Closure and Responsible Exit
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A requirement for environmental and climate justice in Latin America
No natural resource (material or energy) extraction project lasts forever. Its useful life is subject to many variables, including endogenous factors -such as the amount of resource reserves or the extraction rate- and exogenous factors -such as decisions to address the climate crisis, the decrease in demand, financial problems, etc.- that condition the moment in which the project must close or the moment in which an actor in its value and supply chain must leave. Regardless of the length of the project's useful life or how it may be affected, a responsible closure process with the natural environment and society must be contemplated, which must be desired and promoted by all the stakeholders involved.
This issue is even more relevant in the context of the climate crisis we are experiencing, which makes it urgent to implement measures to manage it in the short, medium and long term. Many of the actions required to meet greenhouse gas (GHG) mitigation targets are related to energy transition, which implies, in general terms, at least two things: 1) the substitution of fossil fuel extraction and use projects and 2) the promotion of low-emission renewable energies, which are associated with mineral extraction. In both scenarios, closure and exit issues are of great importance.
In both extraction and generation projects, the role of their promoters, whether public or private, is essential. Likewise, the obligation of supervision and oversight of the States is very important for the protection and guarantee of the rights of those who may be affected. On occasions, the responsibility of the exit includes other key actors that are part of the value and supply chains of the projects: investors, insurers, distributors and buyers, among others.
In Latin America, there have been important advances in regulating aspects related to the authorization, start-up and implementation of mining and energy projects. In these phases, environmental principles such as prevention and precaution, as well as rights such as prior consultation and free, prior and informed consent, and access rights, have played a crucial role in determining the viability and progress of projects, as well as in protecting and guaranteeing the rights of communities in the region. However, experience has shown that there are significant challenges for the closure and exit processes to be responsible with the ecosystems and communities involved. Indeed, the lack of a closure process, as well as the lack of clarity about the obligations surrounding the social transition processes and overcoming the conditions of economic dependence, are complex obstacles that can exacerbate environmental and social impacts.
This report arises from the idea of proposing approaches based on law and science to address the closure and responsible exit of projects. To this end, we at the Interamerican Association for Environmental Defense (AIDA), in the period 2022-2024, interviewed various stakeholders1 and systematized 12 cases that exemplify the problematic situation of multiple fossil fuel extraction, mineral and power generation projects, which are in the closure phase or in exit processes in different countries of the region. These cases highlight the current challenges and legal, technical and administrative gaps regarding closure and exit in specific contexts.
With this publication, we seek to provide answers to the following questions: what is meant by project closure and exit, what is the basis for closure and exit obligations under international law, what should closure and exit look like, who should be involved in these processes, and how should the social, environmental, economic and human rights challenges and impacts that arise from them be addressed?