The biomass pellets market is projected to experience significant growth between 2025 and 2035, driven by increasing demand for renewable energy, stringent emission regulations, and rising adoption of bio-based fuels for power generation and heating applications. The market is projected to reach USD 12,377.7 million in 2025 and expand to approximately USD 23,674.6 million by 2035, reflecting a compound annual growth rate (CAGR) of 6.7% over the forecast period.
Biomass pellets, which are made from wood, agricultural waste, and organic residues, are showing up as a low-carbon and not so costly alternative to fossil fuels for residential heating, industrial energy production, and combined heat and power (CHP) plants. The global shift toward carbon neutrality has seen a rapid increase in the usage of biofuels to replace coal and natural gas, thus creating a new market in all parts of Europe, North America, and Asia-Pacific.
Governmental subsidies in the interest of biomass energy, advancement in pellet handling, and improvement in high-performance pellet burning devices are also largely playing their parts in expanding markets. Another thing that is facilitating the expansion of biomass consumption is the incorporation of the terrified and black pellets to be added to the utilization of biomass in co-burning and gigawatt scale electricity production.
| Metric | Value |
|---|---|
| Industry Size (2025E) | USD 12,377.7 million |
| Industry Value (2035F) | USD 23,674.6 million |
| CAGR (2025 to 2035) | 6.7% |
Use of biomass pellets in district heating, industrial boilers, and stand-alone power generation has increased considerably, leading to increased market growth. Focus on carbon trading plans, bioenergy tax incentives, and energy security programs has influenced the industries and governments to increase the investments in power plants based on biomass and decentralized renewable power solutions.
Accompanied by the enhancements in palletization technology, the producers are mainly concerned with the improvement of pellet durability which would lead to the optimization of combustion efficiency and the decrease of production costs, thereby allowing the deployment across residential, commercial, and industrial sectors.
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The biomass pellet industry in North America is rapidly gaining momentum thanks to the government policies that promote renewable energy, the mode of transition from coal to other power generating solutions, and the demand for heating with low or no environmental effect. The United States of America and Canada are heavily funding the biomass pellet production and exports, with the main suppliers to the European and Asian markets.
Additionally, the region's replacing of district heating with or as well as pellet stove installation and, of course, biomass-based electricity generation endeavors are the other main reasons for the demand going up. Due to the rise in fossil fuel prices and the onset of strict pollution laws, manufacturers, food processors, and chemical producers are using more and more biomass energy plants as their solution to decreasing their own operational carbon footprints.
Europe is the largest user of biomass pellets due to stringent policies, competitive financial support to bioenergy and the EU's ambitious climate policy of the European green deal. Germany, Sweden, the UK, and the Netherlands lead the way when it comes to the application of biomass-based district heating and co-generation (CHP) facilities.
Biomass pellets are central enablers of energy change in the region, particularly following the implementation of carbon pricing policies and coal phase-out. With increased demand for thermal pellets, which offer improved efficiency and storage capacity, large power plants are highly in need of them. Further, bio-based fuel mandates and the sustainability certification program have been the major factors behind investments in pellet manufacturing facilities and the optimization of the value chain.
The Asia-Pacific is proving to be a prominent region for growth for the biomass pellets industry, owing to the rising energy needs of the industry, supportive government initiatives, and rise in investment in the renewable energy project. China, Japan, and South Korea are becoming rapidly co-firing biomass pellets in coal-fired power stations, cement kilns, and industrial boilers.
Both the Japanese Fit program and the South Korean RPS are central drivers of both the import of wood pellets as well as of initiating domestic manufacture. The Chinese government has been promoting the use of biomass in district heating systems, rural electrification, and off-grid applications, thereby affirming its position as a trending player in a global biomass pellet market.
Latin America is becoming an important bio pellet producer as the activity of the biomass pellet trade in the continent grows, especially in Brazil, Argentina, and Chile, where the forestry and agricultural residues are the sources of cheap feedstock for pellet production.
The expansion of the market is supported by the success of the Brazilian bioenergy industry and increased exports to Europe, leading Argentina and Chile towards the increasing demand for biomass heating. The region's commitment to reducing deforestation and sustainable biomass supply is the most important factor that supports the growth of eco-certification in pelleting plants.
Challenges
Fluctuating Raw Material Supply and Costs
One of the biggest difficulties that the biomass pellets sector is facing is the fluctuating raw materials supply and costs. Biomass pellets are primarily produced from wood residues, agricultural waste, and other organic wastes. The availability of these resources is affected by the supply chain interruptions, as well as competition with other machinery, such as paper and furniture production.
The instability in the raw elements supply may lead to the price fluctuations, which will, in turn, affect the total production costs of biomass pellets. Additionally, the change in weather patterns may seriously affect the harvest and access of key biomass resources, especially in places that mainly depend on agriculture. Therefore, manufacturers have to look for other ways to ensure the supply of raw materials while perhaps searching for new sources or technologies to stabilize production and costs.
Regulatory Barriers and Compliance Costs
Regulatory compliance costs and the barriers that come with them are problems for the biomass pellets market, especially in the field of environmental standards and sustainability certifications. Countries all over the world have established rules to ensure that biomass production is carried out sustainably, is carbon neutral, and does not contribute to deforestation or overshooting of natural resources.
These rules are often hard to follow because they entail funding for certification, technology, and monitoring systems, therefore operations become costlier for pellet manufacturers. The obstinate differences in regional and international protocol such as emissions limitations, sustainability certificates like ENplus, and FSC that have to be navigated can easily turn into a bottleneck, thus causing additional costs. The bulk of costs resulting from these mandates could affect market entry and expansion of many small and medium-sized operators.
Opportunities
Growing Demand for Renewable Energy Solutions
The ongoing transition to renewable energy is an opportunity for the biomass pellets market. As industries and authorities strive to decrease carbon emissions and shift away from fossil fuels, biomass pellets are more and more recognized as alternatives of reliable and ecological approach to heating, electricity generation, and industrial applications.
A clear example of this is when Europe was bound to the EU Green Deal's renewable energy objectives that would add the need for source energy from biomass. Biomass pellet market is placed to gain from government subsidies, incentives, and tax reductions which are aimed at and allocated to the green energy projects.
Besides, the gradual introduction of carbon-neutral heating systems by both residential and commercial sectors has resulted in an upswing of demand for biomass pellets, which has resulted in a sustainable path of growth for producers of pellets.
Technological Advancements in Pellet Production
With the pioneering technological breakthroughs in the production of biomass pellets, the market is set to experience tremendous growth. Innovations in manufacturing equipment like more efficient pelletizers, drying processes, and compression technologies have higher capacity pellet quality, energy efficiency, and lower production costs.
The orientation to alternative organic sources, such as agricultural waste or algae, is another strategy that developers are following in order to offer further feedstock choices for pellet manufacture. Logistics problems are being solved by the introduction of new supply chains, which include automated pellet transportation and storage, and this is leading to an improved competitive market environment.
These advancements in technology give the deepened biomass pellet producers the push to scale, up the output, and effectively deal with the escalating demand for the environmentally friendly power solutions across the world.
Between 2020 and 2024, the biomass pellets market experienced enormous growth, mostly due to growing demand for clean energy, commencement of de carbonization policies, and advancements in pellet manufacturing technology. Governments from all over the world, primarily in Europe, North America, and Asia-Pacific, promoted biomass energy as an alternative to coal for power production, thus propelling the growth of the market.
Apart from this, the industrial and domestic heating sectors, and the diversification of co-firing biofuel-blended in power plants using coal, contributed to an increased share of pellet consumption. Nevertheless, market stability was affected by the disruption of supply chains, price volatility of raw materials, and the issues of deforestation and carbon neutrality.
Looking ahead to 2025 to 2035, the biomass pellets market will be completely transformed due to technological advancements, sustainability policies, and integration with advanced energy systems. Introduction of biomass pellets, carbon-negative production methods, and using AI for optimizing the pellet supply chain will be the main factors concerning the growth of the future. Besides, the increasing of decentralized bioenergy, hydrogen co-firing, and pellet-based carbon capture technologies (BECCS) will be the result of biomass being at the forefront of global energy transitions.
| Market Shift | 2020 to 2024 |
|---|---|
| Renewable Energy Policies & Carbon Targets | The Paris Agreement emission reduction targets were set by countries that endorsed biomass energy as a low-carbon alternative to coal in power generation. |
| Electricity Consumption Trend & Bioenergy Demand | Biomass pellets for co-firing and plain use in biomass energy production were widely adopted in Europe, Japan and South Korea. |
| Advancements in Pellet Production & Sustainability | Pellet production via newly improved compression, drying, and densification techniques has led to increased energy production and efficiency. |
| Integration with Power & Heating Infrastructure | Biomass pellets were mainly utilized in coal co-firing, district heating systems, and industrial boilers. |
| Thermal Energy Storage & Co-Firing Applications | Biomass was used as a blend in natural gas and coal in the power plants, which decreased the carbon emissions, but feedstock sustainability concerns increased. |
| AI & Digitalization in Pellet Logistics | The trend toward the newer model of IoT-enabled pellet-boilers and automated combustion controls has improved the efficiency of pellet use. |
| Market Shift | 2025 to 2035 |
|---|---|
| Renewable Energy Policies & Carbon Targets | Net-zero emission directives are the principal mover of the expansion of biomass solutions that are carbon-negative, including pulling biomass with carbon capture and storage (BECCS). |
| Electricity Consumption Trend & Bioenergy Demand | Decentralized biomass power generation, hydrogen-biomass hybrid plants and off-grid pellet-fired energy systems become widespread. |
| Advancements in Pellet Production & Sustainability | AI-driven pellet optimization, torrefied pellets with higher calorific value, and low-carbon feedstock sources (miscanthus, algae-based biomass) redefine production efficiency. |
| Integration with Power & Heating Infrastructure | Biomass hydrogen co-firing, synthetic biofuel production from pellets, and waste heat recovery integration enhance efficiency. |
| Thermal Energy Storage & Co-Firing Applications | Advanced bio-based energy storage solutions that include charred pellets give aid to the flexible board balance. |
| AI & Digitalization in Pellet Logistics | AI, which manages supply chains, and blockchain, which ensures that the feedstock is non-GMO, as well as predictive analytics that optimize the combustion of pellets, are the solutions that will be the basis for a smooth operation of the market. |
The United States biomass pellet market is riding the wave of growth, which is spurred by the increased use of renewable energy, raised convergence of the industrial and residential heating demand, and energy production incentives given by the government. The USA is one of the major players on the biomass pellet field being a producer and exporter with a key focus on power generation, heating applications, and industrial steam production.
The government’s clean energy policies, which include biomass power plant tax credits and financial supports for heating solutions, are additionally underpinning the development of the market. Co-firing of the biomass pellets along with the coal power plants and the wild adoption of the heating systems backed by pellets are major reasons for the increased need of premium and torrefied black pellets.
| Country | CAGR (2025 to 2035) |
|---|---|
| United States | 6.9% |
The United Kingdom biomass pellets market is transiting through a stable phase, courtesy of the concrete steps adopted for carbon reduction, rising bioenergy demand, and the transformation of the power sector operation. The UK government, which is on a mission to turn the country into a zero-emission territory by 2050, has thus, Biomass is now replacing the coal in different power plants all over the country. An example of that is Drax Power Station, which is standing out as one of the biggest biomass power plants across the world.
As the households are widely adopting biomass heating systems, particularly in the off-grid rural areas, the demand for certified sustainable biomass pellets is increasing. Also, government subsidies and the Renewable Heat Incentive (RHI) scheme are being the enablers for the use of biomass boilers and pellet stoves in the residential and commercial sectors.
| Country | CAGR (2025 to 2035) |
|---|---|
| United Kingdom | 6.6% |
The global biomass pellets market is dominated by the European Union, making it the largest market worldwide, and this is efficiently supported by the EU Renewable Energy Directive (RED II), the carbon neutrality targets, and an influx of funds into biomass power plants and district heating systems. By largely consuming the wood and agricultural waste pellets, Germany, France, Italy, and the Netherlands have shown the way in the transition to sustainable biomass energy.
The region's dedication to ending coal-fired power generation and converting to biomass energy has raised the interest of industrial black pellets used for co-firing in power plants. Furthermore, both premium wood pellets and residential & commercial heating applications drive demand in Scandinavian and Eastern European countries.
| Region | CAGR (2025 to 2035) |
|---|---|
| European Union | 6.8% |
The Japan biomass pellets market is on a fast track to growth, mainly because of government policies driving carbon neutrality, a surge in bioenergy demand, and a number of biomass power projects built. The country has a significant percentage of its biomass pellets requirement met through imports from different parts of the world, with the Southeast Asian region, Canada, and the United States being the top suppliers of the imported pellets to support its growing biomass co-firing power plants.
Through feed-in-tariffs (FIT) and renewable energy subsidies, Japan has emerged as one of the fastest-growing biomass pellet consumers in Asia. The focus of the government in minimizing the use of nuclear energy and fossil fuels has resulted in lasting agreements for imports of biomass pellets, thereby closing any gaps in the stability of the local market.
| Country | CAGR (2025 to 2035) |
|---|---|
| Japan | 7.0% |
The South Korea biomass pellets market is showing remarkable growth due to the active government support for bioenergy, the increase in co-firing capacity in coal plants, and the growing need for the use of renewable heating. The country has a very ambitious target for the renewable energy sector, where biomass is an essential factor in the move away from coal.
The South Korea Renewable Portfolio Standard (RPS) requires power companies to adopt renewable energy sources and, therefore, leads to more wood pellet imports from Vietnam, Canada, and the USA On top of that, the development of biomass boilers in industrial and commercial settings is positively affecting the domestic consumption of high-efficiency pellets.
| Country | CAGR (2025 to 2035) |
|---|---|
| South Korea | 6.9% |
Wood pellets are the most popular pellet type in the biomass pellets market, powered by their extensive use in renewable energy, heating in residential buildings, and manufacturing. These sawdust and horticultural waste compressed material pellets are the most ecological and high-energy resource of burning fossil fuels.
With the worldwide goal of cutting carbon emissions, it is part of the journey towards more sustainable energy use in wood pellets, for instance, in biomass power plants combined heat and power (CHP) systems, and district heating networks.
The residential sector employs wood pellets in pellet stoves and heaters extensively and is a low-cost and low-emission solution for heating facilities. Biomass heating markets such as Germany, Sweden, and the United States are the leaders in driving demand due to the strong government backing and subsidies granted for renewable energy adoption.
Comparative advantages of wood pellets over conventional fuels include the high energy density, low moisture content, and flexibility combustion of the equipment thus they are the most preferred choice for households.
Industrial pellets are a new growth sector in power plants and heavy industry acetylene replacement. They are often used as an alternative source for cleaner combustion of fuels, where coal and natural gas are the major contenders. These pellets, mainly obtained through wood waste processing, agricultural residues, and torrefied biomass, are advantageous due to the higher calorific value and better combustion which makes them ideal for use in large-scale biomass boilers and co-firing in coal power plants.
In Europe, Japan, and South Korea, the market for industrial pellets is expanding as the energy industry and governments look for renewable energy solutions and carbon emission reductions. Additionally, the increase in black pellets (torrefied wood pellets that are denser and more resistant to water) that are in demand is being seen in places with rigid emission taxes. The cement, steel, and chemical plants sectors are also incorporating the use of pellets for decarbonizing their operations and being more sustainable.
Biomass pellets are considered a renewable fuel in power plants, industrial boilers, and district heating systems to replace fossil fuels in energy production. Countries that strongly support bioenergy such as the UK, Denmark, and Canada are the key users of this, they encourage utilities to implement biomass co-firing and to construct separate biomass power plants.
Biomass is one of the most scalable solutions, alongside the development of new techniques for burning. Grid reliability and energy security product terms of biomass pellets. Furthermore, the integration of biomass energy systems for solar, wind, and hydropower systems is crucial in the fight against climate change and thus promotes the diversification of the global renewable energy mix.
Biomass pellets are gaining attention in the residential and commercial heating industry, particularly in areas with fluctuating natural gas and electricity prices. Residents, property management companies, and businesses are installing pellet heating systems as a low-cost, low-maintenance, and environmentally sound solution to the traditional heating fuels.
In the commercial sector, hotels, schools, hospitals, and office buildings are making more use of biomass pellet boilers to decrease the cost of heating and to reduce their carbon footprints. The compliance with green building certification requirements and local, state, and federal government incentives for renewable energy solutions have been significant drivers in these areas.
At the same time, the development of automated pellet-fed heating devices has enhanced the simplicity of handling and running, therefore, the biomass heating system has become more favorable for both small-scale and commercial applications.
The global biomass pellets market is not only competitive but it is also facing the expansion at the very fast pace owing to the growing demand for renewable energy, carbon-neutral fuel alternatives, and various government incentives for the promotion of such energy solutions. The primary source of biomass pellets is wood, agricultural residues, and other organic materials, which is widely utilized for power generation, residential heating, industrial boilers, and co-firing in thermal plants.
The market is mainly affected by the increase in the utilization of biomass energy in Europe, North America, and Asia-Pacific combined with technological advancements in pellet making, better supply chain logistics, and stricter emission regulations. The main players prioritize their focus on the expansion of capacities, the effective and low-cost production of pellets, and the integration of the supply chain as their fundamental strategies to increase their market share.
Market Share Analysis by Company
| Company Name | Estimated Market Share (%) |
|---|---|
| Enviva Inc. | 14-16% |
| Drax Group plc | 12-14% |
| Pinnacle Renewable Energy (Drax Group) | 10-12% |
| Fram Renewable Fuels | 8-10% |
| Graanul Invest | 6-8% |
| Other Companies (combined) | 40-50% |
| Company Name | Key Offerings/Activities |
|---|---|
| Enviva Inc. | The world’s largest biomass pellet producer, supplying utility-grade wood pellets for power plants and industrial applications. Focuses on sustainability and net-zero carbon goals. |
| Drax Group plc | Operates biomass power plants and pellet manufacturing facilities, integrating low-carbon biomass energy solutions with traditional grid infrastructure. |
| Pinnacle Renewable Energy (Drax Group) | Specializes in bulk wood pellet production for industrial applications, ensuring high-quality pellets for large-scale power plants. |
| Fram Renewable Fuels | Manufactures industrial and residential-grade wood pellets, with a strong focus on export markets in Europe and Asia. |
| Graanul Invest | One of Europe’s largest biomass pellet producers, supplying premium pellets for heating and industrial energy applications. |
Key Company Insights
Enviva Inc.
Enviva Inc. is the world’s number one biomass pellet company, which is supplying utility-grade wood pellets for power generation across North America, Europe, and Asia. The corporation is strictly adhering to the determination of the sustainable source of raw materials and the carbon neutrality of the product as well as the fulfillment of internationally accepted environmental standards.
With operations spread across large-scale pellet plants and long-term contracts with leading power utilities, the company is ensuring an outlet for its products. In the current trend of increasing worldwide demand for bioenergy, Enviva has set a clear goal of enlarging its production capacity and the export infrastructure. Enviva is a key stakeholder in the de-carbonizing process and furthering the integration of renewable energy in the power industry.
Drax Group plc
Drax Group, which is a biomass energy producer, is doing this in a way through the operation of biomass-fired power stations and wood pellet manufacturing facilities. Biomass, which is a renewable energy source, is the next step from coal power stations and Drax Group is at the forefront of this change, which not only decreases UK carbon emissions but also has a huge impact on Europe.
Drax is directly involved with the project known as negative emissions technology (BECCS, which means Bioenergy with Carbon Capture and Storage), so it positions itself as one of the significant players in the area of carbon reduction and sustainable energy solutions. The corporation still goes on with its investments in the broadening of the global biomass supply chain which is the basis for giving energy producers and the world reliable and efficient biomass fuels thereby supporting the enhanced power generation schemes with less carbon.
Pinnacle Renewable Energy (Drax Group)
Pinnacle Renewable Energy is a producer of industrial wood pellets, a company that is now part of the Drax Group. The company serves big power plants and district heating with its products. The main aspect is to produce high-quality pellets as per the company's guideline which brings low moisture, high calorific value and optimized combustion efficiency.
Pinnacle has branches across North America, Europe, and Asia where it exports renewable biofuels manufactured with eco-friendly processes. The organization has been and is still investing in the advancement of pelletization processes and logistics infrastructure, which in turn will promote the supply chain efficiency and allow the expansion of pellet production facilities to match the increasing demand worldwide for renewable biomass.
Fram Renewable Fuels
Fram Renewable Fuels supplies the biomass products, especially the pellet type for heating in residential applications. The company manages several plants that produce pellets and it has a very strong export presence in both the European and Asian markets.
Fram Renewable Fuels is focused on the cost-effective production of pellets and building a sustainability profile that ensures quality and environmental responsibility of the products. The company always seeks further development and technological improvements to be able to keep pace with the increasing demand for renewable heating and electric power generation solutions.
Graanul Invest
Graanul Invest is one of the top manufacturers of biomass pellets in Europe as they produce superior quality pellets for district heating systems, power plants, and industrial applications. The company is dedicated to the principles of sustainable forestry and cleaner production practices which corresponds to the renewable energy Track of the EU.
To meet the burgeoning need for green heat, and carbon-neutral power solutions, Graanul Invest will take the production capacity growth route by making investments in state-of-the-art pellet production facilities. The company has made a strong commitment to the modernization of the infrastructure of biomass energy and has been successfully dispensing a high-quality and dependable pellet supply throughout both the European and international markets.
The global biomass pellets market is projected to reach USD 12,377.7 million by the end of 2025.
The market is anticipated to grow at a CAGR of 6.7% over the forecast period.
By 2035, the biomass pellets market is expected to reach USD 23,674.6 million.
The residential heating segment is expected to hold a significant share due to the increasing demand for sustainable and cost-effective heating solutions, coupled with government incentives for renewable energy adoption.
Key players in the biomass pellets market include Enviva Partners, Drax Group PLC, Rentech Inc., Pinnacle Renewable Energy Inc.
| Market Value, 2025 | USD 2,456.4 million |
| Market Value, 2035 | USD 3,925.6 million |
| Value CAGR (2025 to 2035) | 4.8% |
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