Promotion of Bioenergy in Rural China From the Business Perspective

Abstract: This research investigates the current situation of bioenergy development in rural China from the business perspective. Biomass combustion power stations, medium and large biogas facilities, and household level biogas digesters are discussed in the research. In total 6 empirical case studies and interviews with different stakeholders are employed in the research. This thesis argues that the government-oriented bioenergy promotion strategy is not the most cost-effective way to stimulate the whole industry. This thesis points out that the current predicament of bioenergy demonstration projects is due to technology adaptability problems, the sharply increasing price of raw materials and high transaction costs during the collection stage. Besides, high initial costs and the lack of financing channels also delay the large-scale commercialization and dissemination of bioenergy technologies in rural China. This thesis also finds that local economic conditions, as well as the cultural and social context, are critical factors for the success of bioenergy development in rural China. This thesis suggests that energy service models and local professional co-operatives are effective in helping local residents be involved in the market economy, and in building trust between local residents, energy companies and the operation of bioenergy projects. Four recommendations are made: (1) conduct a biomass resource investigation under market conditions and the local social and cultural situations; (2) ensure strict regulation of the number and capacity of large biomass power stations; (3) bring about modification of the current subsidy system and include coal-firing technology under the subsidy; and (4) promote professional co-operatives and energy service company models in rural China.