China's government push for biomass

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China’s Ministry of Environmental Protection along with the National Development and Reform Committee, and the Bureau of Energy said in a recent joint announcement it plans “to strengthen the evaluation of biomass power project and minimize effects on the environment." The notice requires that all biomass power projects pass environmental evaluation before construction.

"Right now, China’s biomass power projects are still at the beginning level, many of the already-in-use biomass power plants have all kinds of problems such as resource-gathering and management," said Shi Lishan, the vice director of New Energy and Renewable Energy Department, Bureau of Energy in news reports.

Lishan said that new built biomass power projects must demonstrate resource sustainability standard before receiving approval.

The main function of this regulation is to eliminate undocumented and unapproved projects. The regulation may cause problems for some developers who do not have the required approvals.

As for investors, the new directive may be good news. The reason is projects will be prescreened by the government before approval, which helps reduce the risk of delays or fines after investment and construction efforts.

Along with the approval and operational considerations, such as tarrif subsidies and feedstock make-up, there are other challenges.

“The main challenge for developers has been assuring an adequate supply of feedstock at reasonably stable prices," said Kent Carter, the Managing Director of Camco Ventures in China.

“Historically, the cost of agriculture waste, for example, has been much higher than coal," Carter said. "But interestingly, over the past few months, as coal prices have risen dramatically, we are getting enquiries from power generators about substituting some coal for biomass.”

Carter, who invests in cleantech companies sees this trend as positive for developing the market for the biomass technologies and solutions that will be used in biomass projects.

The State Grid Corp of China points out that by the end of 2007, there were 87 biomass power projects approved by National Development and Reform Committee.

Cao Xuewei, executive manager of Mancheng City-based Fumin Biomass Power said in news reports, “The notice in some ways helps us to eliminate competitors. The projects meet the standard are the projects worth investing into and are reliable markets for technologies.”

China’s pipeline for biomass development is growing quickly as is investor interest. Shanxi Province plans to build 14 biomass power projects before 2012, and Hebei Province expects to build nearly 30 projects. Several other well-developed provinces, such as Jiangsu, Fujian, Hubei also have plans for adding several plants.

Recently, the Yangzhou waste-to-energy biomass power plant project in Jiangsu Province started operations. With first start investment of ¥500 million RMB, the project processes up to 800 tons of waste per day and expects to generate 100 million kilowatts (KW) of electricity, based on one ton waste to 280 KW rate.

The project has captured the attention of investors around the globe, including Biomax Environmental Technologies, Shanghai Pudong Development Bank, Veolia Group, Shanghai environment Investment, and China (Suzhou) Everbright Group. All of the investors have announced involvement in this project’s investment and operation.

Fumin Biomass Power's Cao is confident that such strong interests will continue in many parts of China, including his company's project.

“We meet the standard for this new regulation, and 68 percent of our city’s agricultural waste can be used as biomass raw material," he said.

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