According to the general analysis of China’s biomass energy, China owns rich straw resources and the Chinese government attaches great importance on the development of straw power projects. Although the current Chinese laws and policies intend to provide favorable environment and legal protection for straw power generation projects, they are not efficiently carried out. The inefficiency is caused by various factors especially that the local governments' lack of initiative, which resulted in many problems in collection, transportation and storage of the straw resources and let the power plant facing with operation difficult. In this paper, the Chinese governments' responsibilities and the relation between each party in the promotion of the straw power projects were analyzed. The analysis shows that the straw power plants are more dependent on the local governments' full supports and guidance, and if the local farmers and local governments fully cooperate with the operations of straw power plants, many promotion problems such as short fuels can be solved. Besides, this paper suggested a set of measures and policy incentives containing institutional innovations and the tax incentives to stimulate the local governments to better carry out the central government's encouraging policies and measures for the straw power projects