Rural household biogas (RHB) systems are at a crossroads in China, yet there has been a lack of holistic evaluation of their energy and climate (greenhouse gas mitigation) efficiency under typical operating conditions. We combined data from monitoring projects and questionnaire surveys across hundreds of households from two typical Chinese villages within a consequential life cycle assessment (LCA) framework to assess net GHG (greenhouse gas) mitigation by RHB systems operated in different contexts. We modelled biogas production, measured biogas losses and used survey data from biogas and non-biogas households to derive empirical RHB system substitution rates for energy and fertilizers. Our results indicate that poorly designed and operated RHB systems in northern regions of China may in fact increase farm household GHG emissions by an average of 2668 kg CO2-eq· year−1, compared with a net mitigation effect of 6336 kg CO2-eq per household and year in southern regions. Manure treatment (104 and 8513 kg CO2-eq mitigation) and biogas leakage (-533 and -2489 kg CO2-eq emission) are the two most important factors affecting net GHG mitigation by RHB systems in northern and southern China, respectively. In contrast, construction (−173 and −305 kg CO2-eq emission), energy substitution (−522 emission and 653 kg·CO2-eq mitigation) and nutrient substitution (−1544 and −37 kg CO2-eq emission) made small contributions across the studied systems. In fact, survey data indicated that biogas households had higher energy and fertilizer use, implying no net substitution effect. Low biogas yields in the cold northern climate and poor maintenance services were cited as major reasons for RHB abandonment by farmers. We conclude that the design and management of RHB systems needs to be revised and better adapted to local climate (e.g., digester insulation) and household energy demand (biogas storage and micro power generators to avoid discharge of unburned biogas). More precise nutrient management planning could ensure that digestate nutrients are more effectively utilized to substitute synthetic fertilizers.