual contracts for communally owned lands), using bribery and corruption in obtaining authorizations (e.g., In San Dionisio del Mar, residents accused local authorities of receiving money for signing over communal land111), and offering low payments and poor contract terms as there are no minimum contractual standards.112

The GoM provides no clear legal instructions or regulation about when and how private developers should approach community members, the type of sequencing of information to provide, or the instruments of conveying the information and managing contract negotiations.113 There are also no clear laws or regulation on benefits for communities, no precise definition of what are considered “benefits,” who should receive benefits (directly and/or indirectly impacted individuals), how benefits should be distributed, and in what phases of the wind farm life cycle. The uneven distribution of benefits and payment for land leasing to only some of the community members and not others has also caused tension within communities between the “haves” and “have not’s.”

SENER is not present or involved in the initial engagements and contract negotiations, leaving communities at a disadvantage and at the mercy of each developer. While private developers and some government officials view the contracts as legitimate arrangements, community members opposing the wind farms may not. This disparity in views regarding the legitimacy of the contractual agreement has led to community members sometimes reneging on contracts, trying to take back and even physically blockading further use of their lands for wind project development; and government authorities justifying the use of police intervention as a “matter of legality” according to one Oaxaca state government official.114

107 Articulación Yucatán and Yansa interviews. Jan. 2018. 108Juarez-Hernandez, Sergio and Leon, Gabriel. “Wind Energy in the Isthmus of Tehuantepec: Development, Actors and Social Opposition.” Revista Latinoamericana de Economía. 2014. 109 Sonnberger, Marco, and Michael Ruddat. “Local and socio-political acceptance of wind farms in Germany.” Technology in Society, pp. 63, 2017. 110 This “increas[es] vulnerabilities and reinforcing discrimination and exclusion.” The World Bank Group. “Indigenous Latin America in the Twenty-First Century: The First Decade.” Pp. 22, 2015. 111 Wilson Center. “Enticed by the wind.” 2016. 112 Sergio Oceransky interview, Feb. 2018 113 Iniciativa Climática de México interview, Feb. 2018. 114 State government official interview, Feb. 2018. 35 After measuring the wind, developers also need to negotiate additional authorizations including the “Change Land Use” or “Cambio de uso de suelo,” which gives companies permission to legally change the land use category from agricultural to construction purposes. Payment information is opaque, and communities commonly believe local authorities are pocketing money to support their political aims.115

Steps 3A and 4A: Environmental Impact Assessments The law116 requires wind farm developers to conduct an Environmental Impact Assessment (EIA) to determine the environmental characteristics of the potential project area, assess environmental impacts of project activities, and propose measures to prevent or minimize environmental harm. Article 19 of the Energy Transition Law (2015)117 also requires developers to conduct strategic environmental assessments measuring the cumulative impact of activity in zones with high potential for clean energy.

Developers usually contract out the EIA to an external consulting service. Once the EIA is submitted to the Secretariat of Environmental and Natural Resources (SEMARNAT), SEMARNAT reviews the EIA and discloses a summary of projects in the Ecological Gazette. Within 10 days, any citizen can request that SEMARNAT make the EIAs available publicly for a given project and solicit a public information meeting. After the EIA is disclosed, the public has 20 working days to respond with feedback. SEMARNAT is not legally required to respond further. After evaluating the EIA, SEMARNAT will allow for the work to be carried out, conditionally allow the project to be carried out, or deny the project.118

Community stakeholders raised several concerns regarding the content and robustness of the EIA, accessibility of the EIA data, and lack of strategic environmental assessments.

While the EIAs are crucial to creating a space for public participation, input, and use of different types of knowledge, the EIA is perceived to lack robustness in the environmental research methodology and analysis. Environmental researchers in Yucatán have observed, for example, that key geophysical and nocturnal studies are lacking from EIAs that should incorporate those tools.119 EIAs may exclude exact numbers on affected wildlife or use references or citations to support their claims.120 The law also does clearly defined professional requisites of specialists who conduct the EIA assessments, leading to inequities in the quality of reporting.121

The EIAs are available publicly, but practically accessing the documents and having ample time to provide constructive feedback is challenging for community stakeholders. To access EIAs, an individual must have Internet access, log onto the Ecological Gazette website, identify a particular project proposal, and submit a request. Once EIA is made available, the individual must review the document, several hundreds of pages long, navigate technical jargon on risks and negative impacts, and provide feedback within 20 days of EIA public release – too limited a time for communities to verify the

115 Wilson Center. “Enticed by the wind.” Pp. 12. 2016. 116 Article 28 of the General Law on Ecological Biological and Environmental Protection (LGEEPA, 1988): Every infrastructure project developer must prepare, present, and submit for approval to SEMARNAT an environmental impact assessment – used to assess works and activities that “may cause ecological imbalance or exceed the limits and conditions established in the applicable provisions to protect the environment and preserve ecosystems, to avoid or minimize their negative effects on the environment.” 117 “To determine the relevant characteristics of the ecosystems potentially affected by the projects, regionally assess the potential environmental impacts and dictate the prevention and control measures to which the project developers must submit.” Additional policies like La COP 6 del CBD 2002, La COP 7 del CBD 2004, Ake Kon, ILO 160, Article 6 and 7 call for use of a strategic environmental evaluation. 118 “DECRETO Por El Que Se Expide La Ley De Transición Energética.” DOF - Diario Oficial De La Federación, dof.gob.mx/nota_detalle.php?codigo=5421295&fecha=24%2F12%2F2015. Energy Transition Law 2015, Article 19. 119 Articulación Yucatán, Presentación de Jazmín Para MEXIREC_Caso Yucatan, 2017. 120 Wilson Center. “Enticed by the wind.” Pp. 36. 2016. 121Perevochtchikova, Maria and Andre, Pierre. “Environmental Impact Assessment in Mexico and Canada: Comparative Analysis at National and Regional Levels of Federal District and Quebec.” International Journal of Environmental Protection. Pp. 7, 2013.

36 information.122 Given SEMARNAT is not required to respond to community input, there is no transparency as to how the feedback was considered.

Although strategic environmental assessments (EAEs), which measure cumulative environmental impact of projects in a given region, are required by law, SEMARNAT does not enforce the requirement. Therefore, companies often conduct the EIAs on a project-by-project basis, leading to a lack of assessment of the cumulative impacts of project development in a given area. Currently in the Yucatán, SEMARNAT has conditionally approved EIA procedures for two projects (Tizinim and Sinanche), so developers must create a regional assessment on the cumulative impacts of the projects on migratory birds and bats – but no other ecological component. Researchers question the quality and transparency of the study.123

Steps 3B and 4B: Social Impact Assessments The Social Impact Assessment (SIA) must identify and assess the potential short, medium, long-term, or permanent social impacts124 and mitigation measures125, and identify indigenous people who may be directly or indirectly affected by the project. The developer often contracts the SIAs out to external consultancy service and then submits the SIA to SENER. This the first time that SENER is made aware of any project. Within 90 working days of receiving the SIA, SENER returns to the developer if any feedback is needed. The developer has 20 working days to update the SIA, which can be authorized or rejected.

Similar to the EIA, community stakeholders questioned the quality of reporting in the SIAs, which may not consider the longer-term impacts and worldview of indigenous communities, and the quality and methods by which SENER assesses the SIAs. The SIAs are also not made public, so communities are not aware if they are undergoing assessment for a project and do not have opportunity to provide feedback to correct inaccuracies (for example, on the presence or number of indigenous people in the community), or comment on the relevance of proposed benefits.126

A major concern is that the SIA (reviewed by SENER) and EIA (reviewed by SEMARNAT) documents for the same project are considered separately, with no coordination or communication between SENER and SEMARNAT. Multiple stakeholders highlighted the need to consider state planning schemes, wind resource potential, maps of protected areas and sacred sites, environmental impact, and social impact together when assessing a location for potential wind project development, rather than separately.127

Many interviewees were also concerned that SENER is not positioned to fairly assess and authorize SIAs given the Secretariat’s objective to promote renewable energy research and development in Mexico. Many community stakeholders perceived SENER to be acting as “judge and jury” and suggested moving SIA from SENER’s authority. SENER also has limited staff capacity.

122 Articulación Yucatán. Feb. 2018. 123 Articulación Yucatán. Mar. 2018. 124 “Mexican Government Ignores Social Impact of Energy Projects.” Mexican Government Ignores Social Impact of Energy Projects | Inter Press Service, www.ipsnews.net/2015/12/mexican-government-ignores-social-impact-of-energy-projects/. 125 Electricity Industry Law, Chapter II, Articles 117-120. 126 Iniciativa Climática de México interview, Feb. 2018. 127 Federal government official interview, Feb. 2018. 37 Steps 8 and 9: Free, Prior, and Informed Consent Through national laws and international convention rights afforded to indigenous communities in Mexico, they have the right to Free, Prior, and Informed Consent.128 In essence, this means:

Free: without intimidation, manipulation, or coercion.

Prior: sufficiently in advance of authorization of activities, and respecting the length of indigenous decision-making processes.

Informed: information provided on all relevant aspects of the project including its nature, size, duration, locality and areas affected; likely economic, social, cultural and environmental impact, etc.

Consent: groups may give or withhold their consent following a participative consultation process.129

According to most interviewees, the FPIC process in practice is neither free, prior, nor informed consent. One initial challenge with the FPIC process is that it is initiated by SENER, and based on SENER’s data on indigenous population location and presence. Some stakeholders view this selection process as “arbitrary” because data on paper may not correspond with actual populations on the ground, as any citizen has the right to self-proclaim their indigenous identity, and documents may not provide nuance on the “true” customs of people identifying as “indigenous.”130 In interviews, FPIC was seen as “checking the box.”

In the proceeding paragraphs, we will identify key aspects of each of the FPIC elements – “free,” “prior,” “informed,” and “consent” – that community stakeholders perceive as lacking legitimacy and have contributed to low levels of social acceptance.

Free: Reports of intimidation and manipulation of community members opposing wind farm development are widely cited. Landowners and community members have been bribed with alcohol, money, and women.131 Individuals have been publicly threatened, coerced, and targeted by police violence and gunmen.132 People who attend informational sessions or consultations with dissenting opinions have been “expelled” from sessions.133

Prior: There is no shared understanding of “prior.” Government officials and private sector regards prior as after an auction has been won and SIA received but before the “design” (meaning unclear) stage of the project.134 Communities, however, want consultations to occur before the auctions. In practice, “once the project developer has enough information to provide actual data regarding environmental and

128 1991 International Labor Organization Convention 169, the Indigenous and Tribal Peoples Convention of 1989, Article 2 and 27 of the Mexican Constitution, the 2003 Act for Linguistic Rights of the Indigenous People, the 2016 American declaration on the Rights of Indigenous Peoples, and Article 32 of the UN Declaration on the Rights of Indigenous Peoples (UNDRI, 2007) 129 Business & Human Rights Resource Centre. “INVESTOR BRIEFING: RENEWABLE ENERGY IMPACTS ON COMMUNITIES.” pp. 5, 2017. 130 Alexander Dunlap (2017): “A Bureaucratic Trap:” Free, Prior and Informed Consent (FPIC) and Wind Energy Development in Juchitán, Mexico, Capitalism Nature Socialism, DOI: 10.1080/10455752.2017.1334219. pg. 7. 131 Articulación Yucatán interview, Feb. 2018. 132 Alexander Dunlap (2017): “A Bureaucratic Trap:” Free, Prior and Informed Consent (FPIC) and Wind Energy Development in Juchitán, Mexico, Capitalism Nature Socialism, DOI: 10.1080/10455752.2017.1334219, pg. 11. 133 Patiño, Rodrigo. “Una Consulta Pendiente.” El Diario De Yucatán, 19 Mar. 2018, www.yucatan.com.mx/editorial/una-consulta-pendiente. 134 Recommendation No. 27/2016. 38 community risks to affected indigenous communities, the project will have already received its initial equity funding, a commitment that could prove difficult to unwind.”135 The developer has won the auction, gained financial backing, conducted, the impact evaluations, and “an Indigenous community’s rejection of the project would result in the loss of hundreds of work hours and hundred thousands of dollars.”136 Thus, indigenous communities have not been able to exercise their right to self- determination and veto power over these projects.

Informed: Community stakeholders expressed concern over a lack of transparency and information on questions regarding: • Preliminary phase of wind farm development: wind production capacity, number of turbines to be installed; direct and indirect impacts to environment, significance to rhythm of daily life and connection to land; ability for community members, their children, and future generations to access the land; procedure for decision-making processes; price points for electricity to be sold; type of benefits and distribution of benefits • During operations: payment structures, distribution of electricity; type, duration, and wages for jobs; potential displacement; impact of incoming workers on local economy and social fabric of community; method for monitoring and evaluation of project and impact; accountability measures for promised benefits; grievance mechanism • Disassembly phase: benefits after companies leave; jobs after companies leave; grievance mechanism; long-term economic, environmental, and social impacts

If information is shared, it may not be sufficient or could even be falsified. Lack of information makes community members vulnerable to negotiating below market lease deals or having inflated community expectations about the financial benefits that can come from wind farms.137 Additionally, people who sign contracts with companies later are able to negotiate more equitable payments.

Community stakeholders also viewed the process of informing communities as lacking legitimacy – in terms of its manner and timing. The scheduling of consultations often fails to take into consideration the availability of the entire asamblea, preventing a significant number of community members from participating. (Feasibility is a challenge because the size of communities can vary greatly.) Indigenous community members requiring language support are not informed in their native languages but in Spanish. When interpreters are present, community members have complained that the translators do not understand the renewable energy technology terms used and will instead resort to language around fossil fuels in renewable energy-related interpretations.138

The GoM offers no guidance on who should be informed (e.g., people directly impacted/indirectly impacted), with what information, how the information should be distributed (e.g., iterative meetings over a period of days or months, door-to-door, or television/radio broadcasts139), and how vulnerable groups like women and youth will have access to information in a timely manner. Women and youth are frequently excluded from key meetings with community leaders and/or receive information last.140

135 Shalanda Baker. WHY THE IFC’S FREE, PRIOR, AND INFORMED CONSENT POLICY DOES NOT MATTER (YET) TO INDIGENOUS COMMUNITIES AFFECTED BY DEVELOPMENT PROJECTS.¨Wisconsin International Law Journal. Pp. 693, 2013. 136 Alexander Dunlap (2017): “A Bureaucratic Trap:” Free, Prior and Informed Consent (FPIC) and Wind Energy Development in Juchitán, Mexico, Capitalism Nature Socialism, DOI: 10.1080/10455752.2017.1334219. Pp. 6, 2017. 137 Private sector interview, Feb. 2018. 138 Pedro Uc Be, Eliceo Ek Yah, Aaron Sanchez Cortes, and Bernardo Caamal Itza Interview. Feb. 2018. 139 Id. 140 Yansa interview, Jan. 2018. 39 It is important to note that not all wind farm developers conduct business in these ways, and some developers, according to interviews, strive to provide full information upfront in indigenous languages of understanding.

Consent: Theoretically, the FPIC process should allow indigenous groups to deny or consent to private developers and governments from operating on their lands.141 Given the rapid timeline of the megaprojects and amount invested in the project already, the ability of communities to deny the projects without further government or developer pushback seems “unrealistic.”142 Additionally, scholars have cited a “cultural mismatch” between Western principles and indigenous community processes of consensus, whereby the project contracts are “fairly precise and built on the assumption that most major contingencies have been addressed in the documents,” but communities are often more accustomed to lengthy, iterative discussions to reach an agreement.143 Communities report not receiving enough time at meetings to deliberate on the decision and instead being instructed to email local authorities or developers with further questions.

Distributive Rights Concerns Another key concern that contributed to the lack of local legitimacy in engagements with developers and government officials is the lack of distributive justice – relating to fairness of benefits distribution for oneself, for others, and for future generations.144

Community stakeholders highlighted the importance of distributing benefits to the whole community, rather than benefits accruing to the landowner or landholder and local authorities:

“A community is a group of people that takes care of others. We’re protecting our concept of community. Happiness isn’t found in money. It’s found in learning, gaining knowledge, enjoying family. I’m going to be happy if my neighbor and community are happy.”145

Studies from Europe have shown that monetary benefits, compensation payments, and intangible benefits such as having a positive reputation for being a “green community” can positively influence social acceptance.146

141 Alexander Dunlap (2017): “A Bureaucratic Trap:” Free, Prior and Informed Consent (FPIC) and Wind Energy Development in Juchitán, Mexico, Capitalism Nature Socialism, DOI: 10.1080/10455752.2017.1334219, pp. 4, 2017. 142 Shalanda Baker. WHY THE IFC’S FREE, PRIOR, AND INFORMED CONSENT POLICY DOES NOT MATTER (YET) TO INDIGENOUS COMMUNITIES AFFECTED BY DEVELOPMENT PROJECTS.¨Wisconsin International Law Journal. Pp. 688, 2013. 143 Id. 144 Sonnberger, Marco, and Michael Ruddat. “Local and socio-political acceptance of wind farms in Germany.” Technology in Society, 2017. 145 Juan Rodriguez interview, Jan. 2018. 146 Sonnberger, Marco, and Michael Ruddat. “Local and socio-political acceptance of wind farms in Germany.” Technology in Society, 2017. 40

VI. Closing

Recommendations The lack of social acceptance of wind farm development projects in Mexico is a complex phenomenon linked to diverse determinant factors. Our study sought to understand the lack of social acceptance by community stakeholders in the Isthmus of Tehuantepec and in Yucatán who have actively challenged wind farm development projects on their territories through organizing and protests, civic engagement, research, and/or seeking alternative community-driven wind development models. Through interviews and an extensive literature review, our findings reveal that a lack of recognition and respect for indigenous communities’ substantive and procedural rights in the energy reform and wind farm development process erodes perceptions of legitimacy in the change process, and undermines possibilities for social acceptance of wind farm projects.

To more effectively create conditions that target and address communities’ perceived lack of procedural, distributive, and recognition justice (substantive rights), and leverage the IFC and World Bank’s influence as impartial authority, we propose three key recommendations for the IFC and World Bank team’s consideration as they prepare to advise the Government of Mexico:

Recommendation 1: To IFC and Word Bank – Promote and enable SENER to design a “listening tour” or series of participatory workshops with diverse community stakeholders to gather data on how best to develop inclusive, participatory mechanisms that will (1) address substantive and procedural rights concerns, and (2) inform the work of creating appropriate laws and regulations. Alternatively, create an advisory panel or consortium that includes community stakeholders. Community stakeholders may include local authorities; community members including indigenous persons, women, youth, and other vulnerable groups like landless peasants; NGOs and civic organizations; academics; and other relevant entities that seek to participate.

Before deciding (a) the issues to prioritize in addressing a lack of social acceptance for wind farms, (b) solutions to the problems, and (c) implementation steps, SENER must meaningfully involve those community stakeholders who oppose wind farm megaprojects on their territories, in order to both respect their rights, especially the rights of indigenous peoples, and to collaboratively create a multi- stakeholder strategy to address the procedural challenges facing the government, private sector, and communities.

Conducting timely, informed, and inclusive listening sessions, panels, or workshops to engage diverse indigenous community groups in ongoing or foreseeable wind project locations could raise GoM’s credibility and foster trust vis-à-vis the local communities. Through the engagements, stakeholders can begin to develop mechanisms and coordination plans to transform or improve the FPIC, the Social Impact Assessment, Environmental Impact Assessment and Strategic Environmental Assessments, and contract negotiation processes previously described. Before determining how to allocate benefits to communities or how to better inform communities about wind farm developments, SENER can use the listening tour and workshops to partner with indigenous communities and local stakeholders to first create shared definitions on benefit-sharing – as well as a shared understanding of decision-making processes around benefit-sharing and strategically informing community members.

Alternatively, through an advisory panel or consortium, SENER can leverage the technical expertise, and community-level insights, relations and trust of local organizations; and interested local organizations, in turn, can connect with federal authorities through a purposeful and reciprocal channel for sustained communication and collaboration. Community stakeholders like Asamblea Maya, Yansa, Articulación Yuctán, and Iniciativa Climática de México are some of the groups at the forefront of research, community engagement, and advocacy efforts that SENER can engage.

Based on our field interviews, we suggest the GoM consider the following six procedural changes (in no particular order): 1. (SENER) Conduct FPIC prior to auction. 2. (SENER) Collaborate with communities to develop procedures for information distribution 3. (SENER) Increase transparency and allow for community participation in the SIAs as currently possible with EIAs. 4. (SEMARNAT) Enforcine the completion of Strategic Environmental Assessments (EAE) that evaluate cumulative environmental impact of wind farm projects in a region. 5. (SENER and SEMARNAT) Communicate and collaborate with each other on EIA and SIA evaluations for projects rather than working in silos. 6. (GoM) Create one-stop shop website for diverse stakeholders and provide information on wind farm developments, relevant laws, and helpful documents such as “best practice guides” for private sector and communities.

The table below explains some assumptions underlying the aforementioned suggestions.

Assumptions Evidence Supporting Assumption & Risks 1) Inclusive, • In engagements between wind developers and communities on a local level, participatory studies have shown that “early, sustained, reciprocal engagement” can lead to processes can assist greater trust.147 in fostering trust with • Focusing on natural resource negotiations between US and Mexico, Bruno Verdini communities to (MIT) argues that collaborative decision-making processes where stakeholders can sustain a working gain “mutual understanding, shared problem frames, [and] agreed-upon relationship baselines,” foster interpersonal and institutional connections of trust and reciprocity.148

2) Community • A 2015 World Bank study titled “Indigenous Latin America in the Twenty-First participation in Century” reports: decision-making on wind farm “Experience of recent decades shows that, no matter how imperfect, the development only way to advance development projects successfully within indigenous faciltates greater territories is through indigenous peoples’ involvement in the design, social acceptance implementation, and monitoring of development programs. By de facto rule or by law, the question in Latin America is no longer whether indigenous peoples should be involved in decision making, but how and when.”149

• A survey of 1,800 respondents (total) in Poland and in Germany shows that people

147 Wolsink, Maarteen. “WIND POWER: BASIC CHALLENGE CONCERNING SOCIAL ACCEPTANCE.” The Volcanoes of Mexico. 2012. 148 Trejo, B. V..Winning Together: The Natural Resource Negotiation Playbook. Pp. 7. Cambridge: The MIT Press. Pp. 169, 172-174, 2017. 149 The World Bank Group. “Indigenous Latin America in the Twenty-First Century: The First Decade.” Pp. 50, 2015.

43 in both countries are willing to accept wind farms in their communities if they can participate in decision-making processes, if turbines are owned by citizens, and electricity is locally distributed rather than exported.150 • Additional studies on wind power project acceptance show higher levels of social acceptance when citizens can participate in decision-making processes and perceive procedural justice.151 • Recent scholarship on negotiations shows that collaborative decision-making leads to greater trust, more equitable and informed decisions, and more sustainable agreements that benefit stakeholders involved.152

Examples In 2014, the Chilean Ministry of Energy launched Energy 2050, the nation’s strategic-planning policy for energy development. One key pillar of Energy 2050 is conceiving of energy as a “driver of development,” and Chile’s national strategy aims to pursue a model of inclusive development.153 The Ministry of Energy hosted thematic panels and workshops throughout Chile in developing Energy 2050. They conducted approximately 130 meetings involving 3,500 people, and diverse stakeholders including indigenous communities were sought out for the participatory workshops to help steer Chile’s energy policies.154

In 2012, the United Kingdom Department of Energy and Climate Change (DECC) issued an Onshore Wind Call for Evidence. The call solicited information on peoples’ views with onshore wind developments, benefits, and perceived and experienced environmental, health, and eonomic impacts. DECC received 1,115 responses (929 from individuals and 182 from organizations) via email and post mail.155 The government incorporated community responses in its guidance to wind developers on community engagement and benefits.

In 2009, UN groups in Nicargua supported the creation of a Consultative Committee of Indigenous and Afro- Descendent Peoples (CCPIAN), comprised of 12 members including indigenous representatives and experts on indigenous rights. The group offered UN agencies in Nicaragua advice on improving the incorporation of indigenous peoples’ rights in UN programs and activities. The IFC/World Bank team could support the creation of such a consortium or advisory group to advise the World Bank Group and/or the Mexican Government.156

The Iniciativa Climática de México (ICM) is conductng a USAID-funded pilot project with Centro de Colaboración Cívica and Facultad Latinoamericana de Ciencias Sociales1 in Baja California del Sur, Chihuahua, Sonora, and Yucatan. The pilot project is engaging with local stakeholders to develop participatory models for renewable energy development. The GoM and ICM can benefit from shared learnings.

150 Liebe, Ulf, et al. “A turbine is not only a turbine: The role of social context and fairness characteristics for the local acceptance of wind power.” Energy Policy. Vol 107, 2017. 151 Id. Schlosberg 2007, Dimitropoulos and Kontoleon, 2009; Canada - white and mackenzie-scott (2007); Australia – Gross 2007 152 Trejo, B. V..Winning Together: The Natural Resource Negotiation Playbook. Pp. 7. Cambridge: The MIT Press. Pp. 172-174, 2017. 153 Ministry of Energy, Government of Chile. Energy 2050: Chile’s Energy Policy. Pp. 43, 2016. 154 Ministry of Energy, Government of Chile. Energy 2050: Chile’s Energy Policy. Pp. 131, 2016. 155Department of Energy and Climate Change, UK Government. “Onshore Wind Call for Evidence: Government Response to Part A (Community Engagement and Benefits) and Part B (Costs).” Pp. 12, 2013. 156 The World Bank Group. “Indigenous Latin America in the Twenty-First Century: The First Decade.” Pp. 54, 2015.

44 Recommendation 2: To IFC – Strengthen IFC’s Performance Standards provisions on FPIC. To IFC and World Bank – Provide targeted assistance to the Government of Mexico on FPIC implementation. The ongoing lack of a truly “free, prior, and informed consent” process contravenes the substantive rights of indigenous communities resisting wind megaprojects in Mexico and undermines social acceptance for the projects.157 While the Government of Mexico can conduct participatory, inclusive initiatives to improve the government’s FPIC practices (as proposed in Recommendation 1), ensuring FPIC practice in a way that engages communities meaningfully requires multi-stakeholder leadership. Private sector developers in Mexico must also be informed and influenced to improve FPIC practices. The IFC is uniquely positioned to influence private sector behavior, and can benefit from shared learnings by recent World Bank efforts to upgrade their Environmental and Social Framework with specific attention to FPIC.158

According to recent analyses, however, the IFC’s framing of FPIC in its 2011 Performance Standards and Guidance Note 7 (2012)159 may continue to enable the use of FPIC as a mere tool for “checking the box” and reinforcing state and private sector power under the guise of respecting indigenous rights and affirming self-determination. Scholars contend that the IFC’s framing of FPIC avoids mandating private developers to uphold the attributes of FPIC and provides guidelines incongruent with the financial and logistical realities of implementing large-scale projects. The IFC’s framing of FPIC as primarily a risk- mitigation mechanism leads to an FPIC process that fails to support indigenous communities’ right to exercise full veto power over projects, and does not provide viable alternatives to developers who may later incur substantial costs from project cancellations.160

Although a long-term effort would likely require substantial investment and authorizations from personnel outside of the IFC team we are addressing in this PAE, we believe the IFC can play a greater role in influencing dialogues and FPIC standards among private sector actors in the Mexican wind power development space, and beyond. In the short term, the World Bank team can invest efforts in providing targeted support to SENER on reforming the FPIC process with input from private sector and community stakeholders.

Assumptions (Logistical) Evidence Supporting Assumption & Risks 1) The IFC and World Bank has • Additional data is needed to determine capacity and feasibility for IFC capacity and the interest to specialists to enhance FPIC guidelines. enhance institutional guidance • In August 2016, the World Bank approved a new Environmental and on FPIC and provide targeted Social Framework to enhance social protections for World Bank- support to Mexican Government financed projects.161 The World Bank invested four years of research and engaged nearly 8,000 stakeholders in 63 countries in this effort. Interest in tackling challenges regarding indigenous community engagement is present.162

157 Business & Human Rights Resource Centre (2017), Dunlap (2017), Baker (2013), Articulacion Yucatan resources 158 “World Bank Board Approves New Environmental and Social Framework.” The World Bank Group. http://consultations.worldbank.org/consultation/review-and-update-world-bank-safeguard-policies 159 International Finance Corporation. Performance Standard 7. 2012. http:// www1.ifc.org/wps/wcm/connect/1ee7038049a79139b845faa8c6a8312a/PS7_English_ 2012.pdf 160 Baker IFC 161 “World Bank Board Approves New Environmental and Social Framework.” The World Bank Group. http://consultations.worldbank.org/consultation/review-and-update-world-bank-safeguard-policies 162 MacLaren, Oliver and Pariseau, Julie-Anne. “THE NEW WORLD BANK SAFEGUARD STANDARD FOR INDIGENOUS PEOPLES: WHERE DO WE START?” Prepared for World Bank Conference on Land and Poverty 2017.

45 2) SENER is open to receiving • More data needed targeted support on FPIC • With the July 2018 general elections in Mexico, government capacity improvement, and has the to dedicate additional resources to improving FPIC may be limited. capacity and resources to conduct targeted interventions on FPIC

3) Private sector (e.g., Mexican • More data needed Association of Wind Energy, Wind developers) is wiling to engage in deliberations

Recommendation 3: To IFC and World Bank – Support SENER in creating a separate tender process for community-owned wind farms, and/or otherwise promoting community-driven wind farm models in Mexico Alternative models, such as community-owned wind farms, have difficulty competing with the dominant IPP and self-supply modalities of wind farm development in Mexico. IPP and self-supply modalities enable megaprojects that operate on fast timelines and have substantial capital. For example, the Ixtepec community of Oaxaca has partnered with the NGO Yansa to create their own community wind farm, and this proposal has been accepted by the entire community, has support from national and international investors, and has been ready to launch since 2012 when they attempted to submit a bid in a tender process. CFE dismissed the project arguing the Yansa-Ixtepec project could not provide proof of sufficient capital, although the Yansa group’s investors had committed to providing the capital assuming the group would win the bid and access to the substation first.

Although some federal government officials recognize the need to diversify wind power development models and have called for a separate tender process for community-owned farms in the past163 – and additional communities have approached Yansa for support in developing their own community wind farms – the GoM has not provided a mechanism through which community-owned wind projects can feasibly compete in the context of megaproject developments. A repeated complaint from the interviewed community stakeholders was the lack of opportunity for alternative mechanisms by which community-owned wind farms could compete.

Assumptions Evidence Supporting Assumption & Risks 1) Partially or wholly • Studies have shown that community-driven renewable energy projects can community-owned generate ten times the employment and income generation opportunities as renewable energy compared with alternative project models.164 development and • Surveys show that local ownership models lead to re-investment of income wind farm models benefits in local communities, and the “total value-added” by local renewable can amplify benefits energy generation – through increased income, job creation, and skills to communities development for community members – is a net positive.165

163 Sergio Oceransky interview, Feb. 2018. 164 Lucas, Hugo, et al. “RENEWABLE ENERGY TENDERS AND COMMUNITY [EM]POWER[MENT].” REN21, pp. 8, 2017. 165 Id. Pg. 7 46 • Indigenous communities are increasingly acting as partners in wind, solar, and hydropower projects in Canada, and over the last 8 years, 15,300 jobs have been created for indigenous workers, earning $842 million in employment income.166

2) Providing • Locally-owned energy projects in Europe were seen more positively than other mechanisms for types of energy projects167, leading some scholars to posit that there may be an community-driven inverse relationship between project scale/ownership and local acceptance. or community- Additional studies support the claim that community ownership is positively owned wind farm correlated with more positive attitudes towards wind energy development.168 models facilitates • Studies in France and Scotland showed that local community ownership and social acceptance inclusion is associated with greater levels of social acceptance.169 for wind farm projects.

Examples The Chilean Government has recently set forth policies to promote community ownership of renewable energy projects in the Inidgenous Peoples’ Chapter of Chile’s national energy strategy, Energy 2050 (2015), and in the Ministry’s Public Policy on Local and Associative Development.170 The Chilean government aims to create instruments supporting indigenous community ownership and generation of renewable energy.

The Local Energy Scotland Consortium administers the Scottish Government’s Community and Renewable Energy Scheme (CARES), a program aimed to encourage local community ownership over renewable energy projects in Scotland. The Scottish government aims to see half of renewable energy projects have an element of community ownership by 2020.171 In 2013, the UK Government released a first ever Community Energy Strategy (updated in 2015)172 to encourage community participation and shared ownership in renewable energy project development

In 2011, the Government of Canada provided $500,000 of support for construction and installation phases of an indigenous community-owned wind energy project (MERE Wind Farm, owned by the M’Chigeeng First Nation).173 The government continues to provide support for communities developing renewable energy projects.174

166 “Government of Canada Announces Funding for Wind Farm at M'Chigeeng First Nation.” Aboriginal Affairs and Northern Development Canada News Room. June 21, 2011. 167 Geraint, Ellis. “The Social Acceptance of Wind Energy.” JRC Science for Policy Report, European Commission. 2016. Cites: Warren and McFayden, 2010, Rogers et al., 2008, Musall et al., 2011, Jobert et al., 2007. 168 Rand, Joseph, and Hoen, Ben. “Thirty years of North American wind energy acceptance research: What have we learned?” Electricity Markets and Policy Group, Lawrence Berkeley National Laboratory, 2017. Cites: Krohn & Damborg, 1999; Maruyama et al., 2007; Petrova, 2013; Warren & McFadyen, 2010. 169 Enevoldsen, Peter and Sovacool, Benjamin. “Examining the social acceptance of wind energy: Practical guidelines for onshore wind project development in France.” Renewable and Sustainable Energy Reviews. pp. 180. 2015. 170 Lucas, Hugo, et al. “RENEWABLE ENERGY TENDERS AND COMMUNITY [EM]POWER[MENT].” REN21, pp. 40, 2017. 171 Local energy Scotland interview, Feb. 2018. 172 Department of Energy and Climate Change, UK Government. “Community Energy Strategy Update.” 2015. 173 “Government of Canada Announces Funding for Wind Farm at M'Chigeeng First Nation.” Marketwire, www.marketwired.com/press- release/government-of-canada-announces-funding-for-wind-farm-at-mchigeeng-first-nation-1529575.htm. 2011. 174 McDiarmid, Margo. “Federal budget money earmarked to help Indigenous communities get off diesel.” CBC News Canada. 2017.

47 Conclusion Mexico’s clean energy transition, while critical, has facilitated a model of wind energy development that prioritizes expediency and returns to private entities over the livelihood concerns of some of the most affected and vulnerable individuals. As a leader in the Global South on renewable energy development, the Government of Mexico has an opportunity to both harness the country’s abundant wind energy potential and pursue an energy transition that ensures the substantive and procedural rights of indigenous communities. Examples from countries like Canada and now Chile have shown that these goals are not mutually exclusive or out of the realm of possibility. Community stakeholders interviewed in Mexico even expressed the desire to create their own wind farms, and projects like the Ixtepec-Yansa initiative have shown that community-owned projects in Mexico can attract financial investments, gain technology resources, and are poised to launch, given the opportunity. As one Ixtepec community leader said, “the world needs to transition from fossil fuels to renewables, but not at the cost of the communities.”

Appendices

A. Methodology and Limitations Our findings were gathered through primary interviews with stakeholders in Mexico and in the US and through an extensive literature review. More literature covering conflicts in the Isthmus of Tehuantepec was available as compared to other regions like the Yucatán. Primary interviews were conducted in Mexico for three weeks from January 22, 2018 – February 8, 2018 in the locations of Mexico City, Oaxaca City, Ixtepec (Oaxaca), and Merida (Yucatan). A total of 20 interview sessions were conducted with 35 individuals total. Each interview lasted an average of 1-2 hours. Interviews included: 2 group interviews with community leaders in Oaxaca and in Yucatan, 1 group interview with academics in Yucatan, 2 private wind farm development companies, 5 federal and state government officials, and 4 NGO stakeholders.

Interviews were conducted in a semi-structured format, and snowball sampling was used to identify additional interviewees. Therefore, the sample of stakeholders interviewed does not represent a random sample and does not capture the full diversity in perspectives surrounding this issue. This is important to note given the competing views and interests between stakeholder groups on this issue, and within factions of stakeholder groups. However, our interviewees consisted of more active proponents calling the wind megaprojects in Mexico into question, and their perspectives form an important and visible subset of the views resisting the dominant models for wind energy development in Mexico.

Interviews conducted in English were captured in written note form. Interviews conducted in Spanish were recorded with consent of interviewees, and then transcribed into written note form. Interviewees who wished to remain anonymous are not named in the final report. ______

Our study aimed to assess what points in the engagement process between community members and private developers and government officials lacked legitimacy with local community stakeholders, and why. We aimed to provide a more visible snapshot of the engagement process between community members and wind developers and government officials to highlight key “pain points” contributing to low social acceptance. The issue of legitimacy and social acceptance in development and change processes, however, is complex, and linked to multiple causal factors. Our study does not purport to capture the ultimate causal factors for low social acceptance for wind farms in Mexico, but we strived to illuminate another piece of the complicated puzzle.

50 B. Stakeholders Interviewed and Sample Questions Community Leaders, Academics, and NGOs - Mexico Daniel Gonzalez and 7 additional community leaders (group meeting), Ixtepec, Oaxaca Juan Rodriguez, Ixtepec, Oaxaca Anonymous, International Human Rights Lawyer and Consultant, Mexico City

Articulación Social de Energía Renovable de Yucatán • Ivet Maturano, PhD, Anthropology, McGill University, Mérida, Yucatán • Rodrigo Patiño, PhD, Center for Research and Advanced Studies of the National Polytechnic Institute, Mérida, Yucatán • Jazmín Sanchez, MA, Physical Engineer, Energy Engineering, Mérida, Yucatán

Asamblea Maya • Pedro Uc Be, Mérida, Yucatán • Eliceo Ek Yah, Mérida, Yucatán • Aaron Sanchez Cortes, Mérida, Yucatán • Bernardo Caamal Itza, Mérida, Yucatán

Centro de Investigaciones y Estudios Superiores en Antropología Social • Salomon Nahmad, Anthropologist and Faculty Member, Unidad Pacífico Sur, Oaxaca

Iniciativa Climatica de México • Carlos Tornel, Program Associate, Mexico City • Jorge Villarreal, Director of Climate Policy and Transport, Mexico City • Naín Martinez, PhD Candidate, Berkeley University, Mexico City

Yansa • Sergio Oceransky, Founder and CEO, Mexico City • Anonymous, Ixtepec, Oaxaca • Anonymous, Ixtepec, Oaxaca

Federal and State Government officials - Mexico Cesar Bayliss, Oaxaca State Government Official, Oaxaca City Fidel Florian, Oaxaca State Government Official, Oaxaca City Sergio Tellez, Federal Government Official, Mexico City Anonymous, Oaxaca State Government Official, Oaxaca City Anonymous, Federal Government Official, Mexico City Wind Energy Development Firms - Mexico Héctor Treviño, Asociación Mexicana de Energía Eólica (Mexican Wind Energy Association) Anonymous, Major Spanish conglomerate Anonymous, Major Spanish conglomerate Anonymous, Medium-sized Mexican developer Academics - United States Cymene Howe, Associate Professor and Director of Graduate Studies, Department of Anthropology, Rice University Shalanda Baker, Professor of Law, Public Policy and Urban Affairs, Northeastern University School of Law

51 Sample Semi-structured Interview Questions for Community Leaders and NGOs • Tell me about you and your work – how did you become involved in this issue? What is your opinion of wind farms in general? • Challenges, successes you’ve seen in the field? Negotiation process • Government roles, functions, formal steps in legislation for wind farm development • Who comes? How do they approach communities? In what language? • What kind of payment structures, benefits do communities receive in set up phase? How much? How is this decided? How does this impact the community members who aren’t receiving anything? • How does the negotiation work? Who gets a voice (from the community side/ government/private sector side - and who does not?) Where does the locus of power lie in the community - formal authority figures? Informal authority figures? In what situations is each type of figure evoked? • How much time are community members given to decide on things? How do community members confer with one another and make decisions? How are conflicts resolved? • How do you communicate the decision or wishes of the community to the government or private sector? Who is an interlocutor you would trust? How would you feel about state government being involved? • How do federal/local government officials and private sector actors interact with community members during the wind farm operations process? How frequently do they contact community members? For what? How can community members reach out if they want to change something or have concerns? • What kind of payment structures, benefits do communities receive in the operations phase? How much? How is this decided? How does this affect the community members who aren’t receiving anything? Accountability measures? Notions of Legitimacy and Social Acceptance • What does “legitimacy” mean to the community? What does it mean for something to have credibility with the community members? What would it take to make you feel like your voice has been heard, and seen? - by the government, by private sector, by NGOs, etc.? • What points in the processes we’ve described seem illegitimate to the community members? Unfair? Unclear? Why? What could have been done differently? By whom? When? How would this have changed community members’ perceptions, feelings, or reactions? Brainstorming Solutions • What would an ideal process of engagement look like? What are the benefits you would negotiate? Why those benefits? • Idea of interlocutor office or advisory committee – interest? What else would you want out of it? • What are other ways you think community members who were interested could take leadership?

Sample Semi-structured Interview Questions for Private Sector • What are your firm’s and your team’s priorities? Current challenges faced in wind farm development? What can the government do differently to enable wind farm development to thrive? • How are SIA/MIAs conducted, and how do you know if they’ve been done sufficiently? o Risk in involving communities? o How would SEMARNAT enforcing a strategic environmental assessment help or hinder your work?

52 o Thoughts on overlapping wind energy resource map with environmental and social impact maps? • How do you engage with communities? Interpreters? Culturally-sensitive trainings or workshops? • Minimum terms of compliance in contracts with communities? • Feedback mechanisms between developer and communities? • How can there be a way for developers to conduct the FPIC with the entire community but also not feel like it would be “suicide” for the project to do so (as one developer said)? • Thoughts on creating a specific tender process for community-owned wind farms? • Formal steps to set up wind farm? Permissions?

Sample Semi-structured Interview Questions for Government Officials • Your role? Priorities? Challenges? • Understanding of the lack of social acceptance? • How does negotiation or engagement process work? • Government roles, functions, formal steps in legislation for wind farm development

53 C. On Legitimacy and Social Acceptance Literature review of definitions of “legitimacy” and “social acceptance”:

(Source: Gehman, Joel, et al. “Social license to operate: Legitimacy by another name?” New Frontiers. CANADIAN PUBLIC ADMINISTRATION VOLUME 60, NO. 2. Pp. 304. (JUNE/JUIN 2017).)

Forms of “Social Acceptance”:

(Source: Wolsink, Maarteen. “WIND POWER: BASIC CHALLENGE CONCERNING SOCIAL ACCEPTANCE.” The Volcanoes of Mexico. Pp. 1790, 2012)

55 The difference in the “attributes” that communities must consider when deciding whether to accept the sociotechnical system of wind power in general versus accepting a wind power development in their communities:

(Source: Wolsink, Maarteen. “WIND POWER: BASIC CHALLENGE CONCERNING SOCIAL ACCEPTANCE.” The Volcanoes of Mexico. Pp. 1794, 2012)

56 D. Climate Change Strategy and Recent Auction Results General Law on Climate Change, 2012 – set out comprehensive regulatory and legal framework to address climate change, established new institutions like the Interministerial Commission on Climate Change (CICC) and the National Institute of Ecology and Climate Change (INECC) o Provisions include: 175

176

175 https://www.iea.org/media/workshops/2015/15thghgtradingworkshop/GeneralClimateChangeLaw_Englishversion.pdf 176 https://www.transparency-partnership.net/sites/default/files/encc_englishversion.pdf, pg. 15 57 National Strategy on Climate Change, 2013 – created vision for Mexico’s climate change mitigation/adaptation goals over next 10, 20, 40 years

58 Self-Supply (SS) versus IPP modalities for Wind Projects in Oaxaca – SS is dominant modality

(Source: Avila-Calero, Sofia. “Contesting energy transitions: wind power and conflicts in the Isthmus of Tehuantepec.” Universitat Autònoma de Barcelona Journal of Political Ecology. Pp. 998. 2017.)

59 Results of Recent Long-Term Auctions

(Source: Programa de Desarrollo del Sistema Eléctrico Nacional (PRODESEN). “Programa de Desarrollo del Sistema Eléctrico Nacional 2017-2031.” Pp. 142, 2017.)

First Long-Term Electricity Auction of the Wholesale Electricity • Began in 2015, concluded on March 2016 • Long-term coverage contracts allocated to 11 enterprises, which have submitted 18 winning proposals o Winning enterprises: Aldesa Energia Renovable, Consorcio Energia Limpia 2010, Enel Green Power, Energia Renovable Peninsula, Energia Renovable del Istmo II, Jinkosolar Investment, Photoemeris Sustentable, Recurrent Energy Mexico, Sol de Insurgentes, SunPower, and Vega Solar • 69 participants submitted a total of 226 proposals • “Objective of the Long-Term Auctions Allow the Basic-Services Suppliers to sign Contracts in a competitive manner, and under financial prudence, to serve the needs of Power, Accumulative Electricity, and CELs that shall be met through long-term contracts according to the requirements established by the CRE for such purpose….This auctioned power is equivalent to 1.9% of the current generation in Mexico, with projects going from 18 to 500 MW to be in Yucatan, Coahuila, Guanajuato, Tamaulipas, Jalisco, Aguascalientes, and Baja California Sur”177

Second auction • September 2016, results published • 57 bidders participated • 23 winners submitted 56 proposals for solar, wind, and other clean power sources • The 23 companies came from 11 countries, Mexico included • Winning bids were allocated 2,871 MW of new installed capacity of clean energies and an investment of $4 billion USD. • Historic average price of clean energy of about 33.47 USD per MWh, highly competitive price worldwide. • With the first two auctions, 15 states in Mexico will host wind, solar, hydraulic, and geothermal power projects.178

Third auction • Winners will provide around 5.5 million megawatt hours per year of clean energy, 55% of which is solar power and 45% wind-generated electricity.179

177 SENER. Energy Sector Outlook, 2016-2030. pg. 27-28. 178 SENER. Energy Sector Outlook, 2016-2030. 179Harrup, Anthony. “Mexico Secures Even Lower Prices for Clean Energy Auction.” Wall Street Journal. Nov. 16, 2017. https://www.wsj.com/articles/mexico-secures-even-lower-prices-for-clean-energy-in-auction-1510869066

61 E. Indigenous Rights Laws and Conventions protecting the rights of indigenous people (to which Mexico is a party) • Article 2 of Mexican Constitution: “‘This Constitution recognizes and guarantees the right of the indigenous people to self-determination and, consequently, to autonomy, including: [...] V To conserve and improve the indigenous peoples' habitat and preserve the integrity of their land in the terms of this Constitution.’ This constitutional amendment states there exists an affirmative obligation to conserve indigenous land, yet the current state of indigenous land in the Isthmus tells another story. That indigenous people are losing their territorial rights as a result of uneducated decision making can in no way be interpreted as a conservationist approach to their land rights.’”

• 1991 International Labor Organization, Indigenous and Tribal Peoples Convention 169 on Indigenous and Tribal Peoples: state parties are to “through appropriate procedures and in particular through their representative institutions, whenever considerations is being given to legislative or administrative measures which may affect them directly” (art. 6.1.a).

• Article 32(1) of UNDRIP: Indigenous people have the right to: “determine and develop priorities and strategies for the development or use of their lands or territories and other resources.” o Article 32(2), states are required to: “consult and cooperate in good faith with the indigenous peoples concerned through their own representative institutions in order to obtain their free and informed consent prior to the approval of any project affecting their lands or territories and other resources, particularly in connection with the development, utilization or exploration of mineral, water or other resources.”

• International Covenant on Civil and Political Rights, the International Convention on the Elimination of All Forms of Racial Discrimination and the American Convention on Human Rights, and the Committee on the Elimination of Racial Discrimination: States must ensure “that members of indigenous peoples have equal rights in respect of effective participation in public life and that no decisions directly relating to their land rights and interests are taken without their informed consent.”

• In June 2016, Mexico adopted the American Declaration on the Rights of Indigenous Peoples: “Indigenous peoples have the right to self-determination… They have the right to their own cultural identity and integrity and to their cultural heritage…. They have the right to the lands, territories, and resources that they have traditionally owned, occupied, used, or acquired.”

62 F. Sample Environmental Impact Assessment *874 pages long (Source: Articulacion Yucatan webpage: https://mayaenergia.wordpress.com/documentos/mias/)

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