BEIJING - European companies have thrown a large number of Chinese emissions reduction projects into doubt by refusing to pay the pre-agreed price following a market plunge, industry insiders said.

About half of the Chinese Carbon Development Mechanism (CDM) projects are being renegotiated or terminated, according to estimates. No official figures are available.

China is the world's biggest carbon credit supplier. EU companies agreed to buy most of the credits to help them meet caps under the EU emissions trading scheme.

Industrialized countries can buy carbon credits from developing countries under the United Nations Carbon Development Mechanism. The carbon credits help developed nations meet their own emissions targets.

The UN, by Jan 9, issued 484 million carbon credits to Chinese CDM projects. Most involve hydro and wind power projects.

However, the international market in carbon credits has plunged in recent months, and defaults by European firms have surged, said Tang Renhu, general manager of Sino Carbon Innovation and Investment Co.

Many projects are being renegotiated, he said.

"Buyers and sellers were in the same boat when the carbon market was up", but the declining market has changed that, Tang said.

Risks facing Chinese sellers grew as the price of carbon credits fell from 25 euros ($33) a few years ago to record lows of around 4 euros.

The average agreed price was around 10 euros, industry insiders said.

"The buyers are looking for loopholes and are trying to terminate or renegotiate agreements," said an executive of a State-owned CDM developer under condition of anonymity.

A CDM consulting company has about 30 projects in its portfolio and about half are being renegotiated, a company source said.

"Obviously buyers want to renegotiate the prices to help them offset the downside risks in the carbon market," said another developer, who declined to be named.

The developer is facing renegotiation and default on two of his wind power projects.

Wind and small hydropower projects are dependent on emissions reduction revenues that make up 20 percent of their income, Tang said.

Investor confidence has been shaken, he said.

But not all CDM developers are experiencing turbulence.

Judy Fan, manager of the Beijing Tianqing Power International CDM Consulting Co, said most of the projects conducted by the company were performing smoothly.

"Fortunately most of our customers are big power companies or financial institutions, are financially strong and respect the spirit of the contract," she said.

Tianqing is one of the biggest CDM consulting companies in China with more than 200 projects in its portfolio. But some companies did ask to renegotiate prices in 2012, she added.

Zhou Yacheng, a lawyer with Zhong Lun Law Firm, said some Chinese companies failed to pay due diligence when signing the contracts and did not involve a lawyer.

The market is expected to rebound in two years. Carbon credits were one of the worst performing commodities in 2011 with prices plunging by about 70 percent.

Yang Fuqiang, a senior adviser on climate and energy policy with the Natural Resources Defense Council, a New York-based environmental group, said it's time for Chinese companies to transfer their focus from the slumping international carbon market to the domestic market.

China is set to unveil plans to impose controls on total energy consumption and that is closely linked to the country's greenhouse gas caps.

China has approved five cities and two provinces to launch carbon emissions trading markets on a pilot basis, probably in 2013.

The National Development and Reform Commission requested that the cities and provinces, including Beijing, Tianjin and Shanghai, set overall emissions control targets and establish a system for carbon trading.

"The European market faces increasing challenges due to sluggish economic growth and uncertainties in the international climate change negotiations," Yang said.