This study examines the causal impacts of the Clean Development Mechanism (CDM) on the environmental performance of Indian manufacturing firms, as measured by their energy use, carbon dioxide (CO2) emissions, and intensities of CO2 emissions per sales and per energy use. The impacts of CDM projects are estimated using either two-way fixed-effect regressions or an estimator built for an event study with staggered treatment (Sun and Abraham, 2021) combined with a sample of ever-treated firms only or a sample comparing treated to never-treated control firms using semi-parametric matching. We found that CDM projects significantly increased firms’ CO2 emissions and energy use after treatment, but had no effect on CO2 emission intensity per sales and only a small negative effect on the CO2 content of energy use (only for the matched sample). These results reveal that CDM projects led to a positive scale effect (increased sales) after investments were made, and that these investments triggered a limited emission-reducing technique effect (decreased CO2 intensity).