A UN panel overseeing $1.5 billion trade in carbon has ignored advice to suspend support for new coal plants.
Panel chairman Martin Hession instead proposed a review of support, adding that the executive board thought that "the problem may not be as big as advised".
"The risk doesn't justify suspension - we looked at their assumptions and found they were worst-case," he said, referring to advice from the methodology panel which reviews what types of technology should qualify for support.
The UN executive board manages a trade in carbon offsets where rich countries pay for developing country projects to cut greenhouse gas emissions on their behalf.
A related U.N. body told the board there was possible over-compensation of new coal plants, which are paid for emissions cuts below a baseline set by the latest coal power technologies.
Most recently, the board approved in India a massive, four gigawatt coal plant owned by Reliance Power.
The clean development mechanism (CDM) operates under a complex system where the board is only meant to approve projects that would not have been feasible without CDM support, leaving room for interpretation and dispute.
Critics say that some projects from dams through to wind farms and super-efficient coal plants are profitable on their own and so should not qualify.
Hession said that carbon cuts from coal-fired power plants were only counted below a baseline set by the 15 per cent most efficient plants in the local area.
So far the CDM has rewarded the world's most rapidly growing and polluting economies such as India and China, because they have the most scope for making emissions cuts.
The panel would approve a "suppressed demand" approach for least developed countries, meaning that emissions cuts would be measured against hypothetical levels assuming people were enjoying a basic standard of living.
"It's facilitating access in under-developed regions," Hession said, adding that it would most likely apply to household projects such as installing solar panels to replace high-carbon kerosene for lighting.