The biomass and hydropower industries are emerging as key sectors with significant growth potential, and are expected to become long term investment hot spots by 2025, according to industry experts.
As China enters a new phase of economic development, the energy sector is playing a crucial role in stabilizing the broader economy, according to the Forecasting & Prospects Research Report on Energy Economy released by the Center for Energy and Environmental Policy Research of Beijing Institute of Technology.
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Wind and solar power have proved to be essential in optimizing the nation's energy supply-demand balance, yet biomass and hydropower are gaining momentum due to their long-term viability and environmental benefits, it said.
Biomass refers to material derived from living organisms that are utilized for bioenergy production, including wood and wood residue, energy crops, agricultural byproducts such as straw and organic waste from both industry and households.
"While wind and solar power continued to lead China's low-carbon energy transition last year, biomass and hydropower are being increasingly recognized for their sustainability," said Tang Baojun, a professor at the Center for Energy and Environmental Policy Research.
"These sectors will become more prominent in China's energy mix, driven by advances in technology, increased policy support, and a growing emphasis on sustainable development," she said.
Biomass power generation has grown rapidly in recent years, with grid-connected biomass power in the country reaching 44.14 million kilowatts in installed capacity by the end of 2023, a fourfold increase since 2013, according to the Biomass Energy Industry Promotion Association.
Nonelectric biomass applications are also expanding, with significant developments in biogas, biomass heating and bio-liquid fuel industries, it said.
Chinese companies have made significant progress in biomass development in recent years. The country's home-built C919 aircraft completed a test flight last year powered by bio-jet fuel that was developed by China Petroleum &Chemical Corp, the world's largest refiner.
According to Tang, biomass energy stands out for its potential to tap into agricultural waste and forestry residue, offering both environmental and economic benefits. This renewable energy source is poised to address pressing issues like waste disposal and carbon emissions, while also fostering regional economic growth.
Hydropower, the most established form of renewable energy, continues to play a foundational role in China's energy transition, thanks to its reliable, large-scale generation capacity, she added.
Despite these promising prospects, Tang cautioned that China's energy sector must further enhance its dynamism and ensure balanced, high-quality development.
As the global energy landscape evolves, China will need to address both internal challenges and external pressures to fully realize the potential of biomass and hydropower. The shift toward a cleaner, more balanced energy system will require ongoing investments in infrastructure, innovation and policy frameworks, she said.
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According to the report, while global carbon capture technology has developed rapidly in recent years, the sector still faces significant challenges, including high costs, energy consumption, technological lock-in risks, and insufficient policy and financial support.
China has been coordinating efforts in fundamental research, technology development, equipment manufacturing, and integrated demonstration projects, according to Wei Yiming, a professor at the center.
These measures are intended to boost China's core competitiveness in carbon capture technology and accelerate the growth of the CCUS (carbon capture, utilization and storage) industry, according to the report.
China's CCUS technology has made remarkable progress in recent years, with 126 CCUS projects planned for operation in the country so far, which is 77 more than in 2020. The government believes that CCUS technology is not only a technical method that can achieve net-zero emissions in fossil energy usage, but also a feasible technical solution for achieving deep emission reductions in the carbon emission reduction industry.
