Small-scale bio-energy projects have been launched in rural areas of China and are considered as alternatives to fossil-fuel energy. However, energetic and environmental evaluation of these projects has rarely been carried out, though it is necessary for their long-term development. A village-level biomass gasification project provides an example. A hybrid life-cycle assessment (LCA) of its total nonrenewable energy (NE) cost and associated greenhouse gas (GHG) emissions is presented in this paper. The results show that the total energy cost for one joule of biomass gas output from the project is 2.93 J, of which 0.89 J is from nonrenewable energy, and the related GHG emission cost is 1.17 × 10−4 g CO2-eq over its designed life cycle of 20 years. To provide equivalent effective calorific value for cooking work, the utilization of one joule of biomass gas will lead to more life cycle NE cost by 0.07 J and more GHG emissions by 8.92 × 10−5 g CO2-eq compared to natural gas taking into consideration of the difference in combustion efficiency and calorific value. The small-scale bio-energy project has fallen into dilemma, i.e., struggling for survival, and for a more successful future development of village-level gasification projects, much effort is needed to tide over the plight of its development, such as high cost and low efficiency caused by decentralized construction, technical shortcomings and low utilization rate of by-products.