China could become a net importer of biomass within three years as coal burn becomes costlier because of rising emissions allocation charges, according to Kelvin Hong, chairman of China's Great Resources Group and vice-president of the World Bioenergy Association.
Heat and power generators are required to reduce CO2 emissions by more every year in China, with rising emissions prices expected to render coal-fired generation costlier than other types.
Each coal-fired power plant is allocated a CO2 quota, and utilities must buy allowances for emissions above their quota under an emissions trading scheme (ETS) launched in 2021.
CO2 emissions prices are not high enough to encourage utilities to significantly reduce coal burn. But demand for allowances is expected to grow as quotas are revised down year by year. The government also plans to extend the ETS scheme to more sectors, including steel and cement.
"Nowadays, some coal plants are trying to find a way to burn biomass," Hong said, adding that not all generators had the know-how to burn biomass. "We are giving demonstrations to plants on how to [switch] from coal to biomass for 5pc, 10pc, 15pc [of their feedstocks]."
Some coal-fired utilities will be able to procure biomass domestically, but east coast plants might find it more difficult to source biomass in China. "They will have to import, [in] my view," Hong said. He added that it will take a couple of years until emissions allowance prices are high enough to encourage utilities to start replacing coal with biomass.
China currently bans biomass imports, although the government is considering lifting this ban, and at least one customs office might have tested imports of biomass meeting certain specifications.
The form of biomass chosen by utilities — particularly woody or agricultural biomass — will depend on price, Hong said, adding that consumers could seek biomass from all key producing regions, including southeast Asia and North America.
Manufacturing firms are also seeking alternatives to coal, in a bid to reduce emissions. Large manufacturers typically operate their own combined heat and power plants, Hong said.
Beijing does not subsidise industrial or residential biomass consumption, as the size of the industry is still small. "Subsidy is not key for the industry… becoming cleaner and decarbonising [is]," Hong said.
