UAE's Climate Transition: Legislative Action

On 28 August 2024, the United Arab Emirates (UAE) enacted Federal Decree-Law No. (11) of 2024 on the Reduction of Climate Change Effects, which is set to come into force on 30 May 2025. This landmark legislation mandates that all public and private entities operating within the UAE, including those in Free Zones, must measure, track, and reduce their greenhouse gas (GHG) emissions. The law aligns with the UAE’s broader strategy to achieve net-zero emissions by 2050 and meets its Nationally Determined Contributions (NDCs) under the Paris Agreement.

Why This Matters

• Gulf Leadership: The enactment of this law signals the UAE's deepening commitment to climate leadership both regionally and globally.

• Oil Exporter Nation Action: As a major oil-exporting nation, its pivot toward sustainability demonstrates a significant shift in national priorities. It reflects an understanding that addressing climate risks is not only an environmental necessity but also a strategic imperative for future economic resilience, global competitiveness, and societal well-being.

Details

Federal Decree-Law No. (11) of 2024 introduces wide-ranging responsibilities for both governmental and private entities. Companies must establish comprehensive GHG inventories covering Scope 1, 2, and 3 emissions, and regularly submit emissions reports aligned with Ministry guidelines. To achieve compliance, entities are encouraged to improve energy efficiency, adopt renewable energy, deploy carbon capture and storage technologies, engage in carbon offsetting, and maintain detailed emissions records for at least five years.

The law also institutes a National Carbon Credit Registry to monitor emissions reductions and enable carbon trading. Climate adaptation plans are required in key sectors like infrastructure, energy, and health, and the legislation provides penalties ranging from AED 50,000 to AED 2,000,000 for non-compliance. In tandem with national goals such as the UAE Net Zero 2050 Strategy and the Third NDC, the law offers clear guidelines and a pathway for businesses to integrate climate considerations into strategic planning.

Action Items:

To prepare for the implementation of the Federal Decree-Law No. (11) of 2024, businesses operating in the UAE should consider the following action items:

• Develop an Inventory: Develop a comprehensive emissions inventory and reporting framework in line with UAE regulations.

• Capacity Building: Train leadership and staff on climate policy compliance, including sector-specific obligations and reporting requirements.

• Risk Assessment: Conduct climate risk assessments and scenario planning to evaluate vulnerability and mitigation opportunities.

• Set Science-Based Targets: Set science-based targets and develop decarbonization strategies aligned with UAE’s Net Zero 2050 goals.

• Engage in National Carbon Credit Registry: Engage with government platforms such as the National Carbon Credit Registry and explore carbon trading mechanisms.