Abstract: The livestock farm in Minhe, Shandong Province was the site of this study. Using methodology (ACM0010) approved by Executive Board (EB) of Clean Development Mechanism (CDM) under United Nation Framework Convention on Climate Change, greenhouse gas emission reduction was analyzed by improving chicken manure management on chicken farms and utilizing a biogas power generation system to supply electricity and displace electricity from a grid-based conventional energy source. The emission reduction was estimated to be 84666 t CO2 equivalent a year. The revenue from sale of electricity would be 7.67 million Yuan per year, and 5.93 million Yuan per year from sale of carbon credit. The payback period of investment would be 19.7 years if no revenue from carbon credit was included. The payback period of investment would be 6.0 years if the revenue from carbon credit was included. Therefore, construction of biogas digesters on intensive livestock farms to treat livestock manure and carry out power generation using the produced biogas can not only improve the environment, utilize renewable energy and reduce fossil fuel consumption, but also reduce greenhouse gas emissions and obtain revenue from the emission reduction. The CDM project will provide additional incentives for the livestock farms to construct biogas digesters.