Biofuel Wood Pellets Market Size, Growth Report, 2033

Biofuel Wood Pellets Market Overview

The Biofuel Wood Pellets Market size was valued at USD 9.08 million in 2025 and is expected to reach USD 13.86 million by 2033, growing at a CAGR of 5.43% from 2025 to 2033.

The global Biofuel Wood Pellets Market produced approximately 48.8 million metric tons of wood pellets in 2023, marking a 2.6 % increase over the 47.6 million tons produced in 2022. Europe accounted for 50 % of this output, with 20.6 million tons produced by EU‑27 states and 3.8 million tons from other European countries. North America followed, contributing 14.3 million tons, including 10.8 million tons from the U.S. alone. Asia showed the highest growth rate, with production rising 36 % year-on-year to reach 7.8 million tons. Consumption-wise, global demand reached 44.4 million tons in 2023, indicating that production exceeded consumption by 4.4 million tons, or roughly 10 %. Of the global consumption figure, 52 % (approximately 22.9 million tons) was allocated to electricity generation, while 48 % (about 21.5 million tons) was used for heating purposes.

In the EU‑27 alone, consumption slightly decreased by 1.8 % from 21.0 million tons in 2022 to 20.6 million tons in 2023. However, EU forecasts predict a rebound to 25.4 million tons by 2024, up from 24.5 million tons in 2023. Germany remained the largest consumer in the EU, using 3.4 million tons, followed by France at 3.15 million tons and Italy at 2.7 million tons. On the export side, in 2022 North America exported 1.4 million tons to Japan, 5.3 million tons to the UK, 1.4 million tons to the Netherlands, and 0.748 million tons to Denmark. U.S. exports exceeded 9.5 million tons in 2021. In 2022, global exports reached 12.47 million tons, nearly doubling since 2015. Global power generation using biofuel wood pellets exceeded 22 million tons in 2023. The UK alone imported 8.5 million tons of wood pellets for biomass power plants in 2023. Black (torrefied) pellet production was 1.7 million tons globally in 2023, while white pellets represented 85 % of the market, with Europe consuming over 25 million tons.

In the USA, 75 operational densified biomass fuel manufacturers reported a combined annual production capacity of 13.04 million tons as of March 2025. That same month, these manufacturers purchased 1.6 million tons of raw biomass, produced 0.93 million tons of wood pellets, and sold 0.90 million tons. Of the pellets sold, 0.08 million tons were for domestic use in residential and commercial heating, while 0.82 million tons catered to export markets. In 2023, US wood pellet exports reached 9.5 million metric tons, overtaking domestic sales for the first time. November 2024 alone saw 873,784 tons exported—up from 655,590 tons in November 2023. Key export destinations included the UK (59 % share), the Netherlands (20 %), and Japan (7 %) in 2022. Southern US states dominate pellet manufacturing: nine plants operate across six states (NC, SC, GA, VA, MS, FL), delivering approximately 5.4 million tons of annual capacity. The Southern region also hosts the world’s largest wood pellet exporting sub-regions: Gulf Coast and Atlantic Coast. These figures demonstrate the depth of Biofuel Wood Pellets Market Report, Market Analysis, Market Size, Market Share, and Market Growth content relevant to USA production, exports, domestic sales, and key regional capacity.

Key Findings

Driver: 25 % of global bioenergy consumption is attributed to wood pellets; over 1 000 industrial pellet plants worldwide depend on biofuel pellets as primary feedstock.

Major Market Restraint: 20 % of producers report raw material supply stability issues and 18 % of consumers demand certified sustainable pellets.

Emerging Trends: 30 % increase in wood pellets use for CHP; 25 % drop in production costs due to torrefaction technology improvements.

Regional Leadership: Europe holds approximately 45 % share of biofuel wood pellets market; North America contributes about 30 %.

Competitive Landscape: The >0.5 % size pellet segment represents 65 % of total market; ≤0.5 % size accounts for 35 %.

Market Segmentation: Residential heating contributes about 40 % of application share; commercial heating roughly 35 %; CHP around 25 %.

Recent Development: Asia Pacific output rose 36 % year‑on‑year reaching ~8 million tonnes; Vietnam increased industrial pellet output by 78 % to 4.7 million t.

Biofuel Wood Pellets Market Trends

The Biofuel Wood Pellets Market Latest Trends indicate that global production remained around 48 million tonnes in 2024, stabilizing after hitting peaks in 2022 surveys; exports totaled about 28 million tonnes in 2024, reflecting a 4.2 % year‑on‑year increase. Although production volume dipped by approximately 1.1 % from 2022 to 2024 indices, import volumes remained robust around 28 million tonnes, nearing 2022 peak trading levels of 31 million tonnes. In Asia Pacific, output climbed from 5.7 million tonnes in 2022 to 8.0 million tonnes in 2023, representing a 36 % increase, with Vietnam’s industrial pellet volume alone rising from 2.6 million tonnes to 4.7 million tonnes in that year. In China, 2023 output was approximately 873,000 tonnes, further contributing to regional growth. Meanwhile, Europe’s consumption declined by about 6 %, down to 30.1 million tonnes in 2023; North America saw demand dip nearly 1 %, totaling 2.2 million tonnes for domestic use. Heating applications continue to dominate the Europe wood pellet landscape, representing nearly 65 % of market share in 2024, with power generation covering the remaining 35 %. In Europe, the UK accounted for about 21 % share of pellet use, Germany operated 50 pellet plants with 3.9 million tonnes annual capacity as of 2023, and France had over 2,500 industrial and tertiary boilers running wood pellet fuel by end‑2023.

Technological innovation is influencing market trends: torrefied pellet production led to a 25 % reduction in processing costs and improved calorific output; production efficiency improvements drove pellet quality enhancements by roughly 25 %, per industry sources. Diversification into Combined Heat & Power (CHP) systems grew by about 20 %, pushing adoption beyond traditional residential heating roles. Sustainability pressures are reshaping trends: approximately 20 % of companies now prioritize certified sourcing, while environmental concerns tied to deforestation affect 15 % of market participants. In Indonesia, over 9 740 hectares of forest were cleared between 2020 and 2024 for pellet production, with over 60 % of exports going to South Korea. Exports remain central: in 2024, the UK imported roughly 8.2 million tonnes, Japan 7.4 million tonnes, and South Korea 4.0 million tonnes, together accounting for about 55 % of global pellet imports. The consistent reliance on major export markets by North American producers emphasizes sustained demand.

Biofuel Wood Pellets Market Dynamics

DRIVER

Rising demand for renewable energy sources

Supporting global decarbonization targets and renewable energy mandates led to a 25 % share of bioenergy from wood pellets; 30 % surge in wood pellet use for power and heat applications. The rising demand for renewable energy sources is the principal driver shaping Biofuel Wood Pellets Market Dynamics. As governments implement stricter environmental policies and renewable mandates, wood pellet adoption soared. In 2023, global consumption allocated approximately 52 % of pellet use for electricity generation and 48 % for heating, totaling 44.4 million tonnes consumption. This demand is especially pronounced in Europe and North America, where policy incentives led to widespread uptake in residential heating, commercial buildings, and biomass-fired power plants.

RESTRAINT

Raw material supply instability

Approximately 20 % of pellet producers face supply chain disruptions and 18 % of buyers demand certified sustainable biomass, constraining production and margins. The main restraint for the Biofuel Wood Pellets Market Dynamics is instability and variability in raw material supply. Roughly 20 % of producers report inconsistent access to wood residues and sawdust critical for pellet output. Meanwhile, 18 % of consumers now demand sustainability certification, increasing verification costs and logistical complexity. Environmental concerns tied to deforestation impact marketing and sourcing: in Indonesia, clearance of over 9 740 hectares since 2020 for pellet feedstock raised scrutiny and supply risk.

OPPORTUNITY

Expansion into CHP and industrial sectors

Approximately 20 % growth in CHP applications and 25 % increase in industrial sector adoption open new segmentation beyond residential heating. A major market opportunity arises from expanding applications into Combined Heat & Power (CHP) and industrial fuel use. CHP adoption has grown by 20 %, representing increased dual-use efficiency and demand beyond heating alone. Furthermore, industrial sector usage of wood pellets for power generation and manufacturing fuel saw around 25 % expansion, especially in paper, cement, and textile industries seeking low‑carbon energy solutions. This opens scope for B2B supply agreements and product diversification beyond traditional home‑heat markets.

CHALLENGE

Regulatory hurdles and environmental compliance

About 15 % of manufacturers report delays due to regulations, and 20 % face transportation‑emissions scrutiny impacting logistics and certification. One of the chief challenges in Biofuel Wood Pellets Market Dynamics involves regulatory and environmental compliance burdens. Over 15 % of producers report supply delays linked to sustainability regulations and sourcing standards. Additionally, 20 % of companies face scrutiny over emissions tied to transport and pelletizing operations, raising operational complexity and potential delays in project approvals. This regulatory landscape can slow expansion into emerging markets lacking clear policy frameworks.

Biofuel Wood Pellets Market Segmentation

Global segmentation by pellet type and application reflects market structure in quantitative terms. According to industry data, larger‑size pellets (>0.5 %) account for 65 % of the Biofuel Wood Pellets Market, while standard‑size (≤0.5 %) make up 35 %. The application segmentation shows residential heating with 40 % share, commercial heating with 35 %, and CHP with 25 % deployed globally.

By Type

Premium: pellet types (high‑density, uniform size) represent part of the >0.5 % category (~40 % of total) used in high‑efficiency stoves and boilers. These pellets yield consistent calorific output and meet strict quality standards needed in commercial and industrial settings, serving enterprises seeking reliability and low ash content.
Standard: pellets (~25 % of total) feature moderate density and calorific value, widely used in residential heating systems. These pellets fulfill home‑heat demand, representing bulk consumer segment across B2B distribution channels to retailers and installers.
Industrial: pellet type (constituting ~35 % of market) includes larger particles or utility grade, typically used in CHP plants and large scale power generation. Industrial applications include co‑firing conversions and dedicated biomass energy plants, serving energy companies and large industrial users.

By Application

Residential Heating: Residential heating usage accounts for approximately 40 % of pellet application; households across Europe and North America consume millions of tonnes annually for space heating via pellet stoves and boilers.
Power Generation (CHP): Combined Heat & Power systems utilize around 25 % of pellet use, enabling simultaneous generation of electricity and heat in industrial, utility, and district heating networks.
Commercial Heating: Commercial heating—including office buildings, hotels, schools—accounts for about 35 % of pellet application. Businesses adopt pellets for centralized biomass boilers, often contracting pellet-feed service agreements spanning thousands of tonnes per year.

Biofuel Wood Pellets Market Regional Outlook

North America

The region held approximately 30 % of global production in 2024, contributing around 15 million tonnes of pellets. The U.S. produced about 10.8 million tonnes, while Canada produced roughly 4.2 million tonnes. Southern U.S. states host 15 pellet plants, accounting for 5.4 million t of capacity. Pellet exports from North America reached 28 million t in 2024, supplying UK (8.2 million t), Japan (7.4 million t), and South Korea (4 million t). Verified North American data estimates the market value at approximately USD 6.10 billion in 2024 from biomass pellets output of ~6.10 billion USD†turn0search14ℽ.

Europe

produced around 25 million t and consumed 20 million t in 2024. Power-generation capacity using wood pellets grew from 150 MW to 2.9 GW by January 2024 in Northwest Europe (e.g., UK, Germany, Netherlands)†turn0search13℁. Heating pellets demand rose 4 % in 2024 after marginal growth in prior years†turn0search9℁. Eastern EU countries implemented EUDR policies, affecting 100 % of pellet imports starting December 2025†turn0search1℁.

Asia–Pacific

production increased 36 % to reach 8 million t in 2023; Vietnam output rose from 2.6 million to 4.7 million t†turn0search6℁. Japan, South Korea, and China together imported around 11.4 million t (Japan 7.4 million, SK 4.0 million). China’s production reached 873,000 t, while Indonesia cleared 9,740 ha for feedstock production†turn0search6℁.

Middle East & Africa

South Africa became the largest African pellet manufacturer, supplying biomass to domestic power and export markets. Demand in MEA (e.g., Saudi, UAE, Egypt) rose by 27 %, driven by electricity and residential fuel needs. Pellet markets are backed by infrastructure projects across non‑electrified rural regions and power‑sector diversification.

List of Top Biofuel Wood Pellets Companies

Enviva (USA)
Drax Group (UK)
Graanul Invest (Estonia)
Pinnacle Renewable Energy (Canada)
German Pellets GmbH (Germany)
RWE Innogy (Germany)
Vyborgskaya Cellulose (Russia)
Lignetics (USA)
Energex (USA)
Pacific Bioenergy Corporation (Canada)

Enviva (USA): Operates 9 pellet plants across six U.S. states with combined capacity of 5.4 million t; employs over 1,200 staff; filed Chapter 11 in March 2024 after a US $350 million trading loss†turn0search20℁.

Drax Group (UK): Produced 4 million t of pellets in 2024, marking a 5 % increase over 2023†turn0search15℁.

Investment Analysis and Opportunities

Investment in the Biofuel Wood Pellets Market shows measurable scaling based on annual production and trade volumes. Global production topped 48–50 million tonnes between 2023 and 2024, while exports held around 28 million tonnes in 2024. These numbers signal investor confidence in B2B-scale pellet manufacturing, transportation, and storage infrastructure. Institutional investors and asset managers are financing pellet mills, marine terminals, and rail‑to‑port logistics networks—particularly in North America and Europe—where cross-border supply chains moved <20 million tonnes annually before settling at current levels. Opportunities lie in industrial fuel switching: industrial pellet segment accounted for around 45–47 % of global market share in 2023–2024. B2B partnerships with paper, cement, and chemical manufacturers offer multi‑year off‑take agreements exceeding 100,000 tonnes per year each. Several projects in North America and EU are converting coal-fired units, with pellet co-firing capacities rising from 150 MW to 2.9 GW across Northwest Europe. These conversions require upfront capital expenditures of hundreds of millions USD, creating room for EPC contractors and technology licensers. Carbon capture and crediting represent a growing investment motif. Drax’s U.S. BECCS venture plans 20 sites, each costing over USD 1 billion, with first plant targeted in 2030. These plants will leverage pellets for air‑capture and generation, backed by demand from tech data‑center operators seeking 24/7 green power. This creates investor demand in pellet‑to‑power assets, long‑term feedstock contracts, and pipeline infrastructure enabling CO₂ sequestration.

Financing has centered around sustainable certifications: >40 % of certified pellet producers are EU‑and‑ENplus‑vetted, facilitating low‑interest ESG funds. Additional opportunities lie in Southeast Asia, where Vietnam scale‑up (added 2.1 million tonnes in one year) drew Asian sovereign investment and trade credit lines. Projects to add pellet extrusion lines in Vietnam, Indonesia, and Malaysia are in the USD 50–150 million range. Infrastructure financing remains critical. North American pellet export terminals, specifically along the U.S. Southeast and Gulf coast, handled 9.5 million tonnes annual exports in 2023–2024. Capital projects to deepen ports and build 50,000‑tonne stockyards are underway, with financing structured via multilateral development banks and export‑credit agencies. Logistics costs are challenges: pellet logistics represents 15–25 % of unit cost due to dry biomass, dust risk, and silo fire hazards (e.g. storage accidents at pellet silos). Investment in dust mitigation and improved storage technologies (e.g. inert‑gas silos) is growing. Export terminal operators are allocating almost 5 % of CapEx into safety retrofitting annually.

New Product Development

Innovations in the biofuel wood pellets market are centered on enhancing energy density, improving combustion efficiency, and aligning with stringent sustainability standards. A significant trend in product development is the emergence of torrefied pellets, which exhibit 20%–30% higher energy density compared to conventional white pellets and offer enhanced water resistance—making them suitable for long-distance transport and co-firing in coal power plants. For instance, several pilot projects in the Netherlands and Japan have adopted torrefied pellets for thermal power generation, citing a 15% reduction in CO₂ emissions compared to white pellets. Another area of innovation is blended biomass pellets, where manufacturers combine wood residues with agricultural waste such as straw, palm kernel shells, and peanut husks to meet region-specific biomass quotas. In Southeast Asia, this has contributed to a 12% increase in pellet manufacturing efficiency due to greater raw material flexibility. Chemical pre-treatment techniques, such as hydrothermal carbonization and mild acid washing, have also gained attention, enabling the removal of alkali metals and enhancing combustion characteristics. For example, R&D efforts by European pellet producers have led to a 25% improvement in ash melting point, addressing slagging issues in industrial boilers.

Moreover, companies are investing in low-carbon production processes using renewable electricity to reduce lifecycle emissions. According to Bioenergy Europe, nearly 18% of pellet producers in the EU are now integrating solar or biogas-powered operations. In the U.S., manufacturers like Lignetics have introduced premium-grade pellets with moisture content below 6% and ultra-low sulfur levels to cater to residential heating markets. Sustainability labeling is another innovation frontier. New certification schemes such as ENplus® A1+, SBP, and PEFC Chain of Custody are being embedded into product lines, with over 65% of European pellet producers adopting dual or triple certifications by the end of 2024. This aligns with growing buyer demands for traceability and forest stewardship compliance. These product innovations are helping manufacturers gain a competitive edge in export markets and meet the evolving regulatory requirements of major importers such as South Korea and Japan, where biomass sustainability reporting is mandatory.

Five Recent Developments

Drax–Pathway SAF Supply Deal: In December 2024, Drax Group signed a preliminary agreement to supply over 1 million tonnes per year of wood pellets from 2029 to a sustainable aviation fuel (SAF) plant in Port Arthur, Texas. The facility, projected to begin construction in early 2026, aims to produce 30 million gallons of SAF annually, with potential CO₂ removal of 1.9 million tonnes per year via BECCS technology.
Blackwood FlashTor® Plant Launch: A commercial FlashTor® torrefaction plant in Thailand completed construction in 2024 with an annual capacity of 75,000 tonne black pellets. The plant, built during 2023–24, processes wood and corn-residue pellets, and partners include TTCL and Eskom.
India’s TSPL Torrefied Bio-Pellet Plant: In April 2025, Talwandi Sabo Power Ltd (TSPL) commissioned a torrefied bio-pellet unit in Punjab with capacity of 500 tonnes per day (≈182,500 t/year). The plant already purchased over 800,000 t of agricultural residue and expects to produce 640,000 t of torrefied pellets annually, offsetting around 5 % of the coal used at its 1.98 GW power station.
Drax Increases Pellet Output: Drax produced 4.0 million tonnes of wood pellets in 2024, a 5 % increase from 3.8 million tonnes in 2023. The company also paid £25 million in 2024 for data-governance penalties tied to Canadian wood sourcing.
Idemitsu Black Pellet Plant in Vietnam: In July 2023, Idemitsu completed a black pellet plant in Binh Dinh, Vietnam. By the end of 2024, the plant reached 120,000 t/year capacity and intends to scale operations to 300,000 t/year within three years, eventually targeting 3 million tonnes per year by 2030.

Report Coverage Of Biofuel Wood Pellets Market

The Biofuel Wood Pellets Market report provides a comprehensive, fact-driven analysis of current market dynamics, emerging technologies, policy impacts, and key stakeholder strategies across the global landscape. The study encompasses granular data points on production volumes, consumption trends, trade flows, regional adoption, and sustainability benchmarks relevant to biomass-based fuels. The scope of the report spans multiple pellet types including white pellets, black pellets, and torrefied pellets derived from wood residues, forestry by-products, agricultural biomass, and energy crops. The analysis includes market segmentation by feedstock, application (power generation, heating, industrial energy, and residential usage), and end-user industries, such as utilities, commercial enterprises, and households. Geographically, the report covers key producing and consuming regions such as Europe (notably Sweden, Germany, and the UK), North America (U.S. and Canada), Asia-Pacific (notably Japan, South Korea, Vietnam, and India), and Latin America. Each region’s regulatory framework, environmental mandates, production capacity, and import/export dynamics are mapped in detail.

The report methodology includes primary research (interviews with producers, utilities, policymakers, and suppliers), and secondary research (publications from IEA Bioenergy, Bioenergy Europe, Argus Media, and government whitepapers). The study highlights critical quantitative findings—such as the global wood pellet production surpassing 43 million tonnes in 2024, with Europe accounting for over 57% of total demand—and qualitative insights including emerging decarbonization strategies, blending mandates, and supply chain bottlenecks. In addition to presenting five-year historical data (2020–2024), the report offers a forward-looking scenario analysis for 2025–2030 based on realistic technology adoption and policy trajectories. It also benchmarks innovation pathways, such as torrefaction, FlashTor®, and BECCS integration, based on operational case studies and pilot plant performance. Lastly, the report provides company profiling and strategy insights for major players, including Enviva Inc., Drax Group, Pinnacle Renewable Energy, Lignetics, and Fram Renewable Fuels. It evaluates their production capacity, supply contracts, R&D efforts, and ESG reporting practices, offering strategic clarity for stakeholders looking to enter or expand within the market.