Biogas technology, besides supplying energy and manure, provides an excellent opportunity for mitigation of greenhouse gas (GHG) emission and reducing global warming through substituting firewood for cooking, kerosene for lighting and cooking and chemical fertilizers. A study was undertaken to calculate (1) global warming mitigation potential (GMP) and thereby earning carbon credit of a family size biogas plant in India, (2) GMP of the existing and target biogas plants in the country and (3) atmospheric pollution reduction by a family size biogas plant. The GMP of a family size biogas plant was 9.7 t CO(2) equiv. year( - 1) and with the current price of US $10 t( - 1) CO(2) equiv., carbon credit of US $97 year( - 1) could be earned from such reduction in greenhouse gas emission under the clean development mechanism (CDM). A family size biogas plant substitutes 316 L of kerosene, 5,535 kg firewood and 4,400 kg cattle dung cake as fuels which will reduce emissions of NOx, SO(2), CO and volatile organic compounds to the atmosphere by 16.4, 11.3, 987.0 and 69.7 kg year( - 1), respectively. Presently 3.83 million biogas plants are operating in the country, which can mitigate global warming by 37 Mt CO(2) equiv. year( - 1). Government of India has a target of installing 12.34 million biogas plants by 2010. This target has a GMP of 120 Mt CO(2) equiv. year( - 1) and US $1,197 million as carbon credit under the CDM. However, if all the collectible cattle dung (225 Mt) produced in the country is used, 51.2 million family size biogas plants can be supported which will have a GMP of 496 Mt of CO(2) equiv. year( - 1) and can earn US $4,968 million as carbon credit. The reduction in global warming should encourage policy makers to promote biogas technology to combat climate change and integration of carbon revenues will help the farmers to develop biogas as a profitable activity.