The United Arab Emirates is taking a significant step toward its Net Zero 2050 goal with the introduction of Federal Decree-Law No. 11 of 2024 on the Reduction of Climate Change Effects, effective May 30, 2025. This comprehensive legislation mandates that businesses across all sectors—including free zones—must measure, report, and reduce their greenhouse gas (GHG) emissions.

Why This Matters

The UAE’s bold climate policy signals a new era of accountability. Businesses must now align with national emissions goals—or face increasing regulatory, financial, and reputational risks.

What’s in the Decree?

Key Requirements for All Entities

• Report Scope 1, 2, and 3 GHG emissions.
• Comply with sector-specific emission targets.
• Participate in the National Carbon Credit Registry.
• Maintain emissions records for at least 5 years.

Reporting Emissions – It’s Mandatory

All entities must submit emissions data to the Ministry of Climate Change and Environment through a centralized digital platform.

Non-compliance penalties: Fines from AED 50,000 to AED 2,000,000, doubled for repeat offenses.

Sector Targets Are Coming

What to Expect

• Annual Emission Targets: The UAE Cabinet will establish yearly goals for each sector, aligning with the country’s climate neutrality pathway and economic development priorities.
• Sectoral Decarbonization Plans: Authorities will develop and update tailored plans to achieve these targets in coordination with the Ministry.
• Monitoring & Reporting: Entities must measure emissions, prepare inventories, and submit periodic reports in line with Ministry standards.

Carbon Offsetting Gets a Boost

The New National Carbon Credit Registry

1. Mandatory and Voluntary Participation
   • Large Emitters: Organizations emitting over 0.5 million metric tons of CO₂ annually must register and comply with the registry’s protocols.
   • Other Entities: Organizations below this threshold may voluntarily register to trade credits and support broader reduction efforts.
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2. Carbon Credit Trading Platform
   • The registry enables buying and selling of credits through licensed platforms, treating them as financial instruments.
   • Trading is allowed domestically and internationally with Ministry approval.
3. Monitoring, Reporting, and Verification (MRV)
   • Entities must use MRV systems aligned with IPCC and ISO standards.
   • Annual emissions reports are subject to independent verification.
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4. Carbon Credit Validity and Retirement
   • Credits are valid from a baseline year of 2019 and must be real, measurable, and verifiable.
   • The registry prevents credit reuse, ensuring genuine reductions.
5. Integration with International Standards
   • The registry aligns with global frameworks such as the Paris Agreement.
   • This supports UAE’s climate commitments and enhances market credibility.

What Should Companies Do Now?

1. Calculate your Scope 1, 2 & 3 emissions.
2. Establish a monitoring and reporting system.
3. Set internal emission reduction targets.
4. Develop a carbon credit strategy.
5. Train staff and update internal policies.

Risk or Opportunity? You Decide.

Compliance is mandatory. But leadership in sustainability is a competitive advantage. Early action means:

• Lower long-term costs
• Stronger brand value
• Smoother audits and reporting

Final Thought

Climate regulation is evolving. Your response today will define your future competitiveness. Embrace change now to stay ahead in a sustainable world tomorrow.