The Clean Development Mechanism (CDM) is one of the three greenhouse gas emission reduction and trading instruments of the Kyoto Protocol (KP). The CDM allows governments and business entities from developed countries to offset their emissions liabilities by reducing or avoiding emissions in developing countries, where it is often cheaper to do so. Our results reveal that the majority of the CDM projects utilise local sources of technology. We attempt to explain technology sourcing patterns in CDM projects through the use of knowledge based determinants. Our empirical analysis indicates that in countries with a stronger knowledge base in climate friendly technologies, CDM project implementers tend to use local, as well as a combination of local and foreign technologies, more than foreign technologies.