The global wood pellet market is witnessing significant growth, driven by the increasing demand for renewable energy sources and the need to reduce carbon emissions. In 2024, the market was valued at USD 14.0 billion and is projected to reach USD 22.6 billion by 2033, exhibiting a CAGR of 5.5% during 2025-2033. Factors such as government initiatives promoting sustainable energy, advancements in pellet production technology, and the cost-effectiveness of wood pellets compared to fossil fuels are propelling market expansion. 

Study Assumption Years

• Base Year: 2024
• Historical Years: 2019-2024
• Forecast Years: 2025-2033

Wood Pellet Market Key Takeaways

• The global wood pellet market reached USD 14.0 billion in 2024 and is expected to grow to USD 22.6 billion by 2033, with a CAGR of 5.5% from 2025 to 2033.
• Europe dominated the market in 2024, accounting for over 47.9% of the global share, driven by strong renewable energy policies and infrastructure.
• Forest wood and waste emerged as the leading feedstock type, holding approximately 33.6% market share in 2024, due to their availability and cost-effectiveness.
• Residential heating was the largest application segment in 2024, comprising around 58.4% of the market, fueled by the demand for sustainable and efficient heating solutions.
• Technological advancements in pellet production and combustion technologies are enhancing efficiency and reducing emissions, supporting market growth.
• Government incentives, including subsidies and tax benefits for adopting bioenergy solutions, are further boosting market adoption across various regions.
• The Asia-Pacific region is experiencing robust growth, primarily driven by increasing demand for renewable energy in countries like Japan, South Korea, and China. 

 Market Growth Factors

1. Rising Demand for Renewable Energy

Wood pellets are increasingly used as a renewable energy source in power stations and heat generation plants. They are being used for coal substitution in thermal power generation under government-backed low-carbon energy initiatives. Demand increases because homes require heat in cold climates. Feedstock includes sawdust, wood chips, and forestry residues as well. Manufacturers scale up to meet energy transition targets. Global focus on reducing greenhouse gas emissions and carbon neutrality has driven the demand for wood pellets. Its uses also include industrial applications and domestic applications, such as combined heat and power plants (CHP). Combined heat and Power plants guarantee long-term contracts and global investments into pellet plants.

2. Increasing Industrial Applications

Wood pellets can be used inside industrial boilers and power plants, combined heat and power plants, and in industrial process heat, such as paper, cement, and food processing. Sawdust, shavings, and biomass may create feedstock. Industrial biogas can reduce dependence on fossil fuels, thus helping businesses target sustainability. Also, fuel pellets are less subject to volatile prices, as they are consumed in large quantities. Other types of boilers and furnaces can burn pellets. However, as green energy initiatives expand within the industrial sector, wood pellets gain long-term contracts and a growing business. Industrial sectors that become aware of renewable sources of energy will demand more.

3. Residential Heating Adoption

Wood pellets can be used as residential heating fuel, either in stoves, fireplaces, or furnaces. The feedstock used to produce the fuel includes sawdust, forestry debris and wood chips. Awareness of environmental heating is increasing, particularly in Europe and North America and residential use is reportedly increasing. Wood pellets are competitive with oil or gas heating in terms of efficiency and cost. Their market is growing because consumers want the benefits of high-efficiency automatic, low-maintenance pellet stoves over the winter heating season. As local and renewable fuel resources, the stability of future markets is helped by growing interest in renewables for the residential sector, the largest driver for pellet stove development.

Request for a sample copy of this report: 

https://www.imarcgroup.com/wood-pellet-market/requestsample

Market Segmentation

By Feedstock Type

• Forest Wood and Waste: Comprising residues like sawdust and wood chips, this segment leads the market due to its abundance and cost-effectiveness in pellet production.
• Agriculture Residue: Includes crop residues such as straw and husks, offering an alternative to traditional agricultural waste disposal while contributing to renewable energy goals.
• Others: Encompasses various other biomass materials utilized in pellet production, supporting diversification in feedstock sources.

By Application

• Power Plants: Utilization of wood pellets for electricity generation, aiding in the transition from coal to renewable energy sources.
• Residential Heating: Dominant application segment, driven by the demand for sustainable and efficient heating solutions in households.
• Commercial Heating: Adoption of wood pellets in commercial settings for space and water heating, contributing to energy efficiency.
• Combined Heat and Power (CHP): Integration of wood pellets in systems that simultaneously generate electricity and useful heat, enhancing energy utilization.
• Others: Includes various other applications of wood pellets across different industries and sectors.

Breakup by Region

• North America (United States, Canada)
• Asia Pacific (China, Japan, India, South Korea, Australia, Indonesia, Others)
• Europe (Germany, France, United Kingdom, Italy, Spain, Russia, Others)
• Latin America (Brazil, Mexico, Others)
• Middle East and Africa

Regional Insights

Europe holds the largest share in the global wood pellet market, accounting for over 47.9% in 2024. The region's strong commitment to renewable energy and carbon neutrality, coupled with supportive government policies and advanced infrastructure, drives the demand for wood pellets in power generation and heating applications. Additionally, Europe's focus on reducing greenhouse gas emissions and transitioning away from fossil fuels further bolsters market growth.

Recent Developments & News

In October 2024, PT Bukit Asam Tbk launched a Wood Pellet Pilot Plant in Tanjung Enim, South Sumatra, producing 200 kg of biomass from Red Kaliandra per hour. This initiative aims to support coal co-firing in power plants and contribute to emission reduction efforts, aligning with government sustainability goals. Such developments highlight the increasing investments in wood pellet production to meet renewable energy targets and reduce carbon emissions. 

Key Players

Andritz AG, Asia Biomass Public Company Limited, Drax Group PLC, Energex, Enviva LP, Fram Renewable Fuels LLC, Land Energy Limited, Lignetics Inc., Mallard Creek Inc., Pacific BioEnergy Corporation, Stora Enso Oyj, Svenska Cellulosa Aktiebolaget, Tanac S.A., etc.

Ask Analyst for Customization: 

https://www.imarcgroup.com/request?type=report&id=5088&flag=C

If you require any specific information that is not covered currently within the scope of the report, we will provide the same as a part of the customization.

About Us:

IMARC Group is a global management consulting firm that helps the world’s most ambitious changemakers to create a lasting impact. The company provides a comprehensive suite of market entry and expansion services. IMARC offerings include a thorough market assessment, feasibility studies, company incorporation assistance, factory setup support, regulatory approvals and licensing navigation, branding, marketing and sales strategies, competitive landscape, and benchmarking analyses, pricing and cost research, and procurement research.

Contact Us:
IMARC Group
134 N 4th St. Brooklyn, NY 11249, USA
Email: sales@imarcgroup.com
Tel No:(D) +91 120 433 0800
United States: (+1-201971-6302)