What happens to my highlights if read library ebooks such as Libby?

Currently, the Libby app itself doesn't allow for exporting of highlights.

But if you read your Libby books on a Kindle device or in the Kindle app, the highlights will be automatically synchronized in Readwise for you. Here are the instructions on Reading with Kindle while using the Libby app.

All notes and highlights are preserved in your Kindle account after a library book loan ends. You can find your library book highlights that you've read with your Kindle device or in the Kindle app here: https://read.amazon.com/notebook

It's also best practice to make sure you're highlights and notes are uploaded to Amazon prior to your library loan expiring.