Ethiopia has been recording two digit economic growths for the last five years. The contribution ofrnindustrial sector for this economic growth is significant. One of the industry sectors that contributernfor this two digit economic growth is the leather sector. Currently there are twenty four differentrntanneries in the country but in the coming few years their number is expected to increase.rnAnnually all tanneries generate 70,104 tonnes of solid waste and 3,393,600 m3 wastewater in thernpre-tanning leather processing stage and dispose into the surrounding environment without properrntreatment. The leather production process could create emissions of greenhouse gas, waterrnpollution, and hazardous wastes, which potentially disrupt local ecosystems and pose human healthrnrisks. Processing of leather also consumes large amounts of fossil fuel, which contributes torngreenhouse gas emissions. To make the Ethiopian tanning industry is competitive in the globalrnmarket; the industries should process the leather in the carbon neutral environment with takingrnmitigation measure for emission of greenhouse gases during fossil fuel use and waste disposal.rnIn this study, tanneries biogas and methane production capacity were estimated using anaerobicrndigestion of solid and wastewater in the leather industry development institute and analyzed thernopportunities in which the tanneries could produce in carbon neutral environment with replacingrnthe fossil fuel used by methane generation.rnUsing waste-to-energy principles through anaerobic digestion of tannery waste it estimates that allrntanning industry can generate more than four million meter cube of biogas with three million meterrncube of methane per year. This can cover approximately sixty seven percent of fossil fuel needs ofrnthe tanning industry and this can also help to mitigate 100% and 67% for methane and carbonrndioxide respectively. Beside to the environmental advantage with implementation of cleanrndevelopment mechanism the industries could get more than a million USD per year from the annexrnI countries either financial or technological support