Even as developing nations gear up for a big boom in carbon market, several projects registered with the UN carbon market regulator have drawn flak from various quarters.

The criticism may even harm the existence of clean development mechanism scheme of the Kyoto Protocol, which expires in 2012.

A media report in London-based The Financial Times, had recently said some companies were earning big profits from carbon trading by spending very less. In some cases, these companies register projects for which clean-ups would have been made anyway.

An outrage against this sort of companies could damage the scheme. Developed countries are bound by the Kyoto Protocol to cut greenhouse gas emissions between 2008 and 2012 by at least 5 per cent of the 1990 level.

One way to cut emission is buying certified emission reductions, CERs or carbon credits, which are generated by clean development mechanism projects that reduce greenhouse gas emissions.

However, industry experts justify the lapses in the market saying that since the carbon market is in a nascent stage such incidences are bound to happen as more companies try to cash in on the potential.

However, efforts are on by various countries to develop the carbon market further. The G-8 summit declaration also calls for an improved and strengthened CDM.

India's carbon market is one of the biggest globally and the Designated National Authority has approved over 630 projects, which have potential to generate approximately 400 million carbon credits till 2012.

Total potential in terms of revenue expected is around Euro3 billion (Rs 17,200 crore) till 2012, assuming one credit at Euro 10 (Rs 574).

Till date, over 200 projects from India have registered with the UN carbon market regulator and majority of them are small-scale and renewable energy projects.

The bigger volume projects sectors such as MSW (municipal solid waste), waste water, SF6 (sulphur hexafluoride), and PFC (perfluoro carbon) destruction, are yet to be tapped.

With exchanges such as MCX planning to start carbon credit trading in India, there is vast scope for the carbon credit market in India.

In India, commodity exchanges at present cannot trade in indices, but only in goods that can be actually delivered, and direct foreign participation in buying or selling of commodities is not permitted under the Forward Contracts (Regulation) Act.

Hence, to develop a carbon market in India soon, the Act needs to be amended in the monsoon session of Parliament.

A carbon credit generated by an Indian project is seen fetching around Euro 13-16 (Rs 716-881) or 65-70 per cent of European Union allowance price for 2008 delivery of credits issued by the UN body.