Potential usage, vertical value chain and challenge of biomass resource: Evidence from China’s crop residues

China’s energy needs and its environment are facing great challenges because of the country’s rapid urbanization and industrialization. It is China’s strategic choice to exploit renewable energy to guarantee its energy security and reduce CO2 emissions. Crop residue has been identified and targeted by the Chinese government as a promising renewable energy resource. The purposes of this study are to investigate the potential supply of crop residue nationally and regionally, the vertical value chain from the field to final usage of these crop residues, as well as to conduct cost-benefit analysis on power plant-based crop residue. Our results show that the large amount of crop residue in China has great potential to meet the country’s demand for renewable energy. Crop residues, however, are distributed unequally across regions. Therefore the use of crop residues to produce energy should be different across provinces, especially with respect to large power generation plants. Government supports right now are critical for power plants based on crop residue to survive. Based on our findings, it is suggested that China should attach more importance to technology innovation and creative policy reforms to improve the overall efficiency of the industry and reduce the cost of feedstock.