Renewables Are Expanding on Indigenous Lands, Co-Ownership Offers a Solution

A new report co-produced by the Business and Human Rights Resource Center and Indigenous Peoples Rights International calls for more Indigenous co-ownership in renewable energy projects. 

The report highlights examples where co-ownership agreements between energy developers and Indigenous communities are established and shares the experiences of the parties involved. It also provides recommendations to governments, companies and Indigenous peoples, highlighting barriers and risks to co-ownership in renewable energy projects.

Why is co-ownership important?

“There is massive investment going into renewables and a lot of the same kind of problems that we see in other land-intensive industries, like fossil fuels, are being repeated in renewable energy,” said Ana Žbona, co-head of the civic freedoms and human rights defenders program at the Business and Human Rights Resource Center. 

Indigenous peoples, who in large part have already been pushed to the margins of society, are again experiencing the wave of progress roll into their communities and pull their resources out to sea.

You may expect that from oil barons or the fever of a gold rush, but renewable energy is assumed to be different. 

“Yes, this is an energy transition, but it’s also a systems transition,” Žbona said. “But with renewable energy companies, we aren’t seeing that. We’re seeing a lot of the business-as-usual, extractive approach.”  

Energy developers and Indigenous communities sharing ownership of renewable projects can help address this issue.

“Co-ownership is recognizing the equity that Indigenous peoples have in a project,” said Alancay Morales Garro, business and human rights lead at Indigenous Peoples Rights International.

It’s important to emphasize that co-ownership does not imply free, prior and informed consent of a project from the community. Consent must still be obtained, regardless of ownership.

Co-ownership is proving to be good for business

The report notes that co-ownership models between Indigenous peoples and renewable energy projects are on the rise globally. 

In Colombia, Greenwood Energy is developing a solar project on Arhuaco land, and 49 percent of the project is owned by the Arhuaco people. Greenwood had plans to build a transmission line. But after project discussions with the Arhuaco, the company learned that the proposed route for the line was not optimal and for reasons of cultural and environmental significance, the partners rerouted the transmission line. The decision reduced costs and created a more sustainable project.

In Canada, a company called Natural Forces has eight projects and 19 Indigenous partners. “Their sense is that those projects were successful because of those long-term relationships that they’ve built,” Žbona said.

Natural Forces has some projects where Indigenous communities have small, minority stakes and others where the communities own more than 50 percent of the project. 

Companies that engage in co-ownership agreements with Indigenous nations receive a variety of benefits. The value of Indigenous knowledge of the land cannot be overstated. 

“Indigenous peoples are very informed about how their territory works,” Žbona said. “When they are invested in a project, they will give the kind of advice that’s going to make the project work better.”

There is also less risk of a project being protested, suspended, canceled or challenged in court when an Indigenous community has an equity stake in the project.

A mining company in Northern Canada, Skeena Resources, that co-owns a mine with the Tahltan Central Government told TriplePundit that the practice of respect and relationship-building adds immense value to a project.

“It’s the ability to work closely with people around common goals and to share aspirations with each other,” said Justin Himmelright, senior vice president of external affairs at Skeena Resources. “Trust and respect build fantastic productive relationships when it comes to advancing projects and initiatives together.”

While changing the status quo can be difficult, companies agree it is well worth it in the long run.

“A big renewable energy company said, ‘Yeah, it is challenging learning a new way of doing things,’” Žbona said. “They said, ‘It means more upfront time investment, but ultimately we are showing that there is another approach, a different mentality here, and that makes us more competitive in the end.’”

Governments have to play a bigger role

For co-ownership agreements to thrive, companies and Indigenous communities need a regulatory framework that facilitates the agreements. 

Canada is one country that is leading the way. The country’s regulatory framework recognizes Indigenous title to land and provides support to pursue co-ownership agreements.

“In Canada, there is legislation in place,” Žbona said. “There are even policies that allow for Indigenous peoples to have access to funding for these types of projects.”

In other regions, the lack of government recognition of Indigenous peoples makes it difficult for them to acquire an equity share in projects.

“In some places in Asia and Africa, where Indigenous peoples are not recognized, the state has all the power, and sometimes they exercise those powers wrongfully,” Morales Garro said. “The rights recognition of Indigenous peoples is a must.”

With greater rewards, comes greater risks

As investors know, having equity in a project or a company is not a risk-free venture. The report highlights some of the risks Indigenous communities face when considering ownership.

“If you have equity in a project, you have stakes on the table and there are risks associated with that,” Morales Garro said. “Projects can fail.”

If the governance of the project and the community’s funds are not adequately managed, it can also create internal divisions in the community. 

And when communities move towards full ownership of a project, they need to ensure they have experts who can successfully manage the project.

“One Indigenous community said, ‘We have lots of lawyers, but we don’t have many engineers or technicians, and that’s a gap that will come up if we start pursuing these types of arrangements,’” Morales Garro said.

Given the increased demand for clean energy, co-ownership models offer a potential improvement over the conventional, sometimes combative, relationships that Indigenous peoples had with energy projects in the past. With the right procedures, this arrangement could be a win for all parties involved.