Households in rural China rely heavily on low quality fuels which results in reduced quality of life and environmental degradation. This study assesses the comparative contribution of household scale biogas installations to the broad set of sustainability objectives in the Chinese biogas policy framework, which targets household budget, fuel collection workload, forest degradation, indoor air quality and health, renewable energy supply, and climate change. A household survey was used to determine how biogas affected consumption levels of crop residues, fuel wood, coal, LPG, and electricity. Biogas users were found to reduce consumption of biomass fuels but not coal. Although LPG is not a highly commonly used fuel in rural China, biogas users nearly cease to use it altogether. A big reduction in fuel wood consumption results in strongly reduced workload and forest degradation. Although household scale biogas has alleviated all sustainability issues targeted by Chinese policies, low quality fuel use remains abundant, even in households using biogas. Continued promotion of the construction of biogas installations is advisable, but additional policies are needed to ensure higher quality heating energy supply and cleaner uses of biomass fuels.