Biomass Pellet Market – Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Source (Industrial Waste & Co-product, Agriculture Residue, Food Waste, Energy Crops, Virgin Lumber, and others), By Type (Wood Pellets, Agri Pellets, Torrefied Pellets, and Others), By Application (Power Generation, Industrial Heating, Residential Heating, and Others), By Region 2021-2031F

Forecast Period	2027-2031
Market Size (2025)	USD 13.25 Billion
CAGR (2026-2031)	7.03%
Fastest Growing Segment	Industrial Waste & Co-Product
Largest Market	Asia Pacific
Market Size (2031)	USD 19.92 Billion

Market Overview

The Global Biomass Pellet Market will grow from USD 13.25 Billion in 2025 to USD 19.92 Billion by 2031 at a 7.03% CAGR. Biomass pellets are densified biofuels produced by compressing organic matter, such as wood residues and agricultural waste, into uniform cylinders with high energy density. The market is primarily propelled by the global mandate to decarbonize energy grids, as nations enforce renewable energy targets that necessitate replacing coal in power generation. This structural shift is supported by government incentives and environmental regulations that prioritize low-carbon baseload power, creating consistent industrial demand. According to Bioenergy Europe, in 2025, global pellet production remained stable at 48.3 million tonnes during the preceding year, underscoring the sector's scale.

Despite this established demand, the market faces a significant challenge regarding policy unpredictability and subsidy reliance. The industry depends heavily on consistent regulatory frameworks to remain competitive against fossil fuels, yet shifting political priorities can lead to sudden alterations in support schemes. This legislative uncertainty often deters long-term capital investment in new production facilities and complicates supply chain planning, potentially stalling the capacity expansion needed to meet future energy requirements.

Key Market Drivers

The Rising Adoption of Biomass Co-firing in Coal Power Plants is a primary catalyst for market expansion, driven by utilities seeking to leverage existing infrastructure while meeting decarbonization mandates. Power generators, particularly in Asia and Europe, are increasingly blending or fully replacing coal with wood pellets to provide dispatchable, low-carbon baseload electricity that intermittent renewables cannot guarantee. This trend is heavily incentivized by policy frameworks such as Feed-in Tariffs, which ensure financial viability for large-scale conversion projects. For instance, according to the Wood Pellet Association of Canada, August 2025, in the 'Canadian Wood Pellets at the Forefront of Asia's Energy Transition' report, eleven new biomass facilities were slated to come online in Japan in 2025, driving demand for an additional 1.1 million tonnes of fuel. To meet such escalating utility-scale requirements, global supply chains are intensifying; according to the USDA Foreign Agricultural Service, in 2025, total U.S. wood pellet exports for the first nine months of the year reached 6.72 million metric tons, reflecting the critical role of North American trade in supporting overseas power generation.

Concurrently, the Growing Demand for Sustainable Residential and Commercial Heating Solutions is reshaping the market as consumers and businesses shift away from volatile fossil fuels toward reliable bioenergy systems. This transition is accelerated by government subsidies for boiler replacements and the implementation of strict emission standards that favor modern, high-efficiency pellet stoves over traditional wood burners or oil furnaces. Standardization plays a pivotal role in this segment, as certified quality ensures optimal combustion efficiency and equipment longevity, thereby boosting consumer confidence in biomass as a primary heating source. Illustrating this market consolidation, according to Bioenergy Europe, June 2025, in the 'Pellets Statistical Report', ENplus certified pellets accounted for approximately 75% of the European pellet heating market, underscoring the dominance of standardized high-quality fuels in the residential sector. These factors collectively establish a robust dual-channel demand structure, balancing the massive volumes of industrial uptake with the widespread consumption of the heating market.

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Key Market Challenges

The primary obstacle impeding the Global Biomass Pellet Market is the sector's vulnerability to legislative uncertainty and its heavy dependence on subsidy frameworks. Because constructing pellet production facilities requires substantial upfront capital, investors demand assurance that regulatory support will remain consistent over the asset's lifespan. When governments shift political priorities or abruptly alter incentive structures, it undermines the financial predictability necessary for long-term projects. This volatility elevates the risk profile of biomass ventures, causing financiers to withhold the capital required for new plant construction and infrastructure upgrades.

This hesitation is tangibly affecting the industry's expansion rate. According to the World Bioenergy Association, in 2025, global bioenergy installed capacity growth slowed to 3% during the previous year, a figure that reflects the dampening effect of the current regulatory environment. Without stable and guaranteed support mechanisms, the industry struggles to compete with established fossil fuel markets, leaving producers unable to commit to the supply chain enhancements explicitly needed to meet future decarbonization targets.

Key Market Trends

The Expansion of Intercontinental Biomass Pellet Trade Routes is reshaping global logistics, as Southeast Asian production hubs increasingly cater to the voracious energy appetites of North Asian economies. This trend involves the maturation of supply chains connecting resource-rich nations like Vietnam with power-hungry markets in Japan and South Korea, moving toward established, long-term offtake agreements to meet renewable targets that domestic forestry cannot support. Validating this trade escalation, according to VnEconomy, March 2025, in the 'Vietnam's wood pellet industry has plenty of room to grow' report, Vietnam's wood pellet exports reached 6.03 million tons in 2024, representing a substantial 29.1% increase in volume compared to the previous year.

Concurrently, the Integration of Agricultural Residues for Feedstock Diversification is gaining traction as manufacturers mitigate fiber supply risks and deforestation concerns associated with traditional timber sourcing. By valorizing waste streams such as rice husks and wheat straw, the industry decouples pellet production from volatile forestry cycles while offering a solution to the environmental hazard of open-field burning, a shift particularly evident in agrarian economies enforcing agro-based biomass mandates. Illustrating this uptake, according to Argus Media, December 2025, in the 'Indian coal plants raise biomass co-firing in FY2024-25' article, overall biomass consumption in India, which primarily consists of agricultural residue pellets, reached 1.62 million tonnes in the fiscal year ending March 2025, a fourfold increase from the prior year.

Segmental Insights

The Industrial Waste & Co-Product segment is emerging as the fastest-growing category within the global biomass pellet market due to a heightened focus on circular economy practices. Manufacturers are increasingly converting by-products, such as timber scraps and food processing residues, into fuel to reduce disposal costs and generate renewable energy. This trend is supported by regulatory frameworks from entities like the European Commission, which encourage diverting industrial residues from landfills to bioenergy production. Consequently, companies are prioritizing these cost-effective feedstocks to enhance operational efficiency while meeting stringent environmental sustainability targets.

Regional Insights

Asia Pacific holds a leading position in the global biomass pellet market, driven principally by high consumption in Japan and South Korea for power generation. These nations extensively utilize wood pellets for co-firing in thermal power plants to comply with renewable energy mandates, such as the Feed-in Tariff scheme overseen by Japan's Ministry of Economy, Trade and Industry. Additionally, the region benefits from a stable supply chain due to extensive forestry and agricultural residues in Vietnam and Malaysia. This combination of strong regulatory demand and accessible raw materials establishes Asia Pacific as the primary market hub.

Recent Developments

• In October 2025, Drax Group launched a strategic partnership with NGIS, a geospatial technology company, to implement advanced monitoring of carbon stocks in its biomass sourcing areas. This breakthrough research initiative utilizes satellite imagery and machine learning technologies to model forest carbon dynamics across the company's supply chains in the United States and Canada. The collaboration aims to provide transparent, high-fidelity data to verify the sustainability of its wood pellets and ensure that its forestry practices contribute positively to carbon sequestration and forest health.
• In September 2024, Sumitomo Forestry Co., Ltd. announced its official entry into the wood pellet manufacturing business through a joint venture in Indonesia. The venture, PT. Biomassa Lestari Nusantara, commissioned its first wood pellet plant in Central Java, which utilizes wood waste and unused timber from local processing plants and forests. The facility began operations with an initial annual production capacity of 60,000 tons, with plans to double this output by 2026, creating a stable supply chain of biomass fuel for power generation plants in Japan.
• In May 2024, Drax Group signed a memorandum of understanding with Golden State Natural Resources, a California-based nonprofit organization, to collaborate on a new project aimed at increasing sustainable biomass production. This partnership focuses on the development of two industrial-scale wood pellet plants in California, designed to process forest residues and reduce wildfire risks in the state. The collaboration is intended to produce approximately 1 million metric tons of wood pellets annually, primarily for export to Asian markets, thereby supporting global renewable energy demands while addressing local forest management challenges.
• In February 2024, Graanul Invest launched a new premium wood pellet brand named "g Graanul," specifically tailored for customers in the Baltic region. The company, which is a leading global producer of sustainable biomass and bioenergy, introduced this product to meet local demand with a high-quality heating solution. This launch was part of the company's broader strategy to expand its product portfolio and strengthen its presence in its home markets of Estonia, Latvia, and Lithuania, ensuring a reliable supply of renewable energy for residential heating.

Key Market Players

• Enviva Inc.
• Drax Biomass Ltd.
• Pinnacle Renewable Energy Inc.
• Graanul Invest AS
• Pacific BioEnergy Corp.
• Green Circle Bio Energy LLC
• Svenska Cellulosa AB
• Verdo AS
• Lignetics, Inc.
• German Pellets GmbH

By Source	By Type	By Application	By Region
Industrial Waste & Co-product Agriculture Residue Food Waste Energy Crops Virgin Lumber and others	Wood Pellets Agri Pellets Torrefied Pellets and Others	Power Generation Industrial Heating Residential Heating and Others	North America Europe Asia Pacific South America Middle East & Africa

Report Scope:

In this report, the Global Biomass Pellet Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• Biomass Pellet Market, By Source:

• Industrial Waste & Co-product
• Agriculture Residue
• Food Waste
• Energy Crops
• Virgin Lumber
• and others

• Biomass Pellet Market, By Type:

• Wood Pellets
• Agri Pellets
• Torrefied Pellets
• and Others

• Biomass Pellet Market, By Application:

• Power Generation
• Industrial Heating
• Residential Heating
• and Others

• Biomass Pellet Market, By Region:

• North America
• United States
• Canada
• Mexico
• Europe
• France
• United Kingdom
• Italy
• Germany
• Spain
• Asia Pacific
• China
• India
• Japan
• Australia
• South Korea
• South America
• Brazil
• Argentina
• Colombia
• Middle East & Africa
• South Africa
• Saudi Arabia
• UAE