Electricity is produced from biomass in a number of sustainable ways, including direct firing, cofiring, gasification, and anaerobic digestion. While many of today's biomass power generation facilities are relatively small compared to their fossil fuel counterparts, utility-scale plants with capacities in excess of 80 megawatts have been commissioned. The Energy Information Administration projects that biomass will generate more than 15 billion kilowatt hours of electricity in 2020. The biomass power industry in the United States is substantial. While not without challenges, there are now approximately 80 operating biomass power plants in the nation. Nearly half of all U.S. states generate biomass power. In addition, there are about 40 plants which are operable, but currently idle. The operating biomass power plants nationwide represent about 1,676 megawatts of generating capacity. The plants that sell into the nation's electricity grid are referred to as "sales generation" plants, while others that do not sell into the grid are called "self-generating" plants, and use the power internally. According to the California Biomass Energy Alliance, it is the sales generation plants that are threatened by the nationwide movement to a low-price-only electric industry deregulation and disparate subsidies for renewable energy technologies. About 35 percent of the sales generation biomass plants are located in California. Three states—California, Maine, and Michigan—provide 56 percent of the biomass sales generation capacity.

Biomass is not only an excellent source of next generation biofuels and grid-scale electricity, but also industrial/commercial thermal energy and combined heat and power (CHP), sometimes referred to cogeneration. In CHP, a power plant's spent steam is also used for manufacturing processes and/or building heat, boosting the overall efficiency of the system. Onsite biomass power generation is becoming increasingly mainstream. The industrial sector produces thermal output and electricity from CHP facilities in the paper, food-processing, chemical and fuel processing industries. For example, a growing number of ethanol plants in the United States are generating heat and steam from ag residues and wood waste. Likewise, most ethanol plants in Brazil generate thermal energy for electricity and process steam by combusting sugar cane bagasse. The electricity produced by CHP has only a short distance to travel between generator and end use, therefore, utilizing this heat and steam can improve industrial energy efficiencies by more than 35 percent.

More broadly, biomass thermal energy is the use of biomass for commercial and or residential space and/or water heating, process heat, and the thermal portion of combined heat and power. According to the Biomass Thermal Energy Council, the utilization of biomass for thermal heating applications is one of the most efficient means to produce usable energy—thus displacing fossil fuels and reducing GHG emissions. After more than two decades in residential heating, the pellet fuel industry has entered into large-scale commercial applications, providing heat and energy (boilers) to schools, theaters, prisons, manufacturing facilities and farms. According to the Pellet Fuels Institute, it is now possible to use pellet fuel in many public or commercial settings. And the benefits are many: Pellet fuel is cheap to buy, easy to implement and is available in large supply. Pellet fuel can alleviate the fossil fuel cost roller coaster that many commercial facilities experience.

The petrochemical industry manufactures innumerable products from fossil fuels: plastics, chemicals, and other products that are integral to modern life. Today, nearly all of these products can be made from renewable, carbon neutral biomass. The processes are similar. The petrochemical industry breaks oil and natural gas down to base chemicals and then builds desired products from them. Biorefining technology breaks biomass down to component sugars. Fermentation, chemical catalysis, and other processes can then be used to create new products such as valuable chemical intermediates that can be used in manufacturing processes.

Given the current robust forces driving sustainable bioproducts production, biomass-based routes are expected to make a significant impact on the production of bulk chemicals and advanced biofuels in the next decade, and a huge impact within 20 to 30 years. About 5 percent of global chemical sales currently are made up of "green products," but the market share could rise to 20 percent by 2010 and may reach 66 percent of the total global economy. According to some scientists, 10 percent to 15 percent of fossil oil-based bulk chemicals could be replaced in the near term by biobased bulk chemicals, especially for oxygenated bulk chemicals.

As a source of chemicals, biomass has several intrinsic advantages over fossil mass: it is renewable, flexible through crop switching, and adaptable through genetic manipulation. Direct and indirect strategies to substitute biobased chemicals for petrochemicals are being based on sustainable ecological succession concepts, and the proliferation of lignocellulosic fractionation processes is arising from the need for inexpensive, chemically useful biomass feedstocks.