Biopellet Energy Market – Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Type (Pellet stoves, Boilers, Burners), By Application (Vehicle Fuel, Heat Generation, Lubrication, Reduction Of Emission, Others), By End User (Transportation, Electronics, Commercial, Others), By Region, and By Competition, 2021-2031F

Forecast Period	2027-2031
Market Size (2025)	USD 304.99 Million
CAGR (2026-2031)	7.46%
Fastest Growing Segment	Burners
Largest Market	Europe
Market Size (2031)	USD 469.64 Million

Market Overview

The Global Biopellet Energy Market will grow from USD 304.99 Million in 2025 to USD 469.64 Million by 2031 at a 7.46% CAGR. Biopellets consist of compressed organic matter, such as wood waste and agricultural residues, utilized as a renewable fuel source for efficient heat and electricity generation. The market is primarily supported by rigorous government decarbonization mandates and the urgent need for energy security amidst fluctuating fossil fuel prices, which serve as fundamental drivers distinct from transient technological trends. These factors ensure a consistent demand for sustainable baseload power. According to Bioenergy Europe, in 2024, global pellet production stabilized at 48.3 million tonnes, underscoring the sector's resilience and established capacity.

However, a significant challenge impeding broader market expansion is the intensifying regulatory scrutiny regarding feedstock sustainability and deforestation. Strict compliance requirements, such as the European Union Deforestation Regulation, impose complex traceability obligations that create logistical bottlenecks and escalate operational expenses for producers. This regulatory landscape complicates supply chain management and necessitates substantial investment in compliance infrastructure, potentially limiting growth in price-sensitive regions.

Key Market Drivers

Implementation of supportive government policies and renewable energy subsidies acts as the primary catalyst for the Global Biopellet Energy Market. Governments, particularly in Europe and Asia, utilize financial mechanisms such as Feed-in Tariffs and Contracts for Difference to bridge the economic disparity between biomass and fossil fuels, thereby incentivizing large-scale power generation. These fiscal frameworks are essential for ensuring the financial viability of converted coal plants and dedicated biomass facilities, which might otherwise struggle against cheaper conventional energy sources. According to Parliament UK, in April 2025, the Drax power station received £869 million in biomass subsidies during 2024, highlighting the sector's heavy reliance on continued public funding to maintain baseload renewable capacity.

Escalating global demand for carbon-neutral and sustainable energy solutions further propels market expansion, particularly within the European Union, which remains the dominant consumption hub. This surge is driven by the urgent need to replace coal in power generation and the widespread adoption of pellet-based heating systems in residential sectors to lower carbon footprints. According to the USDA Foreign Agricultural Service, in July 2025, the European Union consumed 22.6 million metric tons of wood pellets in 2024, reinforcing its status as the world’s largest market. To meet this growing requirement, international trade flows have intensified, with North American producers significantly scaling up supply chains. According to Biomass Magazine, in February 2025, United States wood pellet exports reached a record 10 million metric tons in 2024, underscoring the vital role of trans-Atlantic trade.

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Key Market Challenges

The intensifying regulatory scrutiny regarding feedstock sustainability and deforestation constitutes a formidable barrier to the expansion of the Global Biopellet Energy Market. As governments enforce rigorous environmental standards to ensure carbon neutrality, producers are compelled to navigate complex traceability obligations that verify the origin of every unit of biomass. These compliance mandates require companies to invest heavily in sophisticated tracking infrastructure and engage in frequent third-party audits, which significantly escalates operational expenses and creates logistical bottlenecks. Consequently, these financial and administrative burdens disproportionately affect smaller producers, forcing market consolidation and restricting the volume of compliant fuel available for trade.

This regulatory pressure has effectively bifurcated the market, making certification a prerequisite for entry rather than a competitive differentiator. According to Bioenergy Europe, in 2024, ENplus® certified pellets were estimated to correspond to 75% of the European pellet heating market. This statistic demonstrates that the vast majority of market activity is now confined to certified supply chains, thereby excluding non-compliant feedstocks and limiting growth opportunities in price-sensitive regions that cannot absorb the premium costs associated with such rigorous sustainability verification.

Key Market Trends

The adoption of Bioenergy with Carbon Capture and Storage (BECCS) models represents a transformative shift from merely carbon-neutral power generation to carbon-negative solutions. This trend is characterized by the integration of capture technologies directly into biomass facilities, allowing producers to permanently sequester biogenic CO2 and generate valuable carbon removal credits. This evolution is critical for meeting net-zero targets that require offsetting residual emissions from hard-to-abate sectors, creating a new revenue stream beyond electricity sales. According to ESG Today, January 2025, Stockholm Exergi was awarded approximately $1.8 billion by the Swedish Energy Agency to construct a bio-energy carbon capture facility capable of capturing 800,000 tonnes of carbon dioxide annually.

The commercialization of torrefied black pellet technology is reshaping fuel supply chains by addressing the logistical and storage limitations of traditional white pellets. Through a thermal roasting process called torrefaction, these advanced pellets achieve higher energy density and hydrophobic properties, enabling them to be stored outdoors and co-fired in coal plants without expensive infrastructure retrofitting. This innovation significantly lowers barriers for utilities seeking to decarbonize existing thermal assets while maintaining operational efficiency similar to coal. According to Vietnam News, October 2025, Idemitsu Kosan Co., Ltd. began commercial operations at its black pellet production plant in Gia Lai Province, Vietnam, which boasts an annual production capacity of 120,000 tonnes to supply Japanese power stations.

Segmental Insights

The Burners segment represents the fastest-growing category in the Global Biopellet Energy Market, driven by the increasing demand for cost-effective retrofitting solutions in industrial facilities. Unlike complete heating system replacements, pellet burners allow operators to convert existing fossil fuel boilers to renewable biomass capability without incurring the high capital costs of new infrastructure. This operational flexibility enables enterprises to comply with strict decarbonization mandates while maximizing the utility of current assets. Consequently, the industrial sector is rapidly adopting these components to transition efficiently from coal and oil to sustainable biopellet energy.

Regional Insights

Europe maintains a leading position in the global biopellet energy market, primarily driven by stringent environmental regulations and ambitious decarbonization goals. The European Union’s Renewable Energy Directive serves as a critical policy framework, mandating the adoption of renewable sources for power generation and residential heating. This regulatory support creates a stable demand for biomass fuel, replacing traditional fossil fuels. Furthermore, the European Pellet Council strengthens the market infrastructure by overseeing quality standards through the ENplus certification, ensuring supply chain reliability and fostering consistent industry growth across the region.

Recent Developments

• In November 2025, Sumitomo Corporation announced the commencement of commercial operations at the Sendai Port Biomass Power Plant in Miyagi Prefecture, Japan. This new 112-megawatt facility, developed by a joint venture led by the trading house, was designed to be fueled by wood pellets and wood chips. The plant's operation represented a major milestone in the utilization of biomass for power generation in the region, capable of supplying electricity to approximately 260,000 households. This project underscored the growing demand for imported wood pellets in Japan and the company's commitment to expanding its renewable energy infrastructure.
• In December 2024, Enviva Inc. announced its successful emergence from Chapter 11 bankruptcy protection, a move that included the confirmation of financing for its new industrial wood pellet production plant in Epes, Alabama. The company secured approximately $250 million in new financing to fully fund the completion of this large-scale facility, which was anticipated to commence production in the first half of 2025. This development positioned the firm to expand its production capacity significantly, with the new plant expected to produce approximately one million metric tons of wood pellets annually for international markets.
• In September 2024, Sumitomo Forestry Co., Ltd. officially entered the wood pellet manufacturing business through its Indonesian joint venture, PT. Biomassa Lestari Nusantara. The company commissioned its first wood pellet production plant in Indonesia during this month, marking a significant expansion of its renewable energy capabilities. The facility was established to manufacture wood pellets using wood waste and unused timber from local communities and processing plants. These pellets were intended to be exported to Japan to fuel biomass power generation plants, thereby contributing to a stable supply of renewable energy resources.
• In February 2024, Graanul Invest announced the launch of a new premium wood pellet brand, "g Graanul," specifically tailored for customers in the Baltic region. This strategic product introduction was aimed at providing a high-quality, locally focused energy solution to meet the growing demand for sustainable heating. The company, a leading producer of sustainable biomass, emphasized that the new brand would adhere to strict quality standards. This development highlighted the firm's commitment to diversifying its product portfolio and strengthening its market presence by offering specialized biomass products to its regional client base.

Key Market Players

• Enviva Inc.
• Mitsubishi Corporation
• Weyerhaeuser NR Company
• Atikokan Renewable Fuel
• Abellon Clean Energy
• Billington Bioenergy
• Biomass Secure Power
• BIOAGRO Energy Osterlen AB
• Pinnacle Renewable Energy Inc.
• Drax Group plc

By Type	By Application	By End User	By Region
Pellet stoves Boilers Burners	Vehicle Fuel Heat Generation Lubrication Reduction Of Emission Others	Transportation Electronics Commercial Others	North America Europe Asia Pacific South America Middle East & Africa

Report Scope:

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

• Biopellet Energy Market, By Type:

• Pellet stoves
• Boilers
• Burners

• Biopellet Energy Market, By Application:

• Vehicle Fuel
• Heat Generation
• Lubrication
• Reduction Of Emission
• Others

• Biopellet Energy Market, By End User:

• Transportation
• Electronics
• Commercial
• Others

• Biopellet Energy 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