The Federal Decree-Law No. (11) of 2024 on Reducing the Impacts of Climate Change, issued by UAE, marks a qualitative leap in the UAE’s environmental efforts.
This legislation—the first of its kind in the Middle East—not only establishes a legal framework for achieving the “UAE Net Zero by 2050 Strategic Initiative” but also transforms climate commitments from voluntary measures into strict legal obligations for businesses operating in the country, backed by hefty financial penalties.
For companies and establishments of all sizes and sectors, climate action is no longer just a strategic choice—it has become a necessity to ensure legal compliance and business continuity.
This article provides a comprehensive guide for UAE businesses, explaining their new obligations under this law and outlining practical steps to avoid significant fines while aligning with national and global sustainability goals.
Summary of Key Provisions in Federal Decree-Law No. (11) of 2024
Before diving into compliance steps, it’s essential to understand the core pillars of this groundbreaking law:
• Strategic Goal: Achieving Climate Neutrality
The law aims to manage national emissions effectively, contributing to global climate efforts and enhancing the UAE’s resilience to climate change impacts.
• Broad Applicability
The law applies to “Sources,” defined as public/private legal entities and individual establishments whose operations release greenhouse gases (GHGs) into the atmosphere.
This includes all businesses within the UAE, including free zones.
• Mandatory Emission Reduction Pathways
Article (4) requires businesses to reduce emissions through measures like energy efficiency improvements, clean energy adoption, carbon capture, and integrated waste management.
• Measurement, Reporting, and Verification (MRV) Framework
Article (6) mandates designated businesses to measure emissions periodically, maintain detailed records, and submit reports to authorities.
• Strict Penalties
Non-compliance with MRV requirements (Article 6) can result in fines ranging from 50,000 to 2,000,000 dirhams (Article 15), doubling for repeat violations within two years.
• Compliance Deadline
Businesses have a one-year grace period (until May 2026) to align with the law, extendable by cabinet decision.
Practical Compliance Guide: Key Steps to Avoid Fines
Transitioning to full compliance requires a proactive, structured approach. Here’s a breakdown of critical actions businesses must take immediately.
1. Understand Your Specific Obligations
The first step isn’t random action—it’s knowing exactly what applies to your business. The law adopts a phased approach, with stricter MRV rules likely targeting high-emission sectors (e.g., heavy industry, energy, transport, waste, and construction).
Action Steps:
• Monitor executive decisions from the Ministry of Climate Change and Environment and local authorities (e.g., environmental agencies or municipalities). These will clarify sector-specific rules.
• Conduct an internal carbon footprint assessment to gauge your emissions profile and prepare for potential reporting mandates.
2. Set Up an Emissions Measurement System
Article 6(1)(a) requires designated businesses to measure emissions accurately and regularly—not through estimates but via a scientific, ongoing data collection system.
Action Steps:
• Identify emission sources (Scope 1: direct emissions like fuel combustion; Scope 2: indirect emissions from purchased electricity).
• Adopt globally recognized methodologies (e.g., GHG Protocol) and collect activity data (fuel consumption, electricity use).
• This requires an investment in human and technical capabilities. Facilities need to hire and train a specialist (such as an environmental engineer or sustainability manager) and emission-tracking software for precise reporting.
3. Prepare an “Emissions Record” and Submit Reports
Measurement alone isn’t enough. Businesses must maintain an Emissions Record (Article 6(1)(b)) with:
1. Emission data (broken down by source and scope).
2. Current reduction efforts (e.g., energy efficiency projects).
3. Future reduction plans (timelines and expected outcomes).
Action Steps:
• Design a clear record-keeping structure.
• Stay ready to submit reports via the national digital platform once launched.
4. Maintain Records and Cooperate with Audits
Article 6(1)(c) mandates keeping emission records for five years and allowing inspections by judicial officers. Non-compliance risks maximum fines.
Action Steps:
• Develop a document retention policy (secure storage for raw data and reports).
• Train staff on handling audit requests transparently and promptly.
5. Strategize Emission Reduction Plans
While fines target MRV failures, the law’s ultimate goal is real emission cuts. Smart businesses will integrate climate action into core operations.
Action Steps:
• Explore reduction pathways under Article 4 (e.g., renewable energy, carbon capture).
• Adopt a shadow carbon price (Article 10) to weigh emissions in financial decisions.
• Consider carbon offset projects (e.g., renewables, afforestation) via the upcoming National Carbon Registry.
Compliance Isn’t a Burden—It’s an Opportunity
Federal Decree-Law No. (11) of 2024 isn’t just another regulation—it’s a new era of corporate responsibility in the UAE.
Businesses that act now won’t just avoid fines; they’ll boost efficiency, cut waste, and build a reputation as sustainability leaders.
The message is clear: Start your compliance journey today. Understand the law, assess emissions, allocate resources, and contribute to the UAE’s vision for a climate-neutral, sustainable future.
