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The perspectives of developing-country firms are missing from the policy literature on carbon markets. This research addresses this gap by analysing participation in the Clean Development Mechanism (CDM) by sugar mills in Brazil. Specifically, the research documents how far the CDM has penetrated into Brazil's sugar sector; how sugar mill owners/managers perceive the benefits, risks and costs of CDM-related investments; and the processes by which Brazilian sugar mills entered the carbon market. The mill-level analysis of CDM participation reveals the market and non-market dynamics that drive patterns of sugar mill investment in carbon abatement. First, access to a trusted source of information was a key driver of initial CDM participation by sugar mills, alongside other market drivers such as revenue, cost and reputation concerns. Firms with pre-existing relationships with carbon industry experts were more willing to assume the risk of carbon market participation and were in a much better position to capture early opportunities in emissions reduction projects. Furthermore, carbon market consultants, rather than mill owners/managers, were the primary agents of CDM activities in Brazil's sugar sector. Consultants approached sugar mill owners, identified firm-level carbon market opportunities, created project templates by developing methodologies, convinced mill owners/managers of the benefits of carbon abatement investments, and guided projects through the bureaucratic CDM project approval process. [ABSTRACT FROM AUTHOR]