Quite why such an environmentally friendly energy resource has escaped government and industry attention here is a mystery.

Whatever the reasons, German businessman Markus Huwener and Sydney-based funds manager and former Allco principal Chris West insist the small, compressed pellets of natural waste products that create the energy source known as biomass warrant at least as much attention and investment as wind farms and solar panels in the development of Australia's power-generating landscape.

What's more, they are now working together on establishing the world's first internationally co-ordinated biomass supply chain -- funded by Australian investors -- to meet an already voracious, ever-increasing demand for this product throughout Europe, China and Japan.

With biomass widely used not just for generating clean power but also for domestic heating in place of oil, worldwide demand is estimated to exceed the amount of material available for trade by at least 300 per cent.

Huwener, a former investment banker who now heads the Frankfurt-based carbon asset management and advisory company FirstClimate, says one big advantage biomass has over wind-and solar-generated power is that the two latter sources cannot be used for baseload purposes in coal and oil-fired power stations.

"Biomass, geothermal and hydro power are the only renewable energy technologies that can be relied upon to run 24/7, whereas wind and solar power sources fluctuate depending on weather conditions and are, therefore, not sufficiently reliable for baseload purposes."

Numerous power stations around the world now run permanently on a combination of coal and biomass pellets, and one British power-generating company has announced plans to replace half its coal-fired generators entirely with biomass generators.

With more countries and industries looking for clean, carbon-neutral, renewable baseload energy sources, with governments taking action to price carbon emissions and establish carbon-trading schemes, and with geothermal, hydro and nuclear power not always feasible, biomass is becoming an attractive option for baseload substitution.

"The sole issue stopping ongoing expansion of this industry is reliability of supply," Huwener says, "because constant provision of fuel needs to be absolutely guaranteed. And this is where we enter in the market, offering cost-efficient and reliable ways of bringing supply and demand together."

With pellets produced from timber and sawmill offcuts in often remote areas of the world's jungles and forests that would otherwise go to waste, along with agricultural by-products such as rice husks and sugar cane and bamboo residue, UN climate policy officials classify biomass as carbon-neutral and renewable even though it is burnt.

FirstClimate, which first became aware of the vast untapped supply of biomass material several years ago while working on projects to reduce greenhouse gas emissions in developing countries, has already built up a pipeline of 25 projects to help meet pellet demand worldwide.

"We saw these piles of discarded biomass material all over the place being left to rot, thereby producing the greenhouse gas methane," Huwener says. "We never cut any forests or trees. We're talking solely about wood waste, especially in remote forests where as much as a third of every cut tree is wasted."

Originally developed to produce animal feed, pelletisation compresses waste, extracts humidity and enhances density by a factor of three to four.

Partnering with Spar Capital, the boutique funds management company Chris West established five years ago after leaving Allco, FirstClimate has established First Biomass -- the world's first dedicated biomass fund -- to create or expand pelletisation plants in a number of countries including Brazil, Canada, the US and also Australia, from where the fund's managers see great potential for supplying local and Asian power producers in the future.

Given market volatility, a stockmarket float intended to raise $150 million has been postponed until next year, with First Biomass instead launching a pre-IPO funding round of $100m offering prospects of double-digit yields and about a 30 per cent return for those who sell their stakes into the IPO.

With Australia's Energy Users Association warning recently that a further $30 billion would have to be spent on windfarms by 2020 to meet targets for renewable energy generation, on top of the billions already spent on subsiding rooftop solar panels, perhaps the time has come for Australia to start focusing a bit harder on innocuous-looking pellets.