Chile’s President-Elect Gabriel Boric to Take Office Next Month Campaigned on a Platform with a Strong Environmental Focus
Parallel to this, the constituent convention charged with writing a new Constitution continues to make associated suggestions. These include proposals to nationalize natural resources of the country and to enshrine rights to nature in the draft magna charta. After clearing the committee stage, proposals need to be approved by the full convention. Next, half of the draft constitution will be up for vote in a national exit referendum.
A new constitution or, more specifically, rights enshrined could have myriad consequences for leftist Borics’ incoming government and its legislative plans, which are also expected to have thick, green threads running through them. Investors are asking big questions in this context: What’s next? How will the rules change?
BNamericas spoke with Fernando Molina (lawyer and partner at Chiles Grupo Evans), a legal firm that employs both engineers and lawyers to discuss these issues. Its practice areas include energy, environment, sustainability, mining, water rights, and regulations.
BNamericas: Gabriel Borics campaign was founded on environmental protection as a central pillar. What do you think Boric will do to fulfill this promise? What are the challenges he might face along the way
Molina:Gabriel Boric’s main challenge is to address the environment with urgency. It must adapt to the impacts of climate change by taking measures such as drought, growing loss of biodiversity and pollution control. These issues affect both urban centers and fragile ecosystems.
This includes approving emblematic bills, such as the climate-change framework law and the one establishing the biodiversity and protected areas service. However, dictating rules isn’t enough. In today’s social- and environmental context, tangible and verifiable outcomes will be required.
The decarbonization plan, and the tensions between those who want to bring forward its closure, can be clearly seen in the foregoing. [coal-fired]The practical challenges that this creates due to the lack of baseload power sources to sustain the national energy matrix. The same applies to areas known as sacrifice zones. These areas have been particularly affected by fallout from industrial and mining activities, and require state intervention.
BNamericas: How do you address the expectations regarding this environment-focused government?
Molina:As mentioned, expectations are high as visible changes are not expected in the immediate future. This is why the circular economy agenda, for instance, must be developed and implemented effectively in the next years.
This urgency will be reinforced by the need to secure new investments and clarify the rules that govern their development. Borics government program, which was announced by the president-elect, has stated that he intends to stimulate extractive activities like mining, but with a new approach that is more sustainable and more environmentally responsible. This is why the expectation will be on how this declaration will be put into practice. Is it capable of setting clear rules and making decisions that allow for the development of sustainable projects while protecting the environment? If it is able to establish clear rules and adopt decisions that allow for the development of sustainable projects while protecting the environment, it will undoubtedly have to shoulder certain costs. It is possible for players to feel hurt, or that they have unrealistic expectations. This is something that the government must address.
As mentioned, the first signs regarding the decarbonization process as well as the environmental evaluation of relevant investments projects will be particularly indicative.
BNamericas: In Chile, there is a proposal that the magna Carta would enshrine nature rights in the context of constitutional rewrite. What implications could such approval have on companies that are considering developing projects in the country’s mining and infrastructure sectors?
Molina: Rights over nature are not new. It is an old issue that has been studied in several countries, including New Zealand, Ecuador, and the United States.
This vision is fundamentally about a change in the human relationship to nature. It can be viewed as simple goods that can easily be exploited, or the need for consideration of the interdependence between man and nature and the intrinsic value this represents.
This new paradigm does not solve the problem. This vision can be expressed in rules, such as the rights to live and develop, the protection of endangered species or the prohibition on cruelty to animals. This recognizes them as sentient beings that need to be respected. Rights over nature do not mean that nature has the same rights as humans. It means to preserve them for their survival and development.
This regulation that seeks to prohibit the exploitation of natural resource, which corresponds with the foundation of Chile’s income, can create problems. Its depth and scope will ultimately affect the consequences of its eventual consecration. The legal action in environmental matters will be significantly increased if its limits are not clearly defined or if the rights to file actions against nature are not exercised.
There are many legal formulas that include this new understanding of the relationship between humans and nature that go beyond the utilitarian vision. They also do not recognize rights over the natural world. For example, the so-called custody of nature concept has been proposed, where the burden of this protection is shouldered by the state, which must conserve and maintain it for the common benefit of current and future generations; all concepts incorporated in the new trends of sustainable development.
BNamericas: Do you think that the new government, in regulatory matters such as environmental, will bring about more significant changes than a new Constitution, or vice versa,?
Molina: The main change could be attributed to the new constitution, rather than the government. From the perspective of environmental management, the new political constitution will have relevant consequences if it fails to balance the protection and development of the environment.
This does not diminish the high expectations for elected governments, which must demonstrate effectiveness in protecting the environment and making sure that there are clear rules for the development new investments.
BNamericas: Concerning the new government, and the process for drafting a constitution, do you think there are concerns on the part of private sector about new rules of play for the country? Do you think this uncertainty is having an effect on investment plans? Is there a company that is in wait and see mode?
Molina: Yes, there are changes that can be relevant and cause uncertainty which could affect investments. This is demonstrated by the fact that in 2021 records were set for mutual funds in international currencies and research that confirms capital fleeing.
This is a typical example of a process that has seen profound changes.
The signals that the future government is sending to ensure stability in the country’s economy and regulatory environment are important. For example, the appointment as chairman of the central banking to the finance ministry, and the addition of other specialists in key positions such as Maisa Rojas at the ministry of environment.
It will also be crucial to see how the constitutional process develops, and show respect for the rule and minimum guarantees.
BNamericas: What can you say about recent regulatory or rule change, such as the modification of the mining code?
Molina: We are a law firm that consists of lawyers and engineers who specialize in environmental and energy matters. This is especially important for large energy and mining projects. We closely monitor both recent and future regulatory changes.
It is difficult to choose one over the other. I believe that the modification to the mining code has a specific tendency towards ending mining speculation, despite some shortcomings. We see that regulations are moving in the right direction in the environmental field. They address issues such as climate change and biodiversity. There are also important efforts to make the country more sustainable, such as the single use plastics law, extended producer responsibility law, as well as the pending modification to the regulation associated with green taxes.
All these changes indicate a shift in Chile’s vision. They also show a concern to adapt Chilean law to international standards, emphasizing sustainable development as the axis. It is clear that the country is going through profound changes. It is important to be able to anticipate them and to respond in the most effective way.
BNamericas: What regulatory changes does Chile need in energy, environment, and natural resources matters?
Molina: It seems to me crucial to give the greatest urgency to the climate bill framework bill and to the bill that establishes a biodiversity and protected area service.
Another important matter is to modernize the environmental impact assessment system so that it allows for the development of more certain requirements that investment projects in the country must meet. It is still a work in progress. Previous governments have failed to modernize this instrument.
Finally, there is still a pending agenda. It has not been able tackle the complexities of pollution. This can be seen in the precarious environment institutional framework that has not been able to effectively deal with the so-called “sacrifice zones”. This is due to a lack effective technical instruments that can be integrated in a comprehensive way, adequate participation and governance in decision-making. These phenomena require a new institutional framework.