What The UAE's Imminent Climate Law Means For The Country's Construction Sector

(MENAFN- Khaleej Times)

Sustainability has rapidly evolved from a buzzword to a boardroom imperative in the Middle East, with regulators, investors and consumers increasingly demanding tangible action. In recent years, the Gulf's leadership has taken bold steps to institutionalise environmental priorities - from the GCC Exchanges Committee's introduction of unified ESG metrics for listed companies, to the UAE playing host to COP28 in Dubai. But what we are witnessing now is the next, and arguably most important, phase: translating ambition into law.

A major turning point arrives on 30 May 2025, when the UAE's Federal Decree-Law No. (11) of 2024, On the Reduction of Climate Change Effects, officially comes into effect. This landmark legislation signals the country's clear commitment to holding all sectors accountable for their role in achieving national climate goals. And for the construction ecosystem in particular, the implications will no doubt be significant.

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At its core, the new law aims to build a robust legal framework to drive climate action across both public and private sectors. Its key objectives include reducing national greenhouse gas emissions, improving climate risk resilience, promoting low-carbon technologies, and strengthening data reporting and governance. Crucially, it provides legal backing to the UAE's Net Zero 2050 strategy-placing the onus on emitters to not only measure and report, but also meaningfully reduce their carbon footprint.

Construction in the spotlight

The built environment is a known heavyweight in global carbon emissions - responsible for nearly 40% of total emissions when factoring in both operational and embodied carbon. In the UAE, where rapid urban development continues to shape skylines and economies, the construction sector is likely to be one of the most closely scrutinised under the new law.

While the legislation does not specify what proportion of existing or future assets will fall under enforcement measures, it establishes a clear expectation of compliance. Failure to meet reporting or emissions reduction obligations could result in penalties ranging from Dh50,000 to D2h million. And since the law applies to all sources, including those in free zones, developers can no longer assume immunity based on project location or classification. In essence, business as usual is no longer an option.

With compliance expected to be achieved within just a year following the new law's introduction, developers will no doubt feel the pressured to reduce emissions. Tempting as it may seem to approach the challenge at hand from this perspective, the more prudent approach would be to first focus on measurement - and do so accurately, consistently and transparently.

Article 6 of the new law mandates regular emissions tracking, emissions inventories, and the submission of periodic reports to the Ministry of Climate Change and Environment. For many, this may require a fundamental shift in how environmental data is collected and managed across the asset lifecycle.

This is where digital transformation can play a critical role. Smart building systems, IoT-enabled sensors, and digital twins are increasingly being used to monitor energy use and environmental performance in real-time. Beyond compliance, these tools provide valuable insights that can help developers optimise operations, reduce costs, and even enhance asset value. But the key is getting started early - retrofitting measurement systems after the fact is both costly and inefficient.

From obligation to opportunity

While the law introduces new responsibilities, it also presents a timely opportunity for developers to lead the charge in low-carbon innovation. Article 4 of the legislation encourages the adoption of cutting-edge solutions to accelerate emissions reduction - many of which are already being tested or deployed across the region.

Take carbon capture, utilisation and storage (CCUS) as an example. Once considered too experimental, CCUS is now being explored in a number of Gulf-based cement and concrete production facilities. Likewise, integrated waste management systems-ranging from construction waste diversion to onsite energy recovery-are helping large-scale developments minimise environmental impact. Developers who embrace these technologies early will not only align with compliance standards, but position their projects as future-ready.

Equally important is improving emissions data sharing between project stakeholders. The law reinforces the importance of timely and precise reporting. Whether through BIM models or cloud-based platforms, enhancing transparency across supply chains and contractors will be essential in creating a clear, auditable trail of climate action.

Crucially, the law doesn't just enforce - it also incentivises. Developers who take proactive steps can benefit from a range of supportive mechanisms designed to reward compliance and innovation.

Participating in carbon offsetting projects, such as investing in regional renewable energy or conservation initiatives, is one such pathway. These efforts not only contribute to broader decarbonisation goals but can also serve as powerful ESG credentials for investors and tenants alike.

Then there's the National Carbon Credit Registry, a key enabler of emissions trading in the UAE. By registering their projects and emissions data, developers can offset unavoidable emissions through credit purchases or exchanges. For forward-thinking firms, this opens up new opportunities to monetise carbon savings or enhance project feasibility through green financing instruments.

Importantly, Article 10 also encourages the adoption of advanced technologies through potential financial or procedural incentives. Developers who implement verified emissions reduction tech or data tools may find themselves better positioned when it comes to permitting, approvals or access to government partnerships.

Complying with the new law will require more than a policy statement or a tick-box audit. It demands a long-term strategy underpinned by technical rigour, cross-functional collaboration and sector-specific insight. This is why many developers are already turning to specialised sustainability consultants to help bridge the gap.

Third-party advisors can offer expert guidance on emissions reporting methodologies, compliance requirements, and technology selection-often faster and more cost-effectively than building internal teams from scratch. They also bring a wealth of experience from similar projects across the region, enabling developers to learn from best practices and avoid common pitfalls.

By working with the right partners, developers can do more than simply meet the new legal baseline. They can reframe climate action as a value driver-enhancing project resilience, unlocking new business models, and reinforcing their leadership role in the UAE's sustainability journey.

As the countdown to 30 May 2025 begins, the message is clear: the time to act is now.

The writer is principal consultant - strategy and advisory, AESG.

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