According to industry analysts, if the Chinese central government established more favorable policies to boost the development of the biomass industry, it would immediately enter a period of accelerated growth. This is partly due to the impact of rising oil prices and the expenses of meeting environmental protection requirements.

On April 26, China’s National Development and Reform Commission issued guidance concerning the latest structural changes within the industry, specifying that the government will encourage the development and application of technologies for producing non-grain biomass fuels, including ethanol from cellulosic biomass and bio-diesel. According to China’s five-year plan for renewable energy during the 2011-2015 period, the country will increase the annual usage of ethanol fuel to three million tons by 2015.

Tsinghua University’s chemical engineering professor Xing Xinhui said, “while China has built a number of biomass energy projects since the beginning of the last five-year period (spanning 2006-2010), the country still lags far behind other countries in terms of biomass energy investments and has not yet made any breakthrough in biomass energy technology. As a result, it behooves the central government to provide additional support for the industry by increasing its investment in research and development of biomass energy technologies, so as to speed up the development of the industry.”

Nevertheless, the sector looks promising mainly due to three factors: the country has substantial biomass resources; non-grain plants that can be converted to energy can be grown on marginal land; and residues and leftover waste from the country’s agricultural and forestry sectors can be used as biological energy materials. China produces 5 million tons of grain per year, generating nearly 700 million tons of straw that can be used as the main source of biomass energy, according to statistics. In addition, all organic materials, including poultry manure, fallen leaves and industrial waste, can be converted to biomass energy.

At the beginning of 2011, Zhu Lieke, deputy director of the State Forestry Administration, said that China plans to build large biomass energy production bases in both southwest and northwest China. The combined capacity amounts to 20 million tons of biodiesel materials. 

Biomass energy has been increasingly favored by a number of energy firms for its clean, efficient, safe and sustainable features. Some multinational energy giants, including BP, American International Petroleum, BASF and DuPont, as well as the major Chinese players (CNPC, Sinopec and CNOOC) have already expanded their presence into the biomass energy sector through direct investments.

On March 4, CNPC entered into a cooperation framework agreement with the government of Shandong province to establish a fuel ethanol and biodiesel production facility. On April 13, Sinopec inked a cooperation agreement with China’s largest food processing manufacturer and trader COFCO. Both companies will jointly build a fuel ethanol manufacturing facility with an annual capacity of 100,000 tons over the next five years.

Industry analysts indicated that China is well on its way to adjusting its coal-focused energy structure by increasing the proportion of clean energy over the coming ten years. And with its unique advantage, biomass is becoming one of the most important energy sources in China’s energy strategy besides traditional wind, nuclear and solar.