China’s biomass-to-electricity industry is booming. Thanks to favorable government tax policies, subsidized energy prices and fat giveaways from the United Nations Clean Development Mechanism (CDM), the Chinese government has approved more than 70 biomass-to-electricity plants. More than 30 of the plants are now operating, with a total capacity of about 3,000 megawatts, or 0.37% of China’s total power capacity.

China produces about 700 million tons of crop waste per year, equivalent to about 350 million tons of standard coal. At present, most of that crop waste is burned in the fields. However, if all of that waste were utilized as fuel, China could but its carbon dioxide emissions by about 850 million tons, according to a recent government estimate.

China has made the use of crop waste into a priority. In 2007, the National Development and Reform Commission laid out plans to invest $220 billion in renewable energy. Included in that plan were options for ethanol and bio-diesel for motor fuel. And in 2008, the central government laid out plans that called for the use of 80% of China’s crop wastes to be used for fuel by 2015.

But that ambitious goal is unlikely to be met. Farming in China is dominated by small family-owned farms. Thus, the crop waste is scattered over a large area which makes collection and transportation expensive. According to the NDRC, some of the biomass-fueled power plants estimated that the price for crop waste should be about $24 per ton. The reality was quite different. The crop waste cost $24 per ton when the farmers sold the material to the collection stations and the price rose to $40 per ton after processing and transportation to the power plants, and rose to about $50 per ton after storage and further processing cost.

As more biomass-to-electricity plants have come on-line, shortages of biomass have developed. And that has led to further increases in prices for crop wastes. For example, a power plant in Jiangsu Province started to generate electricity in July 2008, and lost $2.2 million after only half year’s operation due to high price for raw material.

According to China’s Renewable Energy Association, some of the first biomass-to-electricity projects were profitable, thanks to favorable government policy and CDM subsidies. But today, some of the biomass-to-electricity plants can only operate 30 to 40% of capacity due to fuel shortages. And some power plant operators are buying forest lands and are even planting trees to assure a future supply of raw material. Those moves have exposed yet another weakness: water availability. China’s water supplies – measured on a per-capita basis – are only one-third those of the world average and the push for increased use of biomass will likely make the water shortages even more acute. Furthermore, President Hu Jintao has pledged to increase China’s forest coverage by 40 million hectares by 2020 and the biofuel power plants will surely destroy his promise.

The problem, ultimately, is one of power density. The Chinese government may want to develop biomass-to-electricity, but they are fighting an uphill battle. The power density – that is, the amount of power that can be harnessed in a given unit of volume, area, or mass — of the best-managed forests is only about 1 watt per square meter. By comparison, the power density of the average US natural gas well is about 53 watts per square meter. Simply put, China doesn’t have enough land, or water, to make biomass-to-electricity plants viable on any kind of scale that will make a difference in China’s booming electric power sector.

The push for biomass-to-electricity, which depends on heavy government subsidies for its tenuous existence, is based on the assumption that physics don’t matter. Pretty soon, the Chinese government will have no choice but to admit that their experiment with biomass-to-electricity has failed.