The UN's Clean Development Mechanism (CDM) may have attracted fierce criticism in recent months, with some observers claiming its criteria for approving carbon reduction projects are too tight and others insisting they are too lax. But according to one of the companies involved in verifying the effectiveness of CDM-approved projects, the carbon trading scheme remains on track to deliver a cut in global emissions of 2.7bn tonnes by 2012.

Norwegian verification firm DNV, which has validated close to half of the projects approved under the scheme, said this week that CDM projects have so far generated 135m certified emission reduction (CER) credits, each of which equates to a tonne of carbon dioxide.

It added with large number of approved projects expected to come on line over the next few years the mechanism is now expected to generate more than 2.7bn CERs during the Kyoto Protocol's first commitment period which runs to 2012.

The figures were released as DNV announced that it had validated the thousandth project to be registered with the CDM. The energy efficiency project in the Andhra Pradesh region of India is expected to reduce carbon emissions by over 34,000 tonnes a year.

Under the CDM, industrialised countries can buy in carbon credits from approved emission reduction projects in the developing world as a means of helping them meet their emission targets. The scheme aims to provide clean technology projects in the developing world with an extra revenue stream, making them more financially viable and helping to accelerate the transfer of technologies to developing economies.

The mechanism remains controversial with advocates of offsetting claiming the onerous approval process for projects has meant valid carbon reduction efforts are being denied entry to the scheme. Meanwhile, some environmentalists have argued the criteria are in fact too lax, meaning that some projects that would have gone ahead without the support of the CDM have still been approved.

The announcement comes as it emerged that Greece has been suspended from participating in the UN's various carbon trading mechanisms in an unprecedented punishment for its failure to adhere to greenhouse gas reporting rules.

A statement released by the UN Climate Change Secretariat yesterday said Greece had been "declared to be in non-compliance" as a result of its failure to maintain an adequate system for recording its national carbon emissions. It added that it was "not eligible to participate in the (trading) mechanisms", meaning the country can no longer buy either CERS or so-called Assigned Amount Units (AAU) credits, which are traded between country's signed up to the Kyoto Protocol that are coming in below their emission goals and those that are expected to miss their targets.

Canada could now face similar sanctions after the UN's enforcement branch said that the country had also failed to provide an adequate emissions registry. It said further research would be undertaken before a decision was reached on whether to bar Canada from the scheme as well.