“Beyond social license”: How can solar companies build equitably on Aboriginal land?

Financial, cultural and social fairness is key to unlocking the potential of solar on aboriginal land in Australia. Image: Lightsource bp.

According to the National Indigenous Australians Agency, indigenous peoples’ rights and interests over land are formally recognised on around 50% of Australia’s land mass.

A big part of this “Native Title” law concerns the profitability and economic return from land and the operations that take place on it, ensuring that the resources and proceeds from land are not extracted and separated from the traditional owners.

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Australia is targeting 82% renewables penetration in its energy mix by 2030, and it’s one of the richest nations for solar irradiance anywhere on earth. Many large solar PV projects cross over First Nations land, and the representative body the First Nations Clean Energy Network (FNCEN) says that “proper and meaningful engagement with First Nations will be essential for the success of the renewable energy sector.”

The history of relations between the energy industry and First Nations communities in Australia is checkered at best. Famously, Rio Tinto mining operations ended up destroying a 46,000 year old heritage site in 2020 and the Aboriginal areas of Western Australia in particular have been heavily mined and extracted for decades, often with scant engagement or consideration of the local population.

The FNCEN says to PV Tech Premium that “Systems that presently exist in Australia and which regulate access to land, waters and resources for activities like mining, oil and gas, pastoral, clean energy infrastructure etc. establish by design an adversarial relationship with First Nations and First Nations rights and interests.”

It is important to respect cultural tradition, where First Nations have played a custodial role over the land for millennia and held long-standing land tenure rights. However, a more practical side speaks to the ‘social license’ that renewable energy companies increasingly require if they are to operate.

“First Nations people and communities are key partners in this energy transition and must be treated accordingly – as genuine partners and shareholders”, the FNCEN says.

Earlier this year agreements were reached to develop a green hydrogen export hub in Western Australia, powered by a 900MW solar PV installation. It will be realised by a coalition between MG Corporation, Balanggarra Ventures, Kimberley Land Council and climate change investment and advisory firm, Pollination, called the Aboriginal Clean Energy (ACE) Partnership.

Upon completion by the end of 2028 it will be Australia’s ‘largest’ greenfield solar development, and the press release at the time said that the plant will be designed with “true co-design and co-decision making from the partnership’s shareholders”, meaning the land councils and representative bodies for the First Nations communities in the area.

This level of financial and directional involvement and development perhaps extends further than social license, according to the FNCEN: “Enabling and empowering First Nations to play a key and central role in Australiaʼs renewable energy transition goes beyond just social licence issues. It presents a unique opportunity for Australia to design a system that is fair and just and which can also positively impact and result in other social and economic benefits for First Nations.”

FNCEN continues: “Our clear message is that First Nations are key shareholders and partners, not stakeholders, both in the future success and growth of the renewable energy sector in Australia, and also in the significant beneficial outcomes that a successful renewable energy sector can deliver for the Australian economy.

“Given the geographical spread of First Nations people in Australia, and coupled with the extent of First Nations ownership of land and waters, it is self-evident that proper and meaningful engagement with First Nations will be essential for the success of the renewable energy sector and for any policy initiative.”

One of the forms of “proper and meaningful engagement” that the FNCEN highlights is FPIC – Free, Prior and Informed Consent. Included in the UN Declaration on the Rights of Indigenous People, FPIC calls for companies and governments to work with indigenous communities beyond merely singing a contract to allow sustained self-determination and comprehensive information and benefit-sharing.

Implementing FPIC principles falls in part to governments and their policies to regulate the activity of private business and prevent exploitation, however, according to FNCEN, “industry does not have to wait for governments to embed FPIC.

“To dispense directors’ duties faithfully and protect projects from risk, boards must ensure FPIC is standard across company operations. Similarly, investors should demand companies invest in and adopt FPIC standards and principles.

FNCEN continues: “Resetting relationships and embedding FPIC should simply be seen as sound business practice.”

In July this year, Philippines-headquartered renewables developer ACEN announced a partnership with the Yindjibarndi Aboriginal Corporation and the Yindjibarndi people to develop 3GW worth of renewables in the Pilbara region of Western Australia.

One of the oldest regions on earth with the earliest fossilised signs of life, the region has traditionally been a hotspot for iron ore mining, along with long-standing inequalities and exploitations of aboriginal populations in the region. The partnership between ACEN and the Yindjibarndi Aboriginal Corporation resulted in the formation of the Yindjibarndi Energy Corporation (YEC), a First Nations-led company joint-owned with ACEN.

The agreement is supported by Australian law, according to Craig Ricato, CEO of Yindjibarndi Energy. He references the “Native Title law”, introduced in 1993, which recognises First Nations and Torres Strait Islanders as “Traditional Owners” of lands that are therefore entitled to prior and informed consent of any developments on their land. 

In response to questions from PV Tech Premium, Ricato says of the partnership: “The partnership formed between Yindjibarndi and ACEN is unique in that it is Indigenous led. With AU$2 billion (US$1.28 billion) in renewable energy project construction in Australia already, ACEN’s capability means the Yindjibarndi can meaningfully participate in Australia’s transition to a clean energy future.

“Through YEC, the Yindjibarndi people will receive long term revenue from the energy YEC will make and sell, with an agreed 25%-50% equity participation by the Yindjibarndi nation in all projects. Projects will only be developed in areas Yindjibarndi people approve of, and jobs and training opportunities for Yindjibarndi people will be provided.”

This, it seems, represents the economic FPIC that the FNCEN emphasises. Ricato also echoes FNCEN’s sentiments on the most important steps for ensuring an equitable energy transition and avoiding the financial exploitation of Aboriginal land: “The most important step is to support Traditional Owners and their efforts for self-determination by allowing communities to actively participate as a commercial partner in development on their country. This will allow Traditional Owners the opportunity to find a partner with proven capability and financial capacity, but most importantly with the right values.”

Outstanding issues – a lack of commitment

But everything is not sunshine and roses. A report from the Business & Human Rights Resource Centre in 2021 found that the overwhelming majority of companies underperform in their “commitments to respect Indigenous Peoples’ and affected communities’ rights, in line with international standards, and their approaches to benefit sharing.”

The Renewable Energy & Human Rights Benchmark report found that, of the 15 companies it reviewed (including two large investors, Blackrock and Brookfield), just four companies received “partial credit” for making explicit policy commitments relating to Indigenous People’s rights; Acciona Energy, EDF, EDP and Iberdrola.

The Benchmark findings are based on the UN Guiding Principles on Business and Human Rights, and the average score of the 15 companies regarding indigenous rights was 0.6/6, just 10%. BHRRC said that the results were “profoundly concerning”, as were the findings relating to Land Rights where no company made a showing relating to “commitments to respect land rights and processes for identifying legitimate tenure rights holders”.

BHRRC notes that some companies may have policies on these matters that aren’t public.

The report said: “A key part of the just transition is an acknowledgement from business that frontline communities, who are the most likely to experience and live with the harmful impacts from their operations, have also been the communities least likely to experience the social and economic benefits. They also disproportionately bear the burden of environmental costs of such business, including the growing impact of climate change.”

Next Steps

“First Nations people don’t want the mistakes of Australia’s extractive mining legacy repeated,” the FNCEN says.

As solar deployments and the PV market swell and swell (up 50% in two years according to recent figures from the International Energy Agency), huge market opportunities present themselves. For example, report found that solar and storage has added around US$100 billion to the US economy alone since the Inflation Reduction Act (IRA) passed, and the same US$100 billion figure has recently made headlines regarding the next decade of renewables in Australia.

The energy transition loses its lustre if it’s at the expense of people and communities without direct access to it.

For industry best practise, FNCEN turns to Canada: “Lessons from Canada, where First Nations have been engaged with the renewable energy sector for the past 20 years, help to highlight some of the potential for renewable energy projects to generate significant beneficial economic outcomes for First Nations in Australia.

“An emerging trend in renewable energy developments is the interest being displayed by all project proponents to consider First Nations equity participation. This level of involvement by First Nations in projects is unprecedented in relation to the extractive resources sector (mining, oil and gas), which have typically limited First Nations involvement to royalty payments.”

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