Besides palm oil, palm kernel oil (PKO) and palm kernel cake, which are the primary products, the palm industry also generates a large amount of by-products in the forms of empty fruit bunches (EFB), palm fibre, palm oil mill effluent (POME) from the palm oil mills and palm trunks and fronds from the plantations. All these by-products requires aound management practices to minimize the negative impact on the environment. Research and development (R&amp,D) efforts have demonstrated that palm oil and its derivatives (palm oil methyl ester or palm diesel), EFB, palm fibre and biogas from POME can be good sources for energy production. These can be used to replace the conventional fuels, e.g. petroleum, coal and natural gas, to a certain extent. The main benefit derived from such renewable sources of energy is the reduction of emission of greenhouse gases (GHG) like methane and carbon dioxide. Under the terms of 1997 Kyoto Protocol – a major international initiative established to reduce the threat of global warning – there is potential financial gain to actually transact these GHG bebefits to the palm oil industry under the clean development mechanism (CDM). This paper highlights the potential benefits that can be derived from such an initiative.