Cabinet Resolution 67: Mandate or Market Opportunity?

Over the past four years, the UAE has redefined climate ambition in the region, accelerating its drive toward a low-carbon future. With its Third Nationally Determined Contribution (NDC 3.0) release, the Ministry of Climate Change and Environment reinforces this momentum, solidifying the nation’s commitment to impactful and sustained climate action.

Past 4 Years of UAE Climate Action

Of course, this list is by no means exhaustive, as the UAE continues to advance climate action, implementation, and adaptation through a wide range of initiatives, voluntary pledges, and structured frameworks and strategies. A key driver of this progress is the integration of national policies with real-world implementation, ensuring alignment between high-level ambitions and sector-level action. Turning these commitments into tangible outcomes requires sustained collaboration between the public and private sectors. This synergy ensures that national commitments translate into actionable strategies, driving measurable progress toward net zero.

Cabinet Resolution No. (67) of 2024

Compounding on these efforts, the UAE has introduced Cabinet Resolution No. (67) of 2024, which aims at establishing the National Register for Carbon Credits (NRCC), marking a significant step in formalizing and regulating carbon markets within the country. This initiative supports the UAE’s commitment to climate neutrality by 2050, aligning with Article 6 of the Paris Agreement, which governs international carbon trading mechanisms.

Resolution scope

The resolution has a broad scope, covering financial and non-financial free zones across the UAE. It stipulates carbon disclosure and management from high-emitting industries. In addition, it recognizes the role of voluntary market players and carbon credit trading platforms in supporting decarbonization efforts:

• Entities of Huge Carbon Emissions

  (≥0.5 million metric tons of CO₂e annually from scope 1 and 2): Entities classified as Entities of Huge Carbon Emissions are required to register with the National Register for Carbon Credits (NRCC). In addition to registration, these entities must implement robust monitoring, reporting, and verification (MRV) systems to track and report emissions accurately and ensure compliance with national and international standards.

• Participating Entities

  (<0.5 million metric tons of CO₂e annually from scope 1 and 2): Entities are classified as Participating Entities if they voluntarily choose to register with the NRCC. If registered, these entities must comply with the resolution’s requirements.

• Carbon credit trading platforms

  These platforms will facilitate carbon credit transactions and will be regulated by the UAE’s Securities and Commodities Authority (SCA) to ensure transparency and market integrity.

Monitoring, Reporting, and Verification (MRV) Framework

At the core of this resolution is a rigorous Monitoring, Reporting, and Verification (MRV) framework, ensuring that emissions reductions are real, measurable, and independently verified.

• Monitoring: Entities must track emissions using the latest IPCC methodologies and report them through the National System for Monitoring, Reporting, and Verification, ensuring alignment with the 2019 baseline.

• Reporting: Annual emissions reports must be submitted to the Ministry of Climate Change and Environment and relevant authorities, adhering to IPCC and Paris Agreement standards.

• Verification: Emissions reduction reports undergo third-party verification by approved agencies, following ISO standards to ensure accuracy and compliance

The mandate for compliance with the MRV framework adds credibility to the UAE’s emission disclosures while reinforcing accountability across industries.

With this opportunity comes strict enforcement measures, a necessary undertaking given the fragility of the current global decarbonization trajectory. The resolution introduces penalties, with fines reaching up to AED 2 million for non-compliance with reporting requirements, failure to align with Paris Agreement obligations, or violations of the trading platform’s provisions.

Global benchmarks

Formalizing the approach to emissions disclosure and management has been long-established globally, such as in the UK and EU generally. With several mandates, regulations, and frameworks working in tandem to drive their Net Zero ambitions. Carbon trading mechanisms that enforce emissions monitoring and reporting have been utilized since 2005, with the world’s first international emissions trading system being launched in the EU. Similarly, UK Emissions Trading Scheme (UK ETS) requires major emitters to track and trade carbon allowances, creating a market-driven system for reducing emissions. In the US, California’s Cap-and-Trade Program enforces strict emissions caps while allowing businesses to offset their emissions through verified reduction projects. The UAE’s current mandate marks as a positive first step towards growing a robust carbon trading mechanism in the region.

Who it impacts

This resolution directly impacts businesses across sectors, but its reach goes beyond just the entities meeting the 500,000 metric tons of CO₂e equivalents threshold. While compliance is mandatory for large emitters, companies that voluntarily engage in carbon credit trading, emissions tracking, or sustainability initiatives will also find themselves operating under the framework of this new system. This is not just a regulation for heavy industry; it has implications for supply chains, financial institutions, and even smaller businesses that interact with major emitters.

As such, companies should not ask whether they meet the threshold but rather what they can do to prepare for a future where carbon accountability will be the norm. Carbon regulations tend to start with large emitters before expanding to smaller businesses, supply chains, and financial institutions. Companies that take action now—by establishing emissions tracking systems, engaging in carbon markets, and integrating decarbonization into their strategies—will be better positioned as regulations inevitably tighten.

What 500,000 metric tons means

To put 500,000 metric tons of CO₂e into perspective, this is roughly equivalent to the annual electricity consumption of more than 85,000 homes or nearly 14 Burj Khalifas. Although this number seems immense, it is easily exceeded by companies in the industrial, manufacturing, and power generation sectors. Targeting these high emitters is therefore a logical starting point for the UAE’s carbon management efforts. However, this cutoff point should not be dismissed for low emitters. Organizations below the threshold still play a role in decarbonization and can benefit from engaging early and getting ahead of the inevitable regulatory stringency to come.

What this means for companies

The UAE’s resolution unambiguously mandates that all major emitters and voluntarily registered entities must measure and disclose their scope 1 and 2 emissions effective 6 months after the resolution is published. However, while the UK and US markets have evolved over time, businesses in the UAE will need to adapt quickly. For many, this will require building expertise in carbon accounting, a process often deprioritized in favor of other, more profitable opportunities.

Previously, corporate climate action in the UAE largely depended on voluntary commitments, leading to inconsistent engagement across industries. With the resolution in place, businesses will approach emissions management with varying levels of ambition and capability. While some companies may already have robust carbon management frameworks in place, others will need additional support, whether through internal capacity or external services, to remain compliant and competitive.

Rather than viewing this mandate as a compliance burden, companies should see it as an opportunity to lead in emissions reduction. Now more than ever, this resolution represents a golden opportunity for businesses to pioneer climate action in their sectors and establish themselves as market disruptors. Those who take initiative quickly will shape industry best practices and establish themselves as leaders in the rapidly evolving global race to carbon neutrality.

The bigger picture and regional implications

While this regulation is a significant step, it should be seen as a foundation rather than the final destination. Compared to more mature markets like the UK Emissions Trading Scheme (UK ETS) or California’s Cap-and-Trade Program, which now include more sectors, tighter emissions caps, and broader compliance mechanisms, the UAE is in the early stages of a carbon market evolution. Countries with more advanced carbon policies all started with basic regulatory structures before expanding into more stringent mandates. The UAE’s move signals more to come, and businesses should prepare for the inevitable scaling up of carbon regulations.

The resolution is particularly poignant for the GCC, a region that, despite economic leadership and business innovation, is often flagged for high non-alignment with global climate targets. According to Climate Action Tracker, many regional economies are behind on emissions reduction commitments, and the UAE’s initiative is one of the first structured, market-based approaches in the region. This is not just about national impact; it is about shifting the regional narrative and proving that market-driven carbon management can work in economies historically built on fossil fuels. Alignment with global best practices is no longer a distant concept. It is happening now, and the ones who move early will shape the market rather than just react to it.

Carbon offsets and the risk of greenwashing

The establishment of a carbon credit registry does not mean that offsets are the default solution—or the right one. While carbon credits have their place, they should ideally not be utilized, and at worst used as a last resort, and never as a first response. The recommended best practice is that credits should not amount to more than 10% of the overall emissions. A credible decarbonization strategy starts with cutting emissions at the source, prioritizing a structured carbon reduction hierarchy that favors direct reductions through operational efficiencies, clean energy integration, and low-carbon processes before turning to offsets as a supplementary measure. Leaning too heavily on offsets, even within the framework of this resolution, risks undermining real climate action and exposing companies to greenwashing claims. The success of the UAE’s carbon market will not be measured by how many credits are traded but by how effectively it pushes industries to make meaningful reductions where it matters most.

Unlocking emissions data across the value chain

One key opportunity emerging from this mandate is the improvement of emissions data availability, which will provide businesses with greater visibility into indirect emissions across their entire value chain. Stricter emissions tracking and the introduction of carbon credit trading will standardize emissions reporting, allowing companies to better track the carbon footprint of both upstream and downstream operations. As emissions information becomes more accessible, businesses will have the data needed to account for indirect emissions more accurately, addressing one of the biggest challenges in scope 3 reporting.

This also implies improvements in accounting for supply chain emissions, which will make the carbon footprint of raw materials, manufacturing processes, and logistics more tenable.

With these standards now embedded into national regulations, the supply chain landscape will shift and bring in the emissions data from key local manufacturers and service providers. As businesses are expected to prioritize local sourcing, UAE-based suppliers will be better positioned to meet national sustainability and emissions reporting requirements.

Beyond supply chains, this shift has broader implications for sectors like finance, where banks and investors can leverage enhanced emissions disclosures to strengthen financed emissions accounting, gaining greater transparency on the climate impact of their loan portfolios and investments. With more standardized and reliable data, financial institutions will be better equipped to assess risks, align with sustainable finance frameworks, and integrate climate considerations into lending and investment decisions.

Leveraging Technology for Smarter Carbon Accounting

Rather than viewing compliance as a challenge, companies can leverage cutting-edge solutions to track, manage, and reduce emissions with greater accuracy and efficiency. As the Fourth Industrial Revolution drives advances in automation, artificial intelligence, and digitalization, technology is becoming a critical tool for businesses navigating the UAE’s new carbon management mandate.

Real-time emissions monitoring, AI-driven analytics, and automated reporting are transforming how businesses approach carbon management. These technologies allow for real-time data capture, predictive insights, and calibration opportunities, ensuring that companies can proactively adjust the accuracy of their emissions disclosures rather than relying solely on retrospective reporting.

This intersection of technology and decarbonization marks a new phase in emissions management, where compliance is no longer just about meeting regulations—it’s about gaining a data-driven competitive advantage. Companies that embrace digital tools will be better positioned to navigate the evolving carbon economy, ensuring resilience, efficiency, and long-term market leadership.

Cabinet Resolution No. 67 marks a transformative shift in the UAE’s approach to carbon management. Rather than seeing it as a hurdle to clear, businesses should view it as a tool to leverage. This is yet another bold step in a series of bold steps, reinforcing the UAE’s position as a regional leader in climate action and pulling the region back into the race to carbon neutrality.