"That means much of what is produced (biogas) cannot be pumped into natural gas pipelines," Zhang said.

Aside from technological barriers, Lin Boqiang, head of the China Institute for Studies in Energy Policy at Xiamen University, said a lack of successful business models are also causing problems.

"Take recycling agricultural crops as an example. Many farmers would rather burn crops down than selling to biogas producers. For one, transportation costs are very high and the crops need a large space to be transported and stored. For another, those crops are hard to sell at a very high price. Farmers would give up recycling crops and selling to biogas producers if they found the whole process cannot make ends meet," Lin said.

"In addition, investments in research and development of biogas projects are usually high and need a long time before harvesting profits. Biogas projects also need trained professionals from various fields including agriculture, environment protection, energy, and fertilizers. All those requirements have set a high bar for investors who want to step into the field," Zhang said.

"Lower-than-expected profits in China's current biogas industry have also made investors less interested," Zhang said, who added that about two-thirds of industry revenue for biogas comes from turning waste into fertilizers, rather than producing energy.

Despite the fact the country has recorded great achievements in the research of biogas fermentation and equipment manufacturing, there is still a gap in tech innovation between China and other countries that are in the forefront of the industry, Zhang said. Chinese project operators can learn some advanced methods from overseas.

Zhang cited the European Union as an example. The EU has set up a series of industry standards to support biogas production and commercial operations. Its standards cover areas of equipment manufacturing, construction, security, hygiene, environmental protection, emission, quality checks, equipment maintenance, grid transportation, and many others.

EU governments have introduced a series of supportive measures. In Sweden, the country has been offering subsidies to biogas plant construction to encourage related projects.

EU countries have also set up biogas consumption goals. Germany said it plans to consume 10 billion cubic meters of biogas by 2030. Sweden made a plan for biogas consumption accounting for 50 percent of total gas consumption by 2020, and 100 percent of total gas consumption by 2050.

"The biogas industry is set for rapid growth on a global scale. There are many experiences that Chinese biogas producers can refer to," Zhang said.

At the early stage of development with annual biogas production lower than 3 billion cubic meters, government subsidies are needed for Chinese biogas producers to guarantee profits and hedge investment risks so that the industry can attract more investors, Zhang said.

Despite the fact that biogas development in China faces great challenges, the sector is still poised to grow and is expected to generate great value, Lin said.