Worsening pollution caused by widespread coal use in Asia is driving major energy consumers to diversify their energy sources - a trend that is in focus this week as government officials start to thrash out a post-Kyoto treaty in Bali, Indonesia.
Under pressure from the E.U. and others for its reluctance to impose mandatory caps on emissions, China has instead trumpeted its mid to long-term goal of doubling the share of renewable energy in its energy mix to 15% by 2020.
Installed capacity for generating power from biomass is targeted to reach 30 gigawatts by 2020, according to the National Development and Reform Commission, China's economic planning agency. Goals have also been set for alternative energy such as wind, nuclear and solar power.
But reaching such a lofty target for biomass requires a fundamental shift in how China uses agricultural and forestry waste, while analysts say Beijing's other targets, notably for biofuels, will act as bottlenecks.
China is the world's top consumer of biomass, swallowing 227 million metric tons of oil equivalent in 2005, according to the International Energy Agency, which doesn't expect the total to change much between now and 2030.
More than 98% of demand in 2005 involved households in remote parts of the country burning manure or firewood in cheaply made digesters to produce biogas for use in stoves for cooking or in lamps for lighting.
Large-scale commercial power plants fired by biomass didn't exist until last year. However, the IEA expects these plants to be using 38 million tons of oil equivalent by 2030 as traditional consumption declines.
While some analysts say that China could have as much as 80 gigawatts of biomass power generating capacity by 2020, others feel surpassing Beijing's target of 30 GW may be hard to achieve by that date.
"Limitations include competing uses for the wastes, including biomass pellet and briquette production and, potentially, cellulose-to-ethanol technology when it becomes commercially viable," said Eric Martinot and Li Junfeng, in a report on the role of renewable energy in China for the Worldwatch Institute.
This demand is forcing up prices of agricultural waste, especially as plant operators must often buy from a middleman who has gone to the trouble of collecting stalks and other matter from individual farmers.
On top of this, generators must pay the transportation costs of bringing the biomass to the power station.
Margins are therefore thin and the risk is that many biomass-fired plants never make it to commercial operation without expensive government subsidies if prices of waste rise too high. Biomass Reaps Tariff Benefit Biomass has an advantage over other forms of renewable energy in China currently - a premium of CNY0.25/kWh can be charged for biomass power above the coal-fired electricity price, boosting its competitiveness.
This is reassuring for investors who see no obstacle to the government raising the premium in future to protect the fledgling biomass industry if the cost of waste surges.
Wind farm developers, by contrast, have openly criticized China's tariff policies for their industry and don't expect change any time soon.
Biomass also has the backing of state-run Chinese companies eager to display their green credentials to impress leaders in Beijing.
China's first 25 megawatt biomass-fired power plant, which began operations in the eastern province of Shandong late last year, was financed by the renewables unit of State Grid Corp., China's monopoly power distributor in all but five provinces.
The plant in Shanxian County cost $35.7 million, and burns up to 200,000 tons of cotton stalks and other waste to save the equivalent of 400,000 tons of coal.
National Bio Energy Co., State Grid Corp.'s unit, is also financing a 30 MW plant in Heilongjiang province that burns plant and vegetable stalks to generate electricity, the official Xinhua News Agency said last month.
Power generators including Huadian Power International Corp. (1071.HK) expect the government to introduce a quota system on renewable energy in coming years, and biomass is more similar to their core business than alternatives such as solar energy.
Foreign investors are also seeking opportunities. Core Equity Partners, a private-equity arm of Korean investment firm Core Finance Group, and Sarasin Rabo Investment Management Ltd., a unit of Swiss bank Bank Sarasin & Co. (BSAN.EB), said recently they would launch a private-equity fund focused on clean energy, including biomass.
The government concedes that investment from private companies and state-run titans is needed if its renewable energy targets are to be achieved.
Chen Deming, China's top energy official, said 80% of the $265 billion investment needed in renewable energy in the country by 2020 would come from the private sector.
Amid concern there won't be enough agricultural waste to support a jump in biomass-fired power generation in future, the NDRC has vowed to develop "energy plantations", which will be grown on barren mountains or sandy areas.
Government-run tree planting programs such as the National Forest Protection Program and the Sloping Cropland Conversion Program will raise the availability of forestry waste, the November report by Martinot and Li said.
The NDRC expects to have 24 GW of installed capacity generating power from agricultural and forestry waste and so-called energy crops by 2020.
The remaining 6 GW in the official target will come equally from tapping livestock farms and municipal dumps that have so far contributed little to biomass power output.
By 2020, China envisages having 10,000 large-scale biogas facilities on livestock farms and 6,000 projects using industrial organic effluent to produce 14 billion cubic meters of biogas and an installed capacity 3 GW.
Landfill gas from municipal waste will also contribute 3 GW of power generation by 2020, with combustion plants being built in densely populated and affluent eastern and southern coastal areas such as Guangdong and Zhejiang provinces, which have few natural resources of their own.
"Nevertheless, many millions of rural households will continue to rely on traditional biomass to meet much of their energy needs, even as China's cities swell with citizens whose patterns of consumption are converging with those of their counterparts in already developed countries," the IEA said.