Pakistan is facing severe economic crises due to continuous increasing gap between energy demand and supply. Demand is increasing exponentially and expected to increase more than 66000 MW by 2030 while the supply is observed to remain constant over the last few years due to frozen capacity in spite of having significant renewable/alternate energy resources. Current electricity shortfall has reached up to 6000 MW. This paper investigates the potential of two major biomass energy resources available in Pakistan: Livestock and Bagasse. These resources, if utilized to their full extent for power generation, can contribute up to 42% in the current scenario. The biomass resource quantification is done along with its environmental impact assessment in terms of methane emissions pre and post production of biogas. Economic appeal of biomass energy is demonstrated by a comparative cost analysis among heavy fuel oil, natural gas and biomass (i.e. dung). The ongoing policies and incentives on biomass energy usage, and bottlenecks in making the biomass a component of energy portfolio of Pakistan are also reviewed. The outcomes of this paper might also be applicable to other developing countries having similar resources.