The UAE has enacted two landmark legislations that formally embed climate accountability within the national business framework:
- Federal Decree-Law No. (11) of 2024 on the Reduction of Climate Change Effects
- Cabinet Resolution No. (67) of 2024 on the National Carbon Credit Register
Effective from 30 May 2025, these legal provisions create mandatory obligations for companies across key sectors. They introduce a compliance-based model for emissions tracking, carbon trading, and corporate sustainability.
Table of Contents
Understanding Federal Decree-Law No. (11) of 2024
Legal Purpose and Scope
The Decree-Law outlines the UAE’s legal strategy to reduce the impact of climate change. It:
- Mandates emissions monitoring and mitigation by entities whose operations affect the environment
- Establishes institutional governance led by MOCCAE (Ministry of Climate Change and Environment)
- Enables executive regulations to be issued to detail technical obligations and penalties.
Key Compliance Requirements for Businesses
| Obligation | Summary |
| Emissions Measurement | Companies must track greenhouse gas (GHG) emissions using standard methods approved by MOCCAE |
| Reporting Duties | Entities are to periodically disclose emissions levels to competent authorities |
| Adopt Mitigation Measures | Firms must demonstrate adoption of practices and technologies that reduce carbon footprint |
| Support National Net Zero Pathway | All operations must align with the UAE’s Net Zero by 2050 strategy |
Enforcement and Penalties
As per the provisions, non-compliant entities may face:
- Monetary fines
- Revocation of environmental licenses
- Mandatory suspension or correction of operations
- Public listing of violations on government platforms
These enforcement measures aim to shift climate efforts from voluntary action to statutory obligation.
Cabinet Resolution No. (67) of 2024: The National Carbon Credit Register
Purpose and Scope
This resolution establishes a centralized national register to:
- Record all carbon credits generated, transferred, or retired within the UAE
- Ensure transparency and traceability of carbon offsets
- Standardize issuance and verification of carbon credits under UAE authority
The register is administered by MOCCAE, with technical collaboration expected with sector regulators including Securities and Commodities Authority (SCA) and Abu Dhabi Global Market (ADGM) or Dubai Financial Market (DFM), depending on where the trading or funding is facilitated.
Who Must Register
The following must onboard to the register:
- Companies emitting ≥500,000 tonnes CO₂e annually
- Firms developing or managing UAE-based carbon offset projects
- Entities voluntarily participating in carbon credit markets
Conditions for Credit Validity
Only carbon credits that meet the following standards will be legally valid in the UAE:
- Derived from MOCCAE-recognized methodologies
- Verified and certified by approved third-party validators
- Registered and transacted through the national system
This ensures credits used for compliance or disclosure (e.g., in ESG or financial filings) are traceable and domestically recognized.
Sectoral Impact Analysis
| Sector | Key Exposure Points |
| Oil & Gas / Energy | High emissions intensity, direct reporting and mitigation requirements, potential for project-based credit generation |
| Heavy Manufacturing / Cement / Steel | Emissions disclosure and retrofit of mitigation technologies; subject to strict compliance |
| Transport / Logistics / Aviation | Fuel-related emissions tracking, alignment with net zero logistics initiatives |
| Real Estate / Construction | Carbon footprint from materials and operations; potential to participate in offset markets |
| Agriculture / Food Processing | Land use and supply chain emissions; may benefit from nature-based offset projects |
| Financial Services | Due diligence on financed emissions; potential market makers in carbon credit platforms |
Carbon Credits as Financial Instruments
Market Recognition
Carbon credits are increasingly treated as quasi-financial assets, often categorized as:
- Environmental Assets on balance sheets
- Risk-adjusted instruments under ESG-aligned investment criteria
- Collateral or tradable assets in green finance platforms
Regulatory Oversight
The UAE’s move to regulate carbon credits introduces formal market supervision:
- SCA is expected to co-regulate exchanges and brokers involved in credit trading
- UAE-based exchanges may develop dedicated carbon markets (e.g., ADX, DFM, AirCarbon Exchange Abu Dhabi)
- Credits traded outside the national register will not be recognized for local compliance or official emissions reduction claims
This brings the carbon market under the regulatory purview of financial compliance, anti-fraud, and sustainability disclosure norms.
Practical Steps for Businesses
Business leaders must move from awareness to readiness. Recommended actions:
Compliance Readiness
- Quantify emissions footprint internally or via third-party auditors
- Set up internal teams for climate data reporting and documentation
- Register with the National Carbon Credit Register if applicable
Strategic Positioning
- Identify potential to generate carbon credits from existing ESG projects
- Monitor evolving MOCCAE guidance on sector-specific standards
- Prepare to integrate carbon cost and credit valuation into operational planning
Risk Management
- Ensure climate-related risks are reflected in corporate risk registers
- Monitor regulatory updates and executive decisions on enforcement
- Conduct legal reviews of contract clauses related to environmental liabilities
Concluding Remarks
The combination of Federal Decree-Law No. (11) and Cabinet Resolution No. (67) is a structural evolution—not an aspirational one. These are mandatory, enforceable legal obligations backed by penalties and inter-agency enforcement.
Businesses in the UAE must now embed climate compliance into core strategy—not just CSR. This is particularly critical as the UAE continues to build a green capital market infrastructure, where ESG performance and regulatory alignment will directly influence:
- Access to capital
- Government procurement eligibility
- Investor confidence and market reputation
Ajay is an experienced accounting professional known for his precision and client-focused approach. He brings deep expertise in bookkeeping, financial reporting, and business advisory services, ensuring clients meet their financial goals.