MANILA, PHILIPPINES - The People's Republic of China (PRC) needs 413.5 billion yuan (CNY) (or roughly $60.5 billion) in investments over the next 10 years to harness its biomass energy potential in rural areas, an Asian Development Bank (ADB) report issued today said.

Biomass energy is sourced from waste generated from livestock and crop production. If livestock manure and crop stalks were converted into clean fuel, it could provide electricity to around 30 million rural people in the PRC who are still dependent on kerosene lamps for lighting, and to millions of others who are relying on firewood and other agricultural wastes to heat their homes and cook their meals.

"Biomass energy is a sensible renewable energy option for rural areas and it can be cost-effective at community and industrial scales if governments support and effectively guide its development," said Klaus Gerhaeusser, ADB's Director General for East Asia Department. It also "has great potential to make a significant impact on two of the country's most pressing development challenges: rural poverty and environmental damage."

According to Rural Biomass Energy 2020 in the People's Republic of China, the country needs CNY413.5 billion through 2020 to fully implement its rural biomass energy development plan. Of the total, CNY314.3 billion will be used to help rural household beneficiaries, CNY16.5 billion for centralized gas plant projects, and CNY82.7 billion for power generation and liquid fuel production. An additional CNY1.5 billion is needed for research, development, demonstration, and piloting.

Government and project financing are the two main sources of funding. While government investment is necessary for projects directly related to farmers, private financing is critical for securing self-sustaining financing cycles and developing the biomass industry.

A broad partnership is needed to develop the sector to become more sustainable and competitive. International financial institutions, such as ADB, can become a catalyst in helping raise the necessary project financing.

At present, most rural biomass energy comes from small-scale conversion projects. In 2005, only 12% of animal waste from household farms was put to energy use, while only 0.5% of the animal waste from industrial livestock farms was used for energy. About 0.4% of the total amount of straw biomass was used in renewable energy systems.

The PRC has set a goal for 2020 to produce energy from various waste-based sources, including biogas from animal farms, crop residues, agro-processing, municipal waste, and sewage sludge. The government has set a target of 15% of the country's energy consumption to come from renewable energy by 2020.

"The potential of biomass energy in the PRC is huge, but the barriers to realizing this potential are likewise significant and complex," Mr. Gerhaeusser said. Biomass energy is the least developed form of renewable energy in the country due to cost and technological constraints.

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