BACKGROUND: The cumulative installed capacity of wind power projects in India is far below its gross potential (<15%) despite tax benefits, long term financing schemes, and receiving a very high level of policy support for more than 10 years. One of the major barriers is the high cost of investment in these systems. The Clean Development Mechanism (CDM) of the Kyoto Protocol provides industrialized countries with an incentive to invest in emission reduction projects in developing countries to achieve a low-cost reduction in carbon dioxide emissions that also promotes sustainable development in the host country. Wind power projects could be of interest under the CDM because, when developed properly, they directly displace greenhouse gas emissions while contributing to sustainable rural development. RESULTS: Our estimates indicate that there is a vast theoretical potential of carbon dioxide mitigation by the use of wind energy in India. The annual Certified Emission Reduction (CER) potential of wind power projects in India could theoretically reach 86 million. Under more realistic assumptions about the diffusion of wind power projects based on past experience with government run programmes, annual CER volumes could reach 41 to 67 million by 2012 and 78 to 83 million by 2020. CONCLUSIONS: The projections based on the past diffusion trend indicate that in India, even with highly favorable assumptions, the dissemination of wind power projects is not likely to reach its maximum estimated potential within the next 15 years. CDM could help to achieve the maximum utilization potential more rapidly as compared to the current diffusion trend if supportive policies are introduced.