Clean energy plans to aid biomass companies

China's biomass companies are on the fast track after government policymakers approved heightened investment in clean energy technology.

Beijing said on Tuesday it plans to finish 120 biomass-fired boiler demonstration projects by 2015 to combat air pollution, according to a document jointly issued by the National Energy Administration and the Ministry of Environmental Protection.

Biomass is defined as biological material - generally farm or forestry byproducts - that can be used directly via combustion to produce heat or indirectly after converting it to various forms of biofuel.

The pilot projects, valued at 5 billion yuan ($800 million), will be built across the country but with a focus on such places as the Beijing-Tianjin-Hebei region, Yangtze River Delta and Pearl River Delta, which are noted for concentrations of heavy smog and haze, the document said.

The projects' completion will provide energy equivalent to 1.2 million metric tons of coal and will reduce carbon dioxide emissions by more than 5 million tons, the statement said.

The program aims to build an entire industrial chain from fuel collection to biomass furnace construction and to boost the biomass market, the paper said.

The fast-track plan illustrates the government's determination to reduce the nation's reliance on fossil fuels.

Although fossil fuels, particularly coal, continue to be a dominant energy source in the overall mix, the share of non-fossil fuels in China increased by more than 50 percent to 9.6 percent last year, the latest data by British giant BP Plc showed.

But many believe this is not enough for the world's largest energy consumer and producer.

Simon Parker, chief executive officer of DP CleanTech, an international biomass solutions provider and a newcomer in China's biomass market, said biomass will play a bigger role in the renewable agenda in China.

He said the natural resource that comes from an estimated 800 million tons of agricultural and forestry waste is the biggest available fuel source in the world today.

"The potential in China is massive, and the only place with similar potential is Brazil," he said, forecasting a continued growth rate of 40 to 50 percent in China's biomass market in the next five years.

"Apparently, the government policy is driving in that direction by encouraging investment," Parker said.

But unlike other new energy sectors, like wind power, the seemingly booming sector poses unique challenges.

"Biomass is hard work, and negotiating with farmers can be very problematic, which makes the work of collecting biomass fuel difficult," the senior executive said.

The fact that the participation level by private enterprises remains very low is another hurdle to the biomass sector. The energy industry is controlled by small group of huge power generation companies, which restricts to some extent the development of medium-sized biomass plants, according to Parker.

"If you are managing 40 to 50 gigawatts of power, how can you focus on the 30-60 megawatt plants?" he asked.