Federal Decree-Law No. (11) of 2024 introduces the UAE’s first legally binding climate compliance framework, requiring businesses across the mainland and many free zones to meet greenhouse gas emissions obligations. If your organisation operates in the UAE, understanding these requirements is essential to avoid penalties and prepare for future reporting.
Effective from August 2024, the law moves sustainability beyond voluntary commitments by establishing enforceable responsibilities for businesses. Whether you’re a business owner, finance leader, or compliance officer, this guide explains who the law applies to, what it requires, potential penalties for non-compliance, and the practical steps you should take now.
Why the UAE Introduced This Law
The UAE’s Climate Change Law is part of a broader national strategy to strengthen climate resilience and reduce greenhouse gas emissions. Following the severe flooding experienced across Dubai and other emirates in April 2024, climate risk became an even more visible priority. While the law forms part of the UAE’s long-term environmental agenda, it also reflects the country’s commitment to turning climate ambitions into enforceable legal obligations.
The legislation supports the UAE’s Net Zero by 2050 Strategy and aligns with its commitments under the Paris Agreement. Through its updated Nationally Determined Contributions (NDCs), the UAE aims to reduce greenhouse gas emissions by 47% from 2019 levels by 2035. Federal Decree-Law No. 11 of 2024 provides the legal framework to help achieve these targets by requiring businesses to manage, monitor, and prepare for future emissions reporting.
Key compliance timeline:
- 28 August 2024: Federal Decree-Law No. 11 of 2024 issued.
- 30 May 2025: Law entered into force.
- 30 May 2026: End of the one-year transition period and deadline for full compliance.
For businesses operating in the UAE, this timeline leaves limited time to review existing environmental practices, identify compliance obligations, and establish the processes needed to meet the new legal requirements.
Does the Climate Change Law Apply to Your Business?
In most cases, yes. Federal Decree-Law No. 11 of 2024 applies to public and private entities across the UAE whose operations generate greenhouse gas (GHG) emissions. This includes businesses established on the mainland as well as companies operating in free zones such as JAFZA, SAIF Zone, and DIFC.
Unlike climate regulations in many other countries, the UAE law does not set minimum revenue, employee, or emissions thresholds. Whether your emissions come from fuel combustion, purchased electricity, company vehicles, diesel generators, manufacturing equipment, or other operational activities, your business may fall within the scope of the legislation.
This broad application is one of the law’s defining features. Rather than targeting only large corporations or high-emitting industries, the UAE has adopted a comprehensive approach that encourages organisations of all sizes to strengthen emissions management and prepare for future compliance and reporting requirements.
What Does the Climate Change Law Require Businesses to Do?
Businesses covered by the Climate Change Law must meet three core compliance obligations: measure, report, and reduce their greenhouse gas (GHG) emissions. Together, these requirements create an ongoing compliance process rather than a one-time reporting exercise.
1. Measure Greenhouse Gas Emissions
Organisations must establish systems to measure their GHG emissions using methodologies approved by the Ministry of Climate Change and Environment (MOCCAE). Depending on the nature of the business and applicable guidance, this may include:
- Scope 1: Direct emissions from owned or controlled sources.
- Scope 2: Indirect emissions from purchased electricity, heating, or cooling.
- Scope 3: Other indirect emissions across the value chain, where relevant or required.
2. Report Emissions
Businesses must submit emissions data through the reporting formats and timelines prescribed by MOCCAE. They are also expected to disclose existing and planned emissions reduction initiatives. Supporting calculations, records, and evidence should be retained for at least five years, making accurate documentation a key part of ongoing compliance.
3. Reduce Emissions
The law is designed to drive continuous emissions reduction rather than simple disclosure. Businesses should expect future reduction targets or sector-specific requirements issued by MOCCAE and should begin integrating emissions management into their operational and strategic planning today.
The Compliance Timeline
Federal Decree-Law No. 11 of 2024 officially entered into force on 30 May 2025, with a one-year transition period to help businesses prepare for compliance. During this period, organisations are expected to identify emission sources, establish data collection processes, build reporting systems, and align their internal procedures with the methodologies prescribed by the Ministry of Climate Change and Environment (MOCCAE).
The transition period ends on 30 May 2026, after which businesses are expected to meet the law’s compliance requirements. Organisations that delay preparation may face challenges in producing accurate emissions data, maintaining the required records, and demonstrating compliance with regulatory obligations.
Penalties for Non-Compliance
Non-compliance with the UAE Climate Change Law can result in significant financial penalties. Depending on the nature and seriousness of the violation, businesses that fail to measure, maintain records of, or report their greenhouse gas (GHG) emissions as required may face fines ranging from AED 50,000 to AED 2 million.
Penalties may apply to a range of compliance failures, including inaccurate or incomplete emissions reporting, inadequate record-keeping, or failure to meet obligations prescribed under the law and its implementing regulations. Beyond the financial cost, non-compliance can expose businesses to regulatory scrutiny, damage relationships with banks and investors, and undermine stakeholder confidence in the organisation’s governance and sustainability practices.
For many businesses, the cost of establishing a robust compliance process is likely to be significantly lower than the financial, operational, and reputational consequences of failing to meet the law’s requirements.
Carbon Credits and Market-Based Incentives
The UAE Climate Change Law is not focused solely on enforcement. It also lays the foundation for a market-based approach to reducing emissions through the development of a national carbon credit system.
Alongside the law, the UAE introduced Cabinet Resolution No. 67 of 2024, establishing the National Carbon Credit Registry. The registry is designed to support the issuance, registration, tracking, and trading of verified carbon credits. Carbon credits represent certified reductions or removals of greenhouse gas emissions generated through approved environmental projects. They may become an important tool in helping businesses manage emissions as the regulatory framework evolves.
While trading platforms are still being developed under the oversight of the Securities and Commodities Authority (SCA), the UAE’s system is not currently comparable to mature cap-and-trade programmes such as the European Union Emissions Trading System (EU ETS). Instead, it provides the foundation for a domestic carbon market that is expected to expand over time.
The broader climate framework also signals government support for emissions-reduction initiatives, including renewable energy, energy efficiency improvements, carbon capture technologies, and climate-focused research and development. For businesses, this means climate compliance may increasingly be supported not only by regulatory obligations but also by future market opportunities and incentive programmes.
Which Industries Are Most Affected?
Although the Climate Change Law applies across the UAE economy, some industries are expected to receive greater regulatory attention because of their emissions profile or their importance to national infrastructure. These include sectors such as energy, industrial manufacturing, transport and logistics, healthcare, insurance, real estate, and construction, where operational activities typically involve higher energy consumption or greenhouse gas emissions.
As the regulatory framework develops, MOCCAE may issue additional sector-specific guidance or requirements to help businesses meet their compliance obligations. Organisations operating in these industries should monitor future updates closely and begin strengthening their emissions management processes.
However, businesses outside these sectors should not assume they are exempt. The law applies broadly to organisations whose activities generate greenhouse gas emissions, regardless of size or industry. Whether you operate a small trading company, a professional services firm, or a multinational enterprise, understanding your emissions profile and maintaining appropriate records will be an important part of ongoing compliance.
What Businesses Should Do Now
To prepare for compliance with the UAE Climate Change Law, businesses should begin taking the following steps:
- Review your current emissions data – Conduct an internal assessment of existing environmental data and identify any reporting gaps.
- Map your Scope 1, Scope 2, and relevant Scope 3 emissions – Identify emissions from direct operations, purchased energy, and applicable value chain activities.
- Establish a reporting framework – implement processes that produce accurate, consistent, and auditable emissions data, and retain supporting records for at least 5 years, where required.
- Develop an emissions-reduction plan – identify practical initiatives, such as energy-efficiency improvements, renewable-energy adoption, or operational changes, that support future emissions-reduction objectives.
- Monitor guidance from MOCCAE – Stay informed about implementing regulations, reporting methodologies, and industry-specific requirements as they are issued.
- Consider independent assurance – Where appropriate, obtain third-party verification to improve confidence in reported emissions data and strengthen compliance readiness.
Many of these practices mirror the governance, documentation, and internal control processes already used for financial reporting. Businesses that manage greenhouse gas data with the same level of accuracy, consistency, and audit readiness as financial information will be better positioned to demonstrate compliance, respond to regulatory reviews, and support broader sustainability reporting obligations.
The Bigger Picture
Federal Decree-Law No. 11 of 2024 marks the UAE’s transition from voluntary climate initiatives to legally enforceable greenhouse gas compliance obligations. Alongside Corporate Tax and VAT, it forms part of the country’s evolving regulatory framework that businesses must actively manage rather than treat as a future consideration.
For organisations operating in the UAE, compliance should begin with understanding their emissions profile, establishing reliable data collection and record-keeping processes, and monitoring guidance issued by the Ministry of Climate Change and Environment (MOCCAE). Taking these steps early can reduce compliance risks, improve operational readiness, and position businesses to benefit from future sustainability initiatives and developments in the UAE’s carbon market.
The UAE’s commitment to Net Zero by 2050 provides the long-term direction for climate policy, and Federal Decree-Law No. 11 of 2024 is a key part of that framework. Businesses that embed emissions management into their governance and operational processes today will be better prepared for tomorrow’s regulatory and commercial expectations.
Authoritative Reference Sources
- UAE Government Legislation Portal — Federal Decree-Law No. (11) of 2024: uaelegislation.gov.ae
