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Solid biomass, such as wood and garbage, can be burned directly to produce heat. Biomass can also be converted into a gas called biogas or into liquid biofuels such as ethanol and biodiesel. These fuels can then be burned for energy production.

Biogas is formed when paper, food scraps, and yard waste are decomposed in landfills; it can also be produced by processing sewage and animal manure in special vessels called digesters. Ethanol is extracted from crops such as corn and sugar-cane by fermentation process. Biodiesel is produced from vegetable oils and animal fats and can be used in vehicles and as heating oil.

The current availability of biomass in India is estimated at about 500 million metric tonnes per year [10]. Studies from the Ministry has estimated surplus biomass availability of about 120–150 million metric tonnes per annum covering agricultural and forestry residues corresponding to a potential of about 18,000 MW. Apart from this, it is predicted that about 7,000-MW additional power could be generated through co-generation process.