The Clean Development Mechanism (CDM), a Kyoto Protocol device to curb greenhouse gases through market forces, has now issued a billion tonnes of carbon credits, the UN climate forum announced on Friday.
Under the CDM, rich countries that are party to the 2005 treaty can invest in emissions-cutting projects in developing countries.
They then earn carbon credits—formally known as certified emission reductions (CERs)—that they can then sell or use to offset against their own emissions targets.
The billionth CER was issued for CDM Project 0949, a scheme in Alwar, Rajasthan, where an Indian factory has switched its fuel source from coal and oil to locally-gathered biomass, the UN Framework Convention on Climate Change (UNFCCC) said in a press release from Bonn.
The change is designed to reduce carbon dioxide (CO2) emissions by 17,475 tonnes annually, the equivalent in terms of fossil-fuel pollution of taking 3,100 passenger cars off the road.
"This exciting milestone is a testament to the expanding use of the CDM," the UNFCCC's executive secretary, Christiana Figueres, said.
"The CDM is not only having an important impact on developing countries through technology transfer and sustainable development, but it can also encourage developed countries to increase their emission reduction targets by making mitigation more affordable."
The value of CERs has been hit by a slump in the European carbon market, the world's biggest, and the CDM itself has been rocked by cases of abuse and accusations of preference for schemes in China.
Addressing this criticism, the UNFCCC said the rules had been tightened "to safeguard the mechanism's environmental integrity and extend its reach in under-represented regions."
New guidelines including help for CDM projects that encourage the use of efficient cooking stoves, solar water heaters and biogas digesters in poorer countries, it said.
The future of the Kyoto Protocol is part of a complex triple-track negotiation process under the UNFCCC that ultimately seeks a new global pact on climate change by 2015.
Kyoto's first round of commitments expires at the end of this year. Among rich countries, only the European Union (EU) and several smaller economies have signalled a willingness to sign up for a second round of pledges.
The United States signed Kyoto as a framework agreement but refused to ratify the deal after its rulebook was completed in 2001.
Explore further: Shell files new plan to drill in Arctic