The United Arab Emirates (UAE) has enacted legislation requiring companies emitting 500,000 metric tons or more of carbon dioxide annually to monitor and report their greenhouse gas emissions. This initiative, effective December 28, 2024, positions the UAE as the first Middle Eastern nation to mandate such comprehensive emissions tracking, underscoring its commitment to achieving climate neutrality by 2050.
The new regulation applies to both direct emissions (Scope 1) and indirect emissions from purchased energy (Scope 2). Entities meeting the specified emission threshold are designated as “Entities of Huge Carbon Emissions” and are obligated to establish monitoring, reporting, and verification (MRV) systems aligned with international best practices. These entities must submit annual emissions reports to the Ministry of Climate Change and Environment (MOCCAE) and relevant local authorities, with verification conducted by MOCCAE-approved auditors.
Abu Dhabi has proactively launched a carbon reporting program aimed at tracking and reducing emissions from large companies. This program requires significant emitters to measure, report, and verify their emissions, facilitating the emirate’s environmental strategy to mitigate climate change impacts.
The legislation also introduces a National Register for Carbon Credits (NRCC), establishing a framework for the measurement, reporting, verification, and trading of carbon credits across the UAE. Entities exceeding the emission threshold are required to register with the NRCC and obtain approval for their carbon credits. This system enables companies to purchase carbon credits to offset their emissions, while entities with lower emissions can voluntarily participate by selling approved carbon credits on designated trading platforms regulated by the Securities and Commodities Authority (SCA).
Non-compliance with the new regulations may result in penalties, including fines up to AED 1 million or suspension of carbon credit trading privileges, as enforced by the SCA. The government has provided a grace period until June 28, 2025, for affected entities to comply with the requirements. Further details, including the identification of approved verification entities and specific operational guidelines, are anticipated to be released by MOCCAE in the coming months.
This legislative move follows the UAE’s hosting of the 28th Conference of the Parties (COP28) to the United Nations Framework Convention on Climate Change, reflecting the nation’s dedication to leading regional climate action. By implementing mandatory emissions reporting, the UAE aims to enhance transparency, support sustainable development, and contribute to global efforts in combating climate change.
The introduction of the NRCC and the associated regulatory framework signifies a significant advancement in the UAE’s environmental policy, promoting accountability among major emitters and encouraging the adoption of cleaner technologies. As the nation strives toward its 2050 climate neutrality goal, these measures are expected to play a crucial role in reducing greenhouse gas emissions and fostering a sustainable economic model.
Industry stakeholders are advised to assess their current greenhouse gas emissions, determine their obligations under the new law, and develop compliance strategies accordingly. Engaging with legal and environmental experts to navigate the complexities of the MRV requirements and carbon credit trading mechanisms will be essential for seamless integration into the UAE’s evolving carbon management landscape.