The paper investigates whether the Clean Development Mechanism (CDM) under the Kyoto Protocol has played a significant role in the development of rural communities, specifically investigating uptake of small-scale renewable energy projects. The investigation involved an assessment of 500 registered small-scale CDM projects under the Kyoto Protocol in terms of their potential impact on the envisaged sustainable development goals for rural communities. Five case studies from the Indian subcontinent were also examined. The paper concludes that the CDM in its current state and design has typically failed to deliver the promised benefits with regard to development objectives in rural areas. Successful projects were found to have had good community involvement and such projects were typically managed by cooperative ventures rather than money making corporations. The paper puts forward a new framework for the assessment of such benefits in the hope that future projects can be better assessed in this regard. The key problem, however, remains on how to deal with the inherent contradiction between development and sustainability. (C) 2010 Elsevier Ltd. All rights reserved.