An official with knowledge of the matter tells Bloomberg that the UN made the move after citing concerns that the Chinese government is artificially lowering the profitability of wind farms in order to help them qualify for CDM funds.

Established by the Kyoto Protocol, the CDM allows investors to generate carbon credits, known as Carbon Emissions Reductions (CERs), by building low-carbon ‘offset’ projects in the developing world. The renewable-energy sector has been one of the biggest beneficiaries of the system.

The newly generated CERs can then be sold within existing cap-and-trade systems such as the EU’s Emissions Trading Scheme. They currently fetch €12.57 ($18.97) on European spot carbon markets.

However, one of the principles of the CDM system is ‘additionality’, or the notion that a given low-carbon project would not be able to proceed without the CDM money. There has been a rising chorus of accusations in recent months that China’s increasingly favourable incentive regime for wind projects has made them commercially attractive without the aid of CDM funds, thereby scratching the notion of additionality.

China has been the largest beneficiary of the CDM system, having created 153 million credits worth more than $1bn over the last five years, according to the Financial Times.

Wind energy has accounted for more than a third of all China’s approved CDM projects in recent months, according to market researcher Point Carbon.