Bioenergy is emerging as a suitable renewable energy alternative. Its quality constituents can match that of petroleum-based products while having the potential to pollute less and contribute significantly to rural development. The food versus energy problem is also an issue in terms of the land tenure system, prompting the need to strengthen indigenous populations and smallholders’ rights against the increasing interest of the local elite, foreign countries, and multinational firms. Traditional use of biomass, mainly in the form of charcoal, firewood, crop residues, and manure, continues to comprise the main staple form of energy in many parts of the country. Biomass accounts for the bulk of energy consumption for households, as well as an important share of the total final energy consumption.

In the past decade, the bioenergy sector has gained importance as a modern energy source in Ethiopia particularly to fuel the transport sector. Energy poverty can be eradicated by decentralized bioenergy generation. For biomass-based business in Ethiopia can be categorized by the type of biomass fuel as a solid, liquid, and the economic sector as household, industry, transport, and agriculture. The country’s total bio-energy availability was estimated to be 750 PJ per year (46.5% forest residue, 34% crops residue, 18.8% livestock waste, and 0.05% MSW). Due to its fast economic growth, the energy demand is increasing enormously. Therefore it is expected to rise by a rate of 10 -14 % per year till 2037.