Given the escalating issue of greenhouse gas emissions, the Certified Emission Reduction (CER) mechanism has been further developed, which provides additional revenues and improves the efficiency of renewable energy projects including terraced hydropower plants. However, limited literature integrates the role of the CER scheme into the optimal scheduling of the terraced hydropower plants. To establish a low-carbon economical operation strategy for terraced hydropower plants considering CER, we first specify the CER calculation method for hydropower plants using emissions baseline analysis. Then, a CER-embedded optimal scheduling model for terraced hydropower plants is established. Therefore, the benefits of CER are combined to the consideration of the overall benefits of hydropower plants, which guides the hydropower plant generation operation strategy. Ultimately, we focus on five typical operating scenarios for terraced hydropower where generation benefits, different CER prices, power subsidies for the summer peak load period, and extreme weather factors with dry water are respectively considered. Further, a comparative analysis of individual factor impacts is conducted in a pairwise manner. Results demonstrate that the proposed model can improve the comprehensive efficiency of the terraced hydropower plants by 18.45 % while the water discarded can be reduced by about 0.413 million m³.