The UAE’s cabinet recently adopted Cabinet Resolution No. (67) of 2024, which aims to reduce GHG emissions to achieve climate neutrality in 2050 and regulate the registration of carbon credits in the nation.
SCOPE OF APPLICATION
The Cabinet resolution applies to the following:
1. Entities with carbon emissions of more than 0.5 million metric tons of carbon dioxide annually (Entities of Huge Carbon Emissions),
2. Voluntarily applicable to entities that can bring their carbon emissions below 0.5 million metric tons of carbon dioxide annually with the advantage of trading in Carbon Credits (participating entities), and
3. Trading platforms for Carbon Credits.
MEASURING, REPORTING AND VERIFICATION REQUIREMENTS
The resolution provides comprehensive methods and forms that shall be used to monitor and report carbon emissions.
The resolution directs the Monitoring of emissions using the most updated methodologies based on the National System for Monitoring, Reporting, and Verification according to a baseline designated for 2019 or any later date.
The reporting requirements include the preparation of annual reports with the usage of basic approved standards in the Greenhouse Gas Inventory Protocol and requirements stipulated in the Paris Agreement.
The process of verification includes auditing by verification agencies as per the appropriate ISO standards.
NATIONAL REGISTER FOR CARBON CREDITS
The Resolution establishes the National Register for Carbon Credits that complies with the requirements of the Paris Agreement. The Register will be used to prepare national reports for the Green House Gasses (GHG) emission inventory.
Earning Carbon Credits
The resolution defines a Carbon Credit as a certificate that includes the volume of carbon dioxide equivalent that was reduced during a certain period stated in the certificate. Such certificate is negotiable and allows its holder within the holder’s operations emissions that equal to credit recorded in the certificate.
Buying and Selling Credits
Entities of huge carbon emissions may buy carbon credits to compensate its greenhouse gas emissions and achieve climate neutrality. Further, the entities that received carbon credits from the National Register may sell their credits on carbon credit trading platforms since these credits are deemed to be financial instruments by the Resolution. The selling entities have to report their selling data to the National Register to ensure the amendment and validity of the carbon credits data.
PENALTIES
Failure to measure GHG emissions, or failure to report the emission annually to the Ministry, or any non-compliance with reporting requirements of the Paris Agreement by the subject entities may lead to a fine of AED 500,000 for a first-time violation, AED 1 million for a second violation and AED 2 million for third violation.
CONCLUSION
The Cabinet Resolution provides an opportunity for participating entities to earn huge amounts by selling their carbon credits to entities with huge carbon emissions. The business opportunity is evident from the fact that in 2024, Tesla had reported its earnings from Carbon Credits at USD 1.79 billion. This will also induce various such businesses to bring their emissions below the norms and use their credits to push their earnings.
For more information, you may contact:
Mr. Thomas Paoletti
Ms. Francesca Romana Valeri
