Jebel Jais

How UAE is transforming the climate landscape through legislative action

Authors

9 minute read 15 Apr 2025
Related topics
Sustainability
Climate change and sustainability services
Government and Public Sector

In 2024, UAE unveils key climate laws and a carbon credit system, steering the nation toward its ambitious net zero target by 2050. 

In brief

  • In 2024, the UAE issued key legislations aligning its climate actions with international commitments, reinforcing its leadership in global sustainability efforts.
  • Reducing emissions is key to mitigating climate risks and essential for achieving the UAE's Net Zero 2050 target, ensuring lasting environmental resilience and economic sustainability.
  • Businesses must now incorporate systems, strategies, and climate risk assessments into their sustainability plans, actively mitigating associated risks.

Amid growing global concerns about climate change, the UAE has been at the forefront of global sustainability efforts, consistently taking bold steps to address climate change and reduce its carbon footprint. In a significant stride toward its ambitious net zero by 2050 goal, the UAE has marked two major milestones in 2024. The first is the enactment of Federal Decree-Law No. (11) of 2024 on the Reduction of Climate Change Effects, which will come into force on 30 May 2025. The new law aligns the nation's climate initiatives with global commitments, such as the Paris Agreement, further cementing the UAE's position as a leader in international sustainability efforts.

The second milestone is the introduction of Cabinet Resolution No. (67) of 2024 Concerning the National Register for Carbon Credits. This resolution establishes a comprehensive framework for the accounting, monitoring and reporting of greenhouse gas (GHG) emissions, laying the groundwork for a transparent and effective carbon emissions management system across various sectors.

These advancements arrive at a critical link as the UAE meets tangible climate impacts. Climate models, based on the analysis of past and present anthropogenic drivers, predict an increase in the UAE’s annual average temperature of around 1.5 to 2°C by 2040. Furthermore, up to 85% of the population and 90% of the infrastructure in the UAE's coastal zones are at risk due to rising sea levels caused by climate change. Reducing emissions is not only crucial for mitigating these risks but also underpins the UAE's Net Zero 2050 target, ensuring the nation's long-term environmental resilience and economic sustainability.

Coastal zone at risk
of the infrastructure in the UAE's coastal zones are at risk due to rising sea levels

How EY can Help

The Federal decree has a nationwide scope, affecting governmental, public and private entities, including those within free zones. Under the Cabinet Resolution, entities with a GHG inventory exceeding 0.5 MtCO₂e for Scope 1 and 2 emissions must report their annual GHG emissions, emission reductions and progress in implementing their emission reduction plans. For entities below this threshold, compliance is voluntary.

 

Businesses are required to establish a GHG Emissions Monitoring and Reporting System, mandating the accounting, reporting and monitoring of their GHG emissions. The new legislation aims to foster the development of GHG management systems in line with international standards such as the GHG Protocol and ISO 14064, as well as the decree’s Monitoring, Reporting and Verification (MRV) framework. Businesses must include at least Scope 1 and Scope 2 emissions, with the intention to eventually report on Scope 3 emissions.

 

Businesses must act now to develop decarbonization strategies and emission reduction plans, set science-based emission reduction targets, and regularly monitor and report progress to the relevant authorities. These strategies and targets must be in line with the UAE 2050 Net Zero Target and national climate change mitigation plans.

The establishment of a National Carbon Registry, in accordance with Article 6 of the Paris Agreement, enables organizations to register their carbon emission reductions and engage in domestic or international carbon trading. This provides an opportunity to generate revenue, supporting their decarbonization and sustainability initiatives. Moreover, the registry allows high-emitting entities to offset their emissions by purchasing verified carbon credits.

 

Businesses are required to integrate climate risk assessments and scenario modeling into their decision-making, aligning with global frameworks that advocate for enhanced climate-related financial disclosures to identify and mitigate climate-related risks.

 

Challenges in the business landscape of the UAE

Noncompliance with the Federal Decree and the Cabinet Resolution will result in administrative fines and penalties for repeated violations. Key penalties include fines for failure to measure GHG emissions, submit annual emissions reports, comply with Paris Agreement reporting requirements and other violations related to the National Register for Carbon Credits.


Beyond the direct penalties, delays in transitioning to low-emission practices pose broader financial and operational risks. These include increased capital costs, reduced competitiveness, indirect financial risks and investor pressure. Non-compliance and delays in adopting low-emission practices carry severe consequences, including escalating fines, increased operational costs, reputational damage and potential loss of market share. Proactive measures to align with federal regulations and sustainable practices are crucial to safeguarding financial stability, ensuring regulatory compliance and maintaining a competitive edge in a rapidly evolving business landscape.

 

How we can help

EY professionals’ insights in sustainability and climate change will assist entities in MENA to align with the new climate change decree while accelerating their transition to a more sustainable and green business model. The EY CCaSS team in MENA provides tailored solutions to address unique challenges and opportunities, regardless of where the organizations are on their sustainability journey. Leveraging advanced analytics, innovative technologies, and regulatory insights, EY teams help businesses reduce carbon footprints, enhance resilience and achieve long-term sustainability goals.

    1. Assess needs and goals: Understand the organization’s emission generating activities, sustainability objectives, and compliance requirements.
    2. Develop tailored GHG accounting frameworks: Create methodologies for measuring emissions (CO₂, CH₄, N₂O, etc.) aligned with global standards like the GHG Protocol and ISO 14064 while reflecting the organization's operational activities and sector-specific requirements.
    3. Define boundaries and emission sources: Establish organizational, GHG operational, and value chain boundaries to capture Scope 1, 2, and 3 emissions.
    4. Build emissions inventories: Develop required inventories for all business levels, ensuring data quality and identifying high-impact emission sources.
    5. Create tools for data collection and monitoring: Design data templates, reporting tools, and dashboards for seamless tracking, analysis, and reporting of emissions and KPIs.
    6. Establish baselines and scenarios: Evaluate and update baseline emissions, align with standards, and conduct scenario modeling to support reduction strategies.
    7. Prepare reports: Deliver standardized emissions reports and documentation for internal and external use.
    8. Ongoing support and recommendations: Train teams, provide guidance, and recommend advanced carbon management tools for continuous improvement.


Related articles

How MENA countries are adapting to and mitigating climate change

EY MENA has developed the CCRI to track responses to climate change in Egypt, Jordan and the six members of the GCC, both now and in the future.

Yasir Ahmad

How can better sustainability reporting mobilize companies and capital?

The EY Global Institutional Investor Survey examines how better ESG data and reporting can accelerate sustainability outcomes. Learn more.

Dr. Matthew Bell + 1

Five ways MENA companies can embrace sustainability

As MENA economies diversify and become more closely integrated into global capital markets, environmental, social and governance (ESG) considerations are becoming increasingly relevant to the region’s companies.

Yasir Ahmad

    Summary

    In 2024, the UAE issued legislations aligning its climate actions with international commitments. These legislations align with global standards, establishing a carbon credit registry and GHG reporting framework to achieve Net Zero by 2050. Businesses are now required to establish a GHG emissions monitoring and reporting system and develop a decarbonization strategy among other steps. These measures are essential to mitigate climate risks, ensuring long-term environmental resilience and economic sustainability for the UAE. EY MENA CCaSS team provides tailored solutions using advanced analytics, innovative technologies and regulatory insights to help businesses comply with climate change decrees and achieve sustainability goals.

    About this article

    Authors

    Related topics
    Sustainability
    Climate change and sustainability services
    Government and Public Sector

    EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.