Surplus bagasse in Indonesian sugar mills is potential for arid-connected electricity-generating projects under Clean Development Mechanism (CDM) scheme. In addition, it is further perceived to considerably support the efforts to address prevailing crises in domestic sugar industry and power generation sector. This paper aims at analyzing the economic potential of bagasse cogeneration as CDM projects in Indonesia with the main deliverables of total emission reductions per year and Certified Emission Reduction (CFR) earnings. The analysis was made by following the applicable methodologies and based on publicly available data from official and other sources on the websites. The results show that with the electricity displacement potential at 260,253 MWh, Indonesia could generate Greenhouse Gas (GHG) emission reductions as much as 240,774 (large scale) or 198,177 tCO(2) (small scale) per annum from the recently-employed low efficiency cogeneration leading to the earnings of about US$1.36 or 1.12 million, respectively. Out of 6 regional grids where the electricity from the project activities can be grid-connected, the primary emission reductions potentials are encountered in Java-Bali and Southern Sumatera grids. Additionally, various barriers in technical, institutional, financial, and other aspects have been identified as the justifications to pass the additionality test. (c) 2007 Elsevier Ltd. All rights reserved.