Based on an analysis of the status of biomass energy sources worldwide including China, this paper concludes that the development of the biomass energy industry in China is limited by factors asfollows:food security; lack of understanding of domestic sources; the deficiency of the policy environment; and environmental protection. There are also other challenges such as: low overall level of industry development; not having yet established a complete biomass energy industry system; high production costs; weak market competition; lack of investment in research and technology; low level of market admittance threshold; and disorder of industry development. Therefore, proposed policies aimed at promoting the healthy and rapid development of the biomass energy industry are as follows improving the policy and regulatory system to enable the biomass energy industry to develop; greater evaluation of biomass energy material resources; accelerating the development of biomass energy conversion and use technologies; establishing the demonstration bases of biomass energy industry.