UAE Adopts Strict Approach to Fight Carbon Emissions
The UAE, striving to double its efforts to address climate change effects, reduce carbon emissions across different sectors, and boost sustainability, has recently issued Cabinet Resolution No. 67 of 2024 on the National Registry of Carbon Credits (“Resolution”).
It is worth mentioning that the UAE has been taking responsible steps to set up the world’s first national carbon credits system using blockchain technology, and the new Resolution aims at reducing greenhouse gas emissions to achieve climate neutrality and regulate the recording of carbon credits.
The Resolution shall apply to the financial and non-financial free zones, as it applies to entities with substantial carbon emissions of which the annual emissions equal to or exceed 0.5 million metric tons of carbon dioxide equivalent, and entities of which the annual emissions are less than 0.5 million metric tons of carbon dioxide equivalent, (“Entities”). However, other sectors may be added to the list of entities subject to this Resolution.
The Resolution stated that Entities with carbon emissions are obligated to have a monitoring, reporting, and verification system to be able to report the volume of their emissions annually to the Ministry of Climate Change and Environment (“Ministry”).
According to the Resolution, the Ministry will create a national registry (“National Registry”) to authorize carbon credits and develop an operating system. The Resolution pointed out that Entities must register with the National Registry by submitting their regulatory documents to the Ministry, such as valid licenses, primary data of their affiliated facilities, reports on their activities, carbon reduction and removal procedures, and updated statements on their emissions.
The Resolution added that the carbon credits issued by the National Registry are considered financial instruments that can be traded on the carbon stock trading platform if the trading happens in the UAE. It may also be traded through licensed platforms outside the UAE with the Ministry’s prior approval. In this regard, the Securities and Commodities Authority shall be entrusted with the issuance of decisions that will regulate the licensing of the carbon credits trading platform, its operating mechanism, and financial activities associated with it and will supervise and control the carbon credits trading platform, and determine and collect fees and commissions related thereto.
The Ministry may impose fines and administrative penalties on actions committed by Entities violating this Resolution. The fine might amount to AED 2,000,000 if certain violations are repeated more than twice, in addition to other penalties such as cancellation or suspension of licenses of violating entities.
This Resolution shall come into effect six months after its publication in the official gazette.
