This report is one of three commissioned by the High-Level Panel to facilitate its provision of recommendations. The objective of this report is to provide an in-depth analysis of the evolving context of the CDM, particularly with regard to new and emerging mechanisms, and to locate the CDM within the global climate policy architecture. The research takes a long-term view of the future challenges and evolving nature of the global response to climate change and addresses the issues of key importance to the CDM’s operation. In particular, the report analyses: the rationale for seeking to make CERs fungible in new and emerging markets, besides those currently connected to the Kyoto Protocol; the potential for, and implications of, moving the CDM towards sectoral crediting, as well as the effect that this may have on the role of the CDM more broadly; and the potential for the current project-based CDM to remain a relevant component in the global climate policy architecture. These issues are assessed with particular regard to the current state and future development of the global carbon market and new and existing offset mechanisms.