Tibet, a region that lacks fossil energy resource, mainly depends on traditional biomass to meet its rising energy demand. Irrational use of traditional biomass affects the local environment as burning of straw and animal dung as fuel pollutes the air and destroys vegetation and ecological environment. The rich forest resources and hydropower resources in the south and east of Tibet, however, hold out the hope of biofuel utilization industrialization, an innovative solution to the Tibet energy issue. Renewable hydropower may be used for briquetting biomass fuel by forest residues, which has higher energy efficiency than traditional biomass and is easier to store and transport. In so doing, the energy demand of Tibet will be better met with least damage to the environment. It also means less reliance on outside supply of fossil fuel even after the opening of the Qinghai-Tibet railway. In addition, it means more job opportunities for local residents as people will be hired to collect forest residues and transport them to the plants.