The CDM has a host of objectives not directly related to climate change; it aims to bring host countries socio-economic and environmental benefits through technology transfer and foreign direct investment. In short, it aims to deliver a "development dividend." Based on an extensive consultation process, this paper assesses the state of the emerging CDM regime, asking whether trends presage a strong performance in this context. It addresses three concerns: that the quality of the projects is not what it could be; that the quantity is not what it needs to be, and that the distribution of investment is skewed in ways that exclude most poor developing countries. The paper concludes that the CDM has great potential for sustainable development, but only if some changes are made. It offers a number of recommendations.