BBA Spotlight Series - Gabriel Bustamante, Environmental Law & ESG Attorney
Gabriel Bustamante is an award winning, Mexico based lawyer, who has been specializing in?environmental law for the last 15 years. Considered to be a “stand out authority on environmental law”, by publications such as Who’s Who Legal, he has worked extensively with private companies as well as national and international NGOs; and federal, state, and local governments.?His areas of expertise include electricity; oil and gas; industry; infrastructure projects; tourism developments; and equator principles. He is a top practitioner on environmental and social impact assessment, with more than 600 approvals.
Q1. At what point in your career did you decide to focus on environmental law and why?
I decided to become a lawyer mainly to protect the environment, I grew up in one of the most beautiful and greener states of Mexico, Oaxaca and since my childhood I developed a close relationship with nature. This background allowed me to understand its interrelations and all the time I spent outdoors empowered me to become an active actor in the protection of natural resources and the environment.?
Q2. How does Mexico’s current environmental laws and policies alongside Mexico’s pledge to reduce greenhouse gas emissions by 22% by 2030 impact business operations in Mexico today?
Mexico is the second biggest emitter of greenhouse gases in Latin America. In 2012 The General Climate Change Law was approved. This law is the legal framework that allegedly will be serving as the foundations from which Mexico will develop its national climate change policy.
It contained the emissions reduction target of 30% by 2020 (50% by 2050) and the 35% share of electricity from low carbon sources by 2024. The emissions target was part of Mexico’s Copenhagen Pledge, although this agreement was not legally binding. The share of low carbon sources of electricity is embedded in the Renewable Energy and Energetic Transition law of 2008, which requires that 35% of electricity comes from non-fossil fuels in 2024, 40% in 2030, and 50% in 2050.
The law was amended on November 6th, 2020, and in 2022, with additional wording in accordance with the Paris Agreement and the NDC, as well as further clarification for the implementation of the Mexican Emission Trading System. Under this mechanism, the government will assign and distribute free emissions allowances to each company or participant, corresponding to their emissions between the years 2016 and 2019. There, each year will be a reserve of 10% of the total volume of allowances, for new participants and for increases in the production of the companies already participating. Regarding the auction scheme under this ETS, 5% of the permissions will be retained and stored in a reserve, for being distributed in the following year.
This program will cover industry and energy sectors (like most ETS around the world). The participants will be those whose emissions exceed the 100,000 tCO2 per year, generating several obligations to all the subjects to report.?
Industries are using the Annual Operation Bond (COA in Spanish) as the reporting instrument to report their GHG emissions (among many other environmental pollutants). Under the COA the COA Web was developed in 2015, which is a web-based electronic tool for the reporting procedures described in COA.
The subject to report must monitor and report its direct and indirect emissions of the previous year (period 01/01 to 31/12) within an emissions report using COA Web between 01/03 and 30/06 of each year.?
Every third year, a specialized third party must verify the establishment’s emissions report and submit a verification opinion to SEMARNAT during 01/07 to 30/11; i.e., the verification of 2018 emissions will take place in 2019 and the next verification will be in 2022 for the reporting year 2021. Emissions of 2019 and 2020 will not be verified.
Among Climate Change serious environmental problems persist, including the provision of clean water, air pollution in Mexico City, and rural deforestation and erosion. Policy strides have been made particularly in air-quality regulation. For years, our country intended not to be an environmental haven for foreign industries and though we have a more robust environmental legal framework, the enforcement and rule of law has been our main weakness.??
Q3.?The Environmental Cooperation Agreement (ECA) among the United States, Mexico and Canada entered into force on July 1, 2020, in parallel with the United States of America, United States of Mexico, and Canada (USMCA) trade agreement.?What key challenges do you think Mexican and US companies face in cross-border deals with regards to these agreements?
The Mexico environmental policy in relation to the business community has been addressed and adequately provided for through the North American Free Trade Area Agreements. While the role and responsibility of enforcing the adopted environmental policies has been left to the individual states, there are two exceptions to this general rule. On the one hand, the states are required to strictly comply with the treaties that have been signed and concluded between the states and on the other hand, all the environmental laws that are enacted or adopted should not reduce their standards merely in a bid to promote business investments in that country. This means that Mexico has a responsibility to ensure that the concerns of the environment in terms of the quality are not compromised in any sense. The minimum standards that have been established should be respected and always upheld.
Q4. What future environmental laws and policies do you see benefitting Mexico’s people, businesses, and the environment?
I must pinpoint that Mexico has made laudable steps in the policy and strategies that have been adopted in a bid to protect the environment. This has led to the country being hailed as one of the most progressive nations especially for business entities that plan on establishing or relocating their manufacturing facilities.
Environmental laws have been structured in a manner that seeks to strike a balance between the global requirements and the need for a suitable business environment. With the major influencing factor being the health of the citizens and other residents, the environmental policy has sought to ensure that the air quality in Mexico is fit and does not lead to any health conditions. Further to this, the water quality in Mexico has been ta ken care of with the primary goal of ensuring that the risk of contracting any air borne or water disease has been reduced to the lowest probability possible. Although our laws and policies are sufficiently covering the main issues of the environmental problem, enforcement and rule of law are still our main weakness.?
The environmental policies and laws cover, although not exhaustive in any manner, the following major aspects:
1.?????The protection of the environment by adopting eco-friendly technology in all spheres of manufacturing as much as practically possible.
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2.?????The conservation of the natural resources especially those that are exhaustible by the manufacturing companies.
3.?????Formulating impact statements that impact on the environment and those that are aimed at taking care of the environment.
4.?????Coming up with policies, laws, rules, and regulation that relate to all aspects of ecological zoning.
5.?????Aspects that relate to the quality of the air and the water which includes the manufacture and use of pesticides, pollutants, and any other toxic substances.
Q5. How can Mexico position itself as a leader in environmental laws and policies concerning environmental issues with regards to business operations?
I′m a true believer that Mexico will reach a leadership position in environmental laws and policies mainly because of the drive of consumers and businesses. We are constantly communicating and working with our clients that although environmental law is a legal obligation, which necessarily imposes certain constraints, it can also represent a great development opportunity.??Indeed, respecting the regulations and incorporating environmental protection into company strategy is now key to a company’s performance and continuity. Whether through monitoring energy consumption or by implementing processes to limit waste generation, contributing to the fight against climate change enables companies to reduce unnecessary expenditure while boosting their net income. In addition to such financial savings, implementing an environmental policy makes a company more attractive in the short and long term to clients and investors with sustainable development concerns. It also rallies employees around a common goal.?
Q6. You have specialized in this sector for over 15 years now, can you tell me a highlight of your career.
A highlight of my career was when I decided to found BUSTAMANTE + FREYRE, which is the largest environmental law firm in Mexico right now. I knew then that my Firm will have distinctive characteristics that will allow us to create not only economic value to our clients, but also environmental and social values.
Q7. Why did you decide to become a member of BBA Deals & Disputes?
I decided to join BBA because it is a group of outstanding specialized lawyers that are focused on providing better efficiencies and better value to our clients with a laser focus on putting our clients first.?