Understanding the UAE’s new National Register of Carbon Credits

In June 2024, the UAE introduced Cabinet Resolution No. 67 of 2024 (the Resolution), establishing the National Register of Carbon Credits (NRCC). The Resolution took effect on 28 December 2024 with entities required to comply by 28 June 2025. This initiative is a cornerstone of the UAE’s strategy to achieve climate neutrality by 2050 and supports the UAE’s ambition to be a leader in climate action, showcasing its commitment to global climate goals. The legislation reflects a preference for regulatory mechanisms that reward positive action on emissions reduction and penalize inertia. 

The Resolution’s scope of application 

The Resolution applies to both the public and private sectors, including onshore and offshore entities, in the UAE and covers a broad spectrum of entities with a high carbon emissions footprint and entities trading in carbon credits. 

The Resolution specifically targets the following entities (with provisions allowing the government to expand the scope):

• public and private entities with substantial carbon emissions, defined as those with annual emissions equal to or exceeding 0.5 million metric tons of carbon dioxide equivalent (entities with substantial carbon emissions); and
• public and private entities that reduce their emissions to levels below the above threshold, allowing them to voluntarily register at the NRCC and participate in carbon credit trading (participating entities). 

The Resolution also applies to trading platforms that facilitate the exchange of carbon credits.

Key sectors affected by the Resolution

The Resolution will have the greatest impact on those sectors with the largest contribution to greenhouse gas (GHG) emissions in the UAE. As illustrated by the following chart, those sectors are heavy industries (e.g. manufacturing and construction), energy and utilities (e.g. electricity and heat), and transport and logistics sectors (e.g. aviation, and shipping).[1] 

How can entities ensure compliance with this Resolution?

A) Registration with the National Register for Carbon Credits

Entities with substantial carbon emissions are required to register at the NRCC, while participating entities can voluntarily register at the NRCC. These entities are required to submit reports detailing their activities, operations and procedures to reduce and remove carbon, and to provide documents including updated emissions statements.

When trading carbon credits, entities are required to submit a detailed disposal statement at the NRCC, which must include the quantity of credits disposed of, the entity to which they were sold or transferred, and the selling price. This is to ensure the data at the NRCC remains accurate and up to date, which is crucial for maintaining the integrity and transparency of the carbon credit system.

B) Establishing a monitoring, reporting and verification system regarding entity emissions 

Entities with substantial carbon emissions and participating entities are obligated to have monitoring, reporting, and verification systems to facilitate the tracking of annual emissions accurately. Annual reports must be submitted to the Ministry of Climate Change and Environment (MOCCAE). 

The Resolution provides specific requirements for the monitoring, reporting, and verification systems and lists the types of GHG emissions that its monitoring, reporting and verification systems must include (such as CO2, Methane, Nitrous oxide etc). 

Entities that violate the provisions of the Resolution may face penalties, including fines of up to AED1million for repeated violations, alongside license suspensions or cancellations. 

A closer look into carbon credits trading 

The Resolution treats carbon credits as financial instruments for trading. It sets out the following process for trading carbon credits:

• the NRCC issues the verified carbon credits;
• then the credits can be traded domestically or internationally through licensed platforms provided those trading platforms have received prior approval from the MOCCAE (although there is no guidance yet around the criteria for approving such trading platforms); and
• the Securities and Commodities Authority (SCA) regulates the trading platforms, including by issuing licenses, overseeing the trading process, and ensuring compliance with applicable laws and regulations.

In practice, carbon credits trading allows entities with substantial carbon emissions to purchase carbon credits to offset their elevated emissions. Participating entities that have obtained approved carbon credits from the NRCC can sell these credits on designated carbon trading platforms. Therefore, entities with surplus carbon credits may generate revenue, while others may need to purchase carbon credits to offset their emissions.

The price of a carbon credit, typically quoted per tonne of CO2 or its equivalent in other GHGs, can vary significantly across different markets. There is no unified global carbon trading system, and carbon credit prices range from approximately USD52 per tonne in the United Kingdom's Emissions Trading System to around USD4.6 in Tokyo (as of February 2025), with variations influenced by local regulations and demand. The price in the UAE will be determined by market forces of supply and demand. 

Next steps

Entities with high GHG emissions in the UAE should consider the following steps: 

1. Assess emissions: conduct internal audits to determine whether your business comes within the scope of the Resolution 
2. Develop systems: invest in robust systems for accurately monitoring emissions 
3. Register at the NRCC: if you are within scope of the Resolution or want to voluntarily participate, register at the NRCC and ensure alignment with monitoring, reporting and verification requirements by 28 June 2025
4. Explore carbon markets: evaluate opportunities to trade carbon credits and integrate these strategies into broader ESG objectives
5. Seek expert guidance: engage with legal and environmental experts to navigate compliance effectively and leverage sustainability initiatives for competitive advantage

With both risks and opportunities presented by the Resolution, proactive engagement and positive action is key.

Kim and Noor would like to thank Farah Bou Nassar, Legal Intern in our Dubai office, for her support.

[1] United Arab Emirates: CO2 Country Profile - Our World in Data