This Background Note assesses the options available to developing countries in a ‘carbon constrained’ world. It begins by discussing the emissions reductions mechanisms included within the Kyoto Protocol and the ways in which they can contribute to ‘green growth’ – economic growth with reduced or neutral greenhouse gas (GHG) emissions. A brief overview of emissions traded through the Clean Development Mechanism (CDM) is followed by an analysis of the geographical distribution of CDM projects and types. Although it is difficult to assess the sustainable development benefits of the CDM, it is clear that some developing countries have gained. Despite this, the future success and continued growth of the CDM is under threat due to the uncertainty surrounding the second commitment period of the Kyoto Protocol. The second section of this Background Note outlines the current state of play of negotiations. Assuming the CDM continues beyond 2012, some of the new initiatives and reforms that are likely to shape the next climate change regime are discussed. This includes the adaptation fund levied at 2% of all CDM transactions (excluding LDCs) agreed at the Climate Change Conference held in Bali, December 2007, sponsored by the United Nations Framework Convention on Climate Change (UNFCC). The latest round of UN sponsored negotiations in Accra, Ghana (21-27 August 2008) constitutes the third major negotiating session this year; to be followed by a further conference in Poznan, Poland (1-12 December 2008). Negotiations are expected to conclude at the Copenhagen conference of December 2009.