Approximately half of the carbon in trees can be fixed to charcoal by carbonization. Porous charcoal is useful as a soil amendment for crop fields and forests, and also as a water purifying agent. Given these facts, charcoal production should be recognized as one of the most promising CO2 sequestration methods. A project on biomass utilization and forest conservation is proposed as a Clean Development Mechanism (CDM) project, by incorporating the carbonization of biomass residue and waste from tree plantations and pulp mills, and also the utilization of carbon products in various fields. A feasibility study was conducted with the existing project of an industrial tree plantation and pulp production in Indonesia. If conventional charcoal-making methods are used, a total of 368,000 t yr-1 of biomass residue and waste could be transformed into charcoal of77,000 t yr-1, and the carbon emission reductions by the project reaches 62,000t-C yr-1 (or 230,000 t-CO2yr-1) in consideration of the project baseline. This charcoal project could provide jobs for approximately 2,600people. The soil fertility in man-made forests could be maintained by returning charcoal to the original forests. Therefore, the project would be beneficial to the regional economy. In addition, the present charcoal project is expected to give more positive impacts than negative ones, or leakage, beyond the project boundary.