HONG Kong timber product maker China Grand Forestry Resources Group Ltd has agreed to buy a bio-energy company for HK$6.4 billion ($822 million) to gain from China's increasing demand for alternative fuels.

Grand Forestry will buy Yunnan Shenyu New Energy, a Chinese company that mainly does research and development on biological energy sources such as using the oilseed-bearing, drought-resistant Jatropha Curcas tree to make fuel, Bloomberg News reported.

China is set to become the biggest consumer of renewable energy, which may account for more than 15 percent of the nation's energy use by 2020, WorldWatch Institute said yesterday.

Biofuels, such as biodiesel and ethanol, may replace as much as 24 percent of global gasoline and diesel use by 2030, according to BP Plc, Europe's second-largest oil company.

"The directors consider the acquisition of high-growth potential biomass energy to be an extension of the group's existing ecological forestry business," Grand Forestry said in the statement.