UAE law could make emissions reporting mandatory

Alamy/Dominic Byrne via Reuters

• Tough climate legislation
• Law due in 2025
• Private sector to face hurdles

The UAE has introduced a new climate law, set to take effect next year, as part of its broader push to achieve net zero emissions by 2050. 

Experts told AGBI the federal decree on the reduction of climate change effects is expected to have significant near-term implications for many businesses, potentially making it mandatory for companies, including those in free zones, to report and reduce their carbon emissions.

The UAE, which hosted the COP28 climate summit in Dubai last year, is the world’s 30th-largest carbon dioxide emitter and ranks third-highest in the Middle East, according to the International Energy Agency.

Last year, Climate Action Tracker (CAT), an independent research group, downgraded the UAE’s climate rating to “critically insufficient” – its worst classification.

CAT projects that UAE emissions will continue to rise through 2030, but the country needs to reduce emissions by 38 percent below 2022 levels by then to meet the 1.5C global climate target.

Rebecca Kelly, a partner at law firm Clyde & Co, described the new legislation as “a significant advancement” that sets a framework for compliance and encourages emissions reduction through incentive programs.

“The law will come into force in May 2025, so companies have around six months to improve their own record keeping [on] emissions and create climate adaptation strategies to mitigate climate damage,” she said.  

Imad Alfadel, global sustainability practice lead at Renoir Consulting, a management consultancy specialising in sustainability, said the law is likely to have the biggest impact on high-emitting sectors, larger companies and listed institutions.

UAE-based organisations will soon have to take actions such as calculate their greenhouse gas emissions, report on climate-related risks and opportunities, set science-based emissions reduction targets and develop decarbonisation plans, he said.

Kelly said education of the private and public sector as to their obligations will be key to the successful implementation of the obligations created under the federal law.

She pointed out that the private sector could face several hurdles in meeting the new requirements, especially companies operating in high-emission sectors such as energy and manufacturing.

The law also promotes advanced technologies such as carbon capture, utilisation and storage to mitigate emissions, but their high costs and technical complexities could delay widespread implementation, Kelly said. 

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Developing sector-specific climate adaptation strategies for industries such as energy, infrastructure and health may also prove “complex” within the short timeline, she said.

“Each sector has unique risks, and identifying the right solutions will require collaboration between government agencies, businesses and international experts,” Kelly added. 

“Ensuring that these strategies are both effective and feasible across such diverse industries is a significant challenge​.”

Kelly also warned that while the law encourages collaboration between the public and private sectors, achieving alignment between corporate interests and national climate goals “may cause friction”.

“Some companies may be hesitant to adopt sustainable practices if they perceive them as harmful to profitability,” she said. “The government will need to provide clear incentives and support to foster cooperation.”

She added that accurate emissions monitoring and reporting will be key to ensuring compliance with the new regulations.

The law also includes penalties ranging from AED50,000 ($13,600) to AED2 million for violations.

“This is an indicator that there are going to be mandatory requirements in relation to climate action,” Alfadel said.

“The earlier a company can start, the less painful, the less costly it is going to be. The cost of inaction is continuously increasing, and companies must have clear targets in place.”