The energy crisis and increasing fossil fuel prices due to increasing demands, controlled supplies, and global political unrest have adversely affected agricultural productivity and farm profitability across the globe and Pakistan is not an exception. To cope with this issue of energy deficiency in agriculture, the best alternate strategy is to take advantage of biomass and solid waste potential. In low-income countries such as Pakistan, the greenhouse heating system mostly relies on fossil fuels such as diesel, gasoline, and LPG. Farmers are reluctant to adopt greenhouse farming due to the continuously rising prices of the fossil fuels. To reduce reliance on fossil fuel energy, the objective of this study was to utilize biomass from crop residues to develop an efficient and economical biomass furnace that could heat greenhouses to protect the crop from seasonal temperature effects. Modifications made to the biomass furnace, such as the incorporation of insulation around the walls of the furnace, providing turbulators in fire tubes, and a secondary heat exchanger (heat recovery system) in the chimney, have increased the thermal efficiency of the biomass furnace by about 21.7%. A drastic reduction in hazardous elements of flue gases was observed due to the addition of a water scrubber smoke filter in the exit line of the flue. The efficiency of the biomass furnace ranged from 50.42% to 54.18%, whereas the heating efficiency of the diesel-fired heater was 71.19%. On the basis of the equal heating value of the fuels, the unit material and operating costs of the biomass furnace for wood, cotton stalks, corn cobs, and cow dung were USD 2.04, 1.86, 1.78, and 2.00 respectively against USD 4.67/h for the diesel heater. The capital and operating costs of the biomass furnace were about 50% and 43.7% of the diesel heater respectively, resulting in a seasonal saving of about 1573 USD. The produced smoke was tested as environmental friendly under the prescribed limits of the National Environmental Quality Standards (NEQS), which shows potential for its large-scale adoption and wider applications.