The UAE has always been at the forefront of environmental sustainability, and with the UAE Carbon Credit Law under Cabinet Resolution No. (67) of 2024, the country takes another significant step toward achieving climate neutrality by 2050. This resolution establishes the National Register for Carbon Credits, outlining the framework for reducing greenhouse gas (GHG) emissions and promoting carbon trading within the UAE. If you’re a business operating in Dubai or across the UAE, understanding the implications of this resolution is crucial for your compliance and potential benefits.
In this blog, we’ll break down the critical aspects of Cabinet Resolution No. (67) of 2024, what it means for businesses.
What is Cabinet Resolution No. (67) of 2024?
Cabinet Resolution No. (67) of 2024 is a pivotal legal framework introducing the National Register for Carbon Credits in the UAE. This resolution, This resolution, part of the UAE Carbon Credit Law, is designed to reduce GHG emissions in alignment with the country’s goal of achieving climate neutrality by 2050. It lays out specific guidelines for entities with significant carbon emissions and establishes a carbon trading platform to facilitate the buying and selling of carbon credits.
Key Terms to Know:
Entities of Huge Carbon Emissions: Businesses that emit 0.5 million metric tons or more of CO2 annually.
Participating Entities: Companies with emissions below 0.5 million metric tons annually that voluntarily opt into the carbon credit system.
Carbon Credits: Certificates representing a reduction in CO2 emissions, which can be traded on a designated platform.
What is the Resolution for?
The primary objective of Cabinet Resolution No. (67) of 2024 is to reduce GHG emissions and regulate the registration of carbon credits in the UAE. By doing so, the resolution aims to:
- Encourage sustainable practices among businesses.
- Create a robust system for monitoring and verifying emissions.
- Facilitate the trading of carbon credits to support climate neutrality efforts.
To Whom it Applies?
The resolution applies to all entities operating within the UAE, including those in financial and non-financial free zones. Specifically, it targets:
- Entities emit 0.5 million metric tons or more of CO2 annually.
- Participating entities with lower emissions that voluntarily register for carbon credits.
- Platforms designated for carbon credit trading.
The resolution also allows for additional sectors to be included or existing thresholds to be adjusted, depending on future amendments.
Compliance Requirements
Entities falling under the scope of this resolution must adhere to stringent monitoring, reporting, and verification (MRV) processes to ensure compliance. These processes include:
Monitoring: Utilizing the latest methodologies to estimate GHG emissions based on international standards.
Reporting: Submitting annual reports to the Ministry of Climate Change and Environment, detailing emissions data.
Verification: Engaging approved verification agencies to audit emissions and ensure accuracy.
Failing to comply with these requirements can result in significant penalties. Including fines and the suspension of carbon credit trading privileges.
The National Register for Carbon Credits
A central component of the resolution is the establishment of the National Register for Carbon Credits. This register is managed by the Ministry of Climate Change and Environment and serves several critical functions:
- Approving carbon credits for entities that meet the reduction criteria.
- Documenting carbon credit transactions and retirements.
- Providing data for national GHG emission inventories and reports.
Entities looking to buy or sell carbon credits must register with the National Register and fulfill specific documentation and verification requirements.
Under this resolution, carbon credits are treated as financial instruments. You can trade them on approved platforms within the UAE or internationally, as long as the Ministry approves. This trading mechanism allows businesses to offset their emissions by purchasing carbon credits from entities that have successfully reduced their emissions.
Violations and Penalties
The resolution outlines a strict enforcement regime, with penalties for non-compliance ranging from warnings to substantial fines. For instance, entities that fail to meet their emission reduction targets or engage in unauthorized trading activities may face fines of up to AED 1,000,000 or suspend their trading rights.
Conclusion
Cabinet Resolution No. (67) of 2024 marks a significant shift in the UAE’s approach to environmental sustainability. Particularly in how it manages and trades carbon credits. If you need clarification on how this resolution affects your business, or help to understand the legal intricacies. Feel free to contact a trusted law firm or lawyers in Dubai. You can turn compliance with the UAE Carbon Credit Law into a competitive advantage with the proper legal support.