Tata Chemicals is reported to have abandoned its clean development mechanism (CDM) project after failing to get approval from the United Nations Framework Convention on Climate Change (UNFCCC).

The UNFCCC in a statement said it has rejected Tata Chemical's project at its fertiliser unit in Haldia, West Bengal. Tata Chemicals' proposal, submitted on 6 September 2008, was rejected on 13 February 2009.

The project, if approved, would have generated over 24,000 carbon credits per annum for Tata Chemicals, reports said, adding, the Tata Chemicals project had amassed as many as 53,204 carbon credits so far.

The report comes amidst a general decline in the value of carbon credits and a switch to renewable energy projects.

Data available with the UN shows that Indian entities withdrew as many as six applications for projects related to cutting carbon emission in 2008.

Under the Kyoto Protocol of the UNFCCC, companies investing in projects or mechanisms that help reduce carbon emissions into the atmosphere are eligible for award of carbon credits. The carbon credits, or carbon emission reduction (CER) can be sold to polluters in the international market for financing their projects.

Under the CDM, industrialised countries can invest in projects in developing countries rather than investing in expensive emission reduction projects in their own country, to earn carbon credits. The carbon credits can be sold to finance their projects.

A carbon emission reduction (CER) credit represents the removal of one ton of carbon dioxide or its equivalent green-house gas from the atmosphere.

The economic slowdown, however, has reduced the price of carbon credits by almost 50 per cent, prompting some major Indian companies also to invest in renewable energy projects rather than on projects for preventing pollution.

The economic slowdown saw a drop in carbon credit prices, especially in the EU's trading system as demand has declined.

Apart from Tata Chemicals, Ispat Energy and Green Ventures International are also abandoning their carbon credit projects in favour of renewable energy projects, reports said.

As per the latest statistics, India had over 394 projects under the clean development mechanism against China's 417.