Bio-oil produced with the scientists' technology is 56.8 percent cheaper than diesel oil and 39.1 percent cheaper than heavy oil, said Professor Guo Qingxiang with the Biomass Clean Energy Laboratory of the university, in east China's Anhui Province.

Guo pointed out, however, that bio-oil only produces two fifths of the heat from the same amount of diesel oil and only half that of heavy oil, Guo said.

The technology, which can produce more than 6 kg of bio-oil from 10 kg of sawdust and 5 kg from stalks, has passed appraisals by the provincial department of science and technology, Guo said.

Producing one ton of bio-oil in the Chinese lab only costs about 100 U.S. dollars.

The lab also invented a machine that can process 120 kg of biomass per hour.

Scientists in a number of countries began researching how to convert biomass into an liquid energy source in the 1980's. The process is known as pyrolysis liquefaction technologies, which decompose biomass using heat which then turns it into liquid. The high cost of conversion has so far prevented scientists from making an economically feasible energy product.

Some scientists in the Netherlands and Germany are also doing research in the field, Guo said.

"The Chinese government will subsidize the application of the lab's technologies," said Cui Weiping, an official with the office of countryside energy of Anhui Province.

More than 700 million tons of stalk and chaff are left over from harvest every year. Traditionally they were burned, causing not only pollution but also a huge waste of energy, according to Guo.

Bio-oil can be used directly in heating boilers and as fuel for motor vehicles after further refining. Ethanol can also be extracted from bio-oil.