What every business must know on UAE Climate Law

Author: Sinduja Amudanathan

The scientific consensus is that the world must reach "net zero" CO2​ emissions around mid-century (by 2050) to stabilize the global temperature. Net zero means balancing the amount of emissions released into the atmosphere with the amount removed. Deep, rapid, and sustained reductions are required to meet the goals of the Paris Agreement, which aims to keep the rise in global average temperature well below 2∘C above pre-industrial levels and pursue efforts to limit the increase to 1.5∘C

In October 2024, the UAE enacted Federal Decree-Law No. 11 of 2024 on the Reduction of Climate Change Effects (“Climate Law”), which came into effect on 30 May 2025. This landmark legislation reflects the UAE’s leadership in climate action and aligns with its Net Zero carbon emissions (Net Zero) by 2050 Strategy and international commitments under the Paris Agreement. Unlike earlier environmental laws that primarily regulated pollution and natural resources (such as Federal Law No. 24 of 1999), this is the UAE’s first comprehensive statute dedicated exclusively to climate change.

The Climate Law applies to all “sources” of greenhouse gas emissions, focusing on any entity, including public and private organizations, individual enterprises, and operations both on the mainland and within free zones, that releases such gases into the atmosphere. In effect, whether emissions arise from industrial facilities, energy production, large-scale transport, or commercial activity, they are brought within the scope of the Climate Law. Under Article 18, entities subject to the Climate Law should regularize their status and bring their operations into compliance within one year of the law’s entry into force, that is, by mid-2026.

The UAE’s Stand on Climate Policy
The Climate Law is a clear statement of the UAE’s commitment to reducing emissions and supporting sustainable growth. It establishes a comprehensive national framework built around four key areas:
  1. ‘Mitigation’ focusing on the reduction of greenhouse gas emissions through cleaner energy and technology, while also protecting natural carbon sinks such as forests, mangroves, and wetlands that absorb carbon from the atmosphere.
  2. ‘Adaptation’ encourages the preparation for and adjusting to the effects of climate change by strengthening resilience in key sectors such as infrastructure, energy, health, and insurance to withstand climatic risks.
  3. ‘Innovation’ focuses on the promotion of clean technologies, carbon capture, and carbon trading through the National Carbon Credit Registry to drive low-carbon growth.
  4. ‘Global Alignment’ ensures that UAE meets its international climate pledges under the Paris Agreement, with clear and transparent reporting of progress.

Compliance Roadmap for Businesses
The Climate Law imposes clear and binding obligations on all “sources” of greenhouse gas emissions. Businesses must prepare to implement the following compliance measures:
  1. Measurement, Reporting & Verification (MRV)
As per Article 6 of the Climate Law, businesses that fall under the law must:
  • Measure their greenhouse gas emissions on a regular basis.
  • Report the emissions data to the Ministry of Climate Change and Environment (“MOCCAE”) or the competent local authority, depending on their emirate or free zone.
  • The authorities shall verify and confirm the accuracy of the reported data.
  1. Carbon Registry & Offsetting
Under Article 10 of the Climate Law and Cabinet Resolution No. 67 of 2024 establishing the National Register for Carbon Credits, entities with annual emissions of 0.5 million metric tons of CO₂e or more are required to register in the National Carbon Credit Registry, while smaller emitters may register voluntarily. The Registry records verified emission reductions, allows credits to be traded under the supervision of the Securities and Commodities Authority, and enables businesses to “set off” or offset their emissions by retiring carbon credits equivalent to their output.
  1. Adaptation Planning
Under Article 7 of the Climate Law, adaptation is a binding obligation. Businesses in critical sectors such as infrastructure, energy, health, environment, and insurance must participate in adaptation plans developed by UAE Ministry of Climate Change and Environment (MOCCAE) and local authorities. This includes reporting on climate-related risks, losses, and adaptation measures, and aligning internal strategies with national adaptation frameworks. Article 7(3) further requires companies to notify MOCCAE of the implementation of such measures, which are then reflected in UAE’s international reporting under the United Nations Framework Convention on Climate Change (UNFCCC), the main international treaty adopted in 1992 at the Rio Earth Summit, forming the foundation for global climate action.
  1. Record-Keeping & Systems
Under Article 6 of the Climate Law, businesses must implement robust data collection and monitoring systems to ensure accurate reporting of greenhouse gas emissions. Reports must be submitted to MOCCAE or the competent local authority (such as the Abu Dhabi Environment Agency) and will be subject to verification. The records of measured emissions have to be maintained for at least five years, which must be made available for inspection by judicial officers. Compliance is expected to follow global benchmarks like the GHG Protocol and ISO 14064, ensuring transparency and alignment with international standards.
  1. Penalties for Non-Compliance
Under the Climate Law, penalties are designed to make compliance non-negotiable. If businesses that fall within the scope of the Climate Law fail to comply with their obligations, they may face fines ranging from AED 50,000 to AED 2,000,000. Repeat violations committed within two years attract doubled penalties, and non-compliance may also result in further administrative sanctions issued by Cabinet resolutions, including suspension of operations or other corrective measures. This framework ensures that compliance is treated as a binding legal duty rather than a voluntary choice.

Conclusion
The Climate Law marks a decisive step in the UAE’s pathway to Net Zero, setting out a binding compliance framework that businesses cannot afford to overlook. With strict timelines, detailed reporting obligations, significant financial penalties, and given that the Climate Law and regulations framed thereunder are to come into force in mid-2026, businesses must act now to evaluate how their operations are impacted.

We at BDO are ready to assist businesses in navigating the new Climate Law from both a compliance and legal perspective. Our team can provide assessment of your entity’s exposure, identify the compliance, measure the most relevant sources to your sector, and design a practical roadmap for timely and periodic alignment. We also support businesses with verification of the inventorisation and target setting. We encourage businesses to reach out early, ensuring that compliance is not only a legal obligation but also an opportunity to strengthen governance, reduce risks, and contribute meaningfully to the UAE’s Net Zero future.


Note: This Legal Update / Newsletter is intended for general informational purposes only and should not be construed as legal advice. It is based on laws and legal interpretations in effect as of the date of publication. Laws and regulations may change over time, and their application can vary depending on individual circumstances. Readers are strongly encouraged to seek specific legal counsel before acting on any of the information provided herein.