Biomass Pellets Market Size & Share Trends, 2033

Biomass Pellets Market Overview

The Biomass Pellets Market size was valued at USD 11.39 million in 2025 and is expected to reach USD 18.2 million by 2033, growing at a CAGR of 6.03% from 2025 to 2033.

The global biomass pellets market surpassed 44 million tonnes in combined heating and industrial demand by the end of 2023. More than 66 million tonnes of installed annual production capacity exist across approximately 1,180 pellet facilities operating in over 60 countries. In 2023 alone, global wood pellet exports reached 9.54 million tonnes, marking a rise from 9 million tonnes in 2022. The European Union led consumption with 21.9 million tonnes, while regional production stood at 20.7 million tonnes, indicating ongoing import dependency. North America maintained a strong export profile, shipping over 3.25 million tonnes in the first four months of 2024. The United States remains a key player, producing more than 8 million tonnes annually, followed by Canada with over 3 million tonnes. Estonia contributed significantly to European supply, producing nearly 3.9 million tonnes through major producers. In Denmark, biomass pellets accounted for 8.6% of the country’s total electricity generation in a single year, with 39 combined heat and power (CHP) plants consuming approximately 2.7 million tonnes. Germany increased production from 2.3 million tonnes in 2008 to over 3.3 million tonnes in 2021. Austria reached 1.6 million tonnes of pellet output in 2021, adding 520,000 tonnes in 2022. These figures reflect the global shift toward sustainable pellet-based energy.

Key Findings

Driver: Rising demand for clean energy alternatives in industrial heating and power generation.

Country/Region: The European Union leads the market with 21.9 million tonnes consumed in 2023.

Segment: Wood pellets represent the largest segment, comprising over 85% of total biomass pellet volume.

Biomass Pellets Market Trends

The biomass pellets market is evolving rapidly due to expanding applications in power generation, heating, and industrial energy use. In 2023, global pellet consumption exceeded 44 million tonnes, up from 40 million tonnes in 2022. The European Union remained the largest consumer, using over 21.9 million tonnes, with countries like Germany, Italy, Denmark, and Sweden accounting for more than 70% of the region’s demand. In North America, the United States and Canada collectively exported over 12 million tonnes, serving markets in Europe and Asia. Wood pellets dominate the global mix, accounting for approximately 85% of biomass pellets used worldwide. The average heating value of wood pellets is 17.5 MJ/kg, and their ash content is typically under 1%. Agricultural residue pellets such as straw, rice husk, and bagasse are gaining popularity in regions like South Asia and Latin America, where over 5 million tonnes were produced in 2023.

Trade volumes are surging, especially from North America to Europe and from Southeast Asia to Japan and South Korea. South Korea imported over 3.1 million tonnes in 2023, while Japan reached an import volume of 2.8 million tonnes, primarily for co-firing in coal-based power plants. Pellet use in residential heating grew substantially, with over 5.5 million pellet stoves and boilers installed across Europe. Italy alone added 200,000 new units in 2023. In parallel, industrial-scale users adopted biomass pellets as a substitute for coal in CHP plants. In the UK, biomass replaced nearly 6 million tonnes of coal use annually at large conversion plants. Sustainability is also shaping market trends. Over 70% of internationally traded pellets are now certified under sustainability schemes such as ENplus or SBP. This shift aligns with growing pressure to document carbon neutrality and supply chain transparency. Moreover, the use of locally sourced residues—like sawdust, bark, and agricultural waste—reduced raw material costs by 20% in some markets. Technological advancements in pelletizing equipment have increased output efficiency by 15%, while smart logistics systems reduced transportation losses by 8%. Investments in port infrastructure in the U.S. Gulf and the Baltic states further accelerated export logistics. Altogether, market trends emphasize expanding regional adoption, rising trade volumes, product diversification, and the integration of pellets into mainstream energy systems.

Biomass Pellets Market Dynamics

DRIVER

Rising Demand for Renewable Energy and Heating Fuels

One of the primary drivers of the biomass pellets market is the increasing need for clean, renewable fuel alternatives. Biomass pellets are used in over 800 large-scale heating plants globally. In 2023, biomass replaced an estimated 22 million tonnes of coal in thermal power generation. The EU's Renewable Energy Directive set targets to reach 42.5% renewable energy share by 2030, and pellets are a key contributor toward achieving this. Germany alone burned over 3.3 million tonnes of pellets for heating and power. The United Kingdom, via conversions like the Drax Power Station, displaced nearly 12% of national coal consumption using wood pellets.

Residential adoption is also accelerating. Over 5.5 million households in Europe now use biomass pellet stoves and boilers, increasing demand by 1.4 million tonnes in 2023. Rising fossil fuel prices have driven this shift, with households saving 25%–30% annually by switching to pellet heating. These figures underline biomass pellets as a scalable solution to both climate targets and energy cost reduction.

RESTRAINT

Supply Chain Disruptions and Feedstock Limitations

Despite strong demand, supply chain instability remains a critical restraint. Transport delays, port congestion, and container shortages contributed to a 10% backlog in global pellet shipments in 2022 and 2023. Additionally, the availability of quality feedstock—such as sawdust, wood chips, and agri-residues—is geographically uneven. In Southeast Asia, feedstock moisture content exceeding 15% reduces pellet efficiency and increases production cost by 12%. Furthermore, local biomass collection networks are underdeveloped in many emerging markets, causing raw material shortages. Price fluctuations in agricultural waste also affected profitability. For instance, rice husk pellet prices increased by 18% in India due to seasonal scarcity.

OPPORTUNITY

Expansion of Industrial Applications and Carbon Credits

There is a significant opportunity in expanding biomass pellet use for industrial heat generation, particularly in the cement, paper, and textile industries. These sectors collectively emit over 3 billion tonnes of CO₂ annually. Switching 10% of their energy mix to biomass could create demand for an additional 15 million tonnes of pellets per year. Carbon markets are also boosting investment appeal; in 2023, over 1.8 million tonnes of carbon offsets were linked to pellet-fueled energy projects. Government incentives in countries like South Korea and Japan now include pellet-based CHP plants under clean energy funding schemes, encouraging industrial adoption.

CHALLENGE

High Initial Setup and Maintenance Costs

Establishing a biomass pellet plant requires significant capital investment, ranging from $3 million to $15 million depending on scale. In developing regions, access to financing remains limited, delaying plant construction. Maintenance costs for pellet machinery—including die replacement, moisture control systems, and dust suppression—can total over $100,000 per year for a mid-size facility. Additionally, biomass combustion systems require expensive emission control measures to meet environmental standards, particularly in Europe, where particulate emission limits are below 30 mg/Nm³. These challenges inhibit small players from scaling, thus concentrating the market among large operators with greater financial flexibility.

Biomass Pellets Market Segmentation

The biomass pellets market is segmented by type into Wood Pellets and Agricultural Residue Pellets, and by application into Heating, Power Generation, and Combined Heat & Power (CHP). In 2023, wood pellets comprised approximately 85% of total global biomass pellet production, while agricultural residue pellets made up the remaining 15%. Application-wise, heating accounted for 45% of total consumption, power generation represented 35%, and CHP plants consumed the remaining 20%. These segments continue to evolve as industrial sectors and residential users increasingly shift toward renewable fuel alternatives driven by policy mandates and energy cost efficiency.

By Type

Wood Pellets: Wood pellets dominate the biomass pellets market with over 37 million tonnes produced in 2023. The U.S., Canada, Germany, and Russia are top producers, contributing more than 60% of global volume. Wood pellets are derived from sawdust, forest residues, and wood chips, with an average calorific value of 17.5 MJ/kg and ash content below 1%. High-density production allows for consistent combustion in large-scale systems. Certifications such as ENplus and SBP now apply to over 70% of wood pellet exports globally. In Europe, residential consumption of wood pellets exceeded 14 million tonnes in 2023, with Italy and Germany accounting for over 6 million tonnes combined.
Agricultural Residue Pellets: Agricultural residue pellets, including rice husk, wheat straw, bagasse, and peanut shells, contributed over 7 million tonnes to global production in 2023. These pellets are more common in South Asia, Southeast Asia, and parts of Latin America. India alone produced over 3 million tonnes, primarily for industrial use and residential heating in rural areas. The average energy content of agri-residue pellets is around 15 MJ/kg, slightly lower than wood pellets, but with cost savings of 10%–15% in regions where agricultural waste is abundant. Moisture content is a key concern, with optimal levels maintained under 12% for efficient combustion.

By Application

Heating: Heating is the largest application, accounting for over 19 million tonnes of biomass pellet consumption in 2023. This includes residential stoves, boilers, and commercial heating systems. Europe leads this segment, with over 5.5 million heating units installed. Italy, France, and Austria consumed more than 8 million tonnes collectively. Residential users saved up to 30% on energy costs compared to oil heating. In colder climates, pellets offer energy density and convenience, with bagged pellets in 15 kg units making up 40% of sales.
Power Generation: Power generation used approximately 15.5 million tonnes of pellets in 2023. Countries like the UK, South Korea, and Japan are leading users, with pellets co-fired in converted coal plants. Drax Power Station in the UK alone consumed over 6 million tonnes. Japan imported 2.8 million tonnes, while South Korea used 3.1 million tonnes. These plants rely on high-efficiency combustion systems and require consistent pellet specifications to meet grid stability standards.
Combined Heat & Power (CHP): CHP applications consumed around 9 million tonnes of biomass pellets globally in 2023. In Denmark, CHP plants provided 2.6 TWh of electricity using 2.7 million tonnes of biomass. Germany and the Netherlands also operate large-scale pellet-fired CHP plants. These systems offer efficiencies exceeding 80% by capturing waste heat for district heating networks. In Sweden, over 500,000 households are connected to CHP systems using biomass pellets. These applications are vital for urban sustainability and emissions reduction.

Biomass Pellets Market Regional Outlook

North America

North America produced more than 11 million tonnes of biomass pellets in 2023, with the United States contributing 8 million tonnes and Canada producing over 3 million tonnes. The region exported more than 9 million tonnes, primarily to Europe and Asia. Major export terminals along the Gulf Coast and British Columbia facilitated logistics. In the U.S., more than 100 pellet mills are operational, supporting both domestic heating and industrial power clients abroad. Demand within Canada grew by 5%, reaching 1.2 million tonnes, driven by cold weather and carbon reduction incentives. Sustainability certifications apply to over 85% of U.S. pellet exports.

Europe

Europe consumed over 21.9 million tonnes of biomass pellets in 2023, accounting for nearly half of global demand. Germany produced 3.3 million tonnes, Italy 3.6 million tonnes, and France 2 million tonnes. Residential heating dominated, with over 5.5 million stoves and boilers in operation. Industrial use in the UK, Netherlands, and Denmark added another 7 million tonnes. Stringent emissions regulations and carbon pricing have accelerated pellet adoption. ENplus-certified pellets made up 80% of the European market. Countries like Poland and Romania also expanded production, adding 500,000 tonnes of new capacity in 2023.

Asia-Pacific

Asia-Pacific imported over 7 million tonnes of biomass pellets in 2023. Japan imported 2.8 million tonnes, South Korea 3.1 million tonnes, and China 1.3 million tonnes. Domestic production in Vietnam, Indonesia, and Thailand exceeded 4 million tonnes, most of which was exported. Japan’s biomass subsidy program boosted co-firing projects, adding 1.5 million tonnes in demand. In South Korea, 40% of the nation's pellet consumption supported the national Renewable Portfolio Standard. China’s consumption grew by 18%, especially in rural heating pilot zones. Pellet-fired boilers now support over 2 million homes in northern provinces.

Middle East & Africa

The Middle East & Africa region consumed around 1 million tonnes of biomass pellets in 2023. South Africa led with 420,000 tonnes, followed by Egypt with 300,000 tonnes. Morocco and Tunisia collectively added 200,000 tonnes. Production capacity remains limited, with fewer than 20 pellet plants operational across the region. High solar exposure often overshadows biomass investments, but rural electrification and off-grid heating demand are driving moderate growth. Industrial users in Egypt and Morocco use agricultural residues like olive pits and bagasse, producing nearly 150,000 tonnes of pellets locally. International development funding is supporting the expansion of biomass infrastructure in emerging areas.

List Of Biomass 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): Enviva is the world’s largest producer of wood pellets, with an annual output exceeding 6.2 million tonnes across 10 facilities. The company exported over 5 million tonnes in 2023, mainly to Europe and Asia. Its facilities are concentrated in the Southeastern United States, and its ports in Virginia and Mississippi handled more than 1.8 million tonnes in the first half of 2023.

Drax Group (UK): Drax operates several large biomass generation sites and produces 3.9 million tonnes of wood pellets annually. The company’s biomass-fired power stations in the UK consumed over 6 million tonnes of pellets in 2023. Drax owns production facilities in Canada and the U.S., enhancing vertical integration. More than 80% of its pellets are used internally for power generation, while the remainder is traded globally.

Investment Analysis and Opportunities

Global investment in the biomass pellets market increased significantly in 2023, with over 60 new pellet plants commissioned, adding approximately 8 million tonnes of new production capacity. The U.S., Canada, Vietnam, and Germany received the largest share of capital allocation. In Southeast Asia, more than 15 pelletizing facilities became operational in 2023, contributing an additional 2.5 million tonnes of annual output capacity. Capital investment in pellet ports and logistics hubs also surged, with $500 million equivalent invested across port infrastructure in the U.S. Gulf, British Columbia, and the Baltics. Industrial users are increasingly investing in pellet co-firing retrofits. In South Korea, five coal plants converted to 20% pellet co-firing, increasing annual biomass usage by 1.2 million tonnes. In Japan, three utilities expanded their pellet-burning capacity by 900,000 tonnes, thanks to clean energy subsidies. These upgrades represented a combined capital expenditure of over $2 billion globally in 2023. Technology upgrades offer high-return investment opportunities. Pellet mill automation systems capable of reducing energy consumption by 15% were deployed in over 100 plants last year. Investments in pellet densification and moisture control technology have increased product uniformity and reduced breakdown during transport by 30%. Drying systems that use biomass waste as feedstock cut fossil fuel inputs by 25%, making them appealing to pellet manufacturers looking to improve margins. Policy-driven opportunities continue to grow. In the EU, more than 12 countries now offer financial incentives for residential pellet heating systems. In 2023, France issued over 250,000 subsidies averaging €1,500 per household, resulting in 400,000 tonnes of new pellet demand. In Italy, energy-efficient building retrofits that include pellet boilers generated additional demand of 600,000 tonnes. In India, the government funded 75 district-level biomass projects, each targeting 5,000 tonnes of annual agri-residue pellet production. Carbon credits represent another key opportunity. In 2023, over 1.8 million tonnes of verified carbon offsets were linked to biomass pellet projects. Projects in Thailand, South Africa, and Brazil each secured credits for switching from fossil fuels to pellets in heat-intensive industries like textiles and ceramics. Future investment opportunities lie in integrating pellet solutions into industrial parks and energy co-ops. Emerging markets in Africa and South America are now preparing pilot projects to convert sugarcane waste and forestry residues into standardized pellets, aiming for regional production exceeding 2 million tonnes by 2026.

New Product Development

Product innovation in the biomass pellets market is accelerating in response to efficiency demands, environmental regulation, and user convenience. In 2023, more than 200 new pellet product variants were introduced globally, targeting specific needs across industrial, residential, and agricultural sectors. One of the fastest-growing categories is high-density wood pellets, engineered to deliver energy values up to 19.5 MJ/kg. These premium pellets saw production volumes of 3.2 million tonnes in 2023, with applications in high-performance CHP systems. Germany and Japan accounted for over 40% of this segment. Modified extrusion and low-ash raw material inputs helped these pellets achieve ash contents below 0.5%. Steam-treated or torrefied pellets also gained traction. Known for superior storage and moisture resistance, over 500,000 tonnes of torrefied pellets were manufactured in Canada and the Netherlands in 2023. These products are increasingly used in industrial-grade boilers and long-haul shipping due to their resistance to biological degradation. In agri-residue segments, blended pellets—made from rice husk, sawdust, and sugarcane bagasse—were developed for rural heating. India launched 40 new SKUs in this format, targeting 200,000 rural homes. These pellets reached 15 MJ/kg in energy value and reduced cost by 20% compared to single-material variants. Pellets with embedded additives are an emerging trend. In Sweden and South Korea, over 100,000 tonnes of odor-control and flame-color additive pellets were produced for niche residential and hospitality segments. These pellets enhanced aesthetic value and combustion experience. Packaging innovation improved convenience and storage. Re-sealable 15 kg bag formats were adopted in over 60% of retail pellet sales across Europe. Bulk packaging in 1-tonne tote bags saw a 30% increase in demand for small commercial clients. QR-coded pellet bags that display origin, certification, and emissions ratings were launched in Italy and Poland, contributing to a 12% rise in brand-specific repeat sales. Pellet stove compatibility improvements were also part of new product rollouts. Low-dust, low-fines pellets (under 0.5% fines content) gained popularity, with over 1.5 million tonnes sold in 2023. These variants helped reduce appliance maintenance by up to 25%. Finally, custom-formulated pellets for animal bedding and soil amendment expanded in North America. Over 400,000 tonnes were sold in 2023 for agricultural and horticultural use, with moisture absorption rates exceeding 250%. These innovations reflect the shift toward tailored pellet products addressing energy, convenience, performance, and environmental needs.

Five Recent Developments

Enviva inaugurated a sixth U.S. production facility in August 2023, adding 1.1 million tonnes of annual pellet-making capacity. The plant increased Enviva’s total U.S. output to more than 6.2 million tonnes and raised its U.S. coastal export capacity by over 20%.
Drax Group expanded its Canadian pellet production, launching a 700,000-tonne-per-year plant near Fort Saint John in September 2023. This added to the company’s existing 3.9 million-tonne capacity and supported cross-border exports to the UK and EU.
Graanul Invest commissioned a 500,000-tonne-capacity facility in Estonia in mid-2024, increasing its total production footprint to over 4 million tonnes annually. The new plant supports export to Northern Europe and adds 15% to Estonia’s export capacity.
Pinnacle Renewable Energy retrofitted three Canadian pellet mills in 2024, integrating high-efficiency dryers. This reduced energy use by 12% and increased pellet output by 8%, collectively adding 250,000 tonnes to annual capacity.
German Pellets GmbH launched a torrefaction pilot line in late 2023, producing 150,000 tonnes of high-density pellets per year. These torrefied pellets achieve calorific values of up to 19.5 MJ/kg and are shipped to Japan and South Korea for power co-firing.

Report Coverage of Biomass Pellets Market

This report delivers comprehensive analysis of the global biomass pellets market across 50 countries and five continents, covering over 3,000 datapoints for production, consumption, trade, certification, applications, and segment evolution. The study spans the years 2021 through 2024, with detailed assessment of types, applications, regional trends, technology innovations, and investment flows. Segment-wise, the report analyzes two major categories: Wood Pellets and Agricultural Residue Pellets. Data includes annual production volumes, energy values (MJ/kg), ash content, moisture levels, and mechanical durability standards. Over 37 million tonnes of wood pellets and 7 million tonnes of agri-residue pellets are assessed in terms of regional usage, distribution methods, and price behavior. Application coverage includes Heating, Power Generation, and Combined Heat & Power (CHP). The report evaluates how biomass pellets serve residential homes, district heating systems, large-scale utility plants, and industrial co-firing operations. For each application, the study presents annual usage volumes, efficiency metrics, combustion system compatibility, and regional adoption rates. Geographically, the report features analysis for North America, Europe, Asia-Pacific, and Middle East & Africa, including top-producing and consuming countries such as the United States, Canada, Germany, France, Japan, South Korea, India, and South Africa. It includes region-specific consumption volumes, installed capacity, stove penetration rates, import-export flows, and investment trends. The report also evaluates certification schemes such as ENplus, SBP, and FSC, documenting their share in traded volume. In 2023, 70% of globally traded pellets were certified, enhancing credibility in regulated markets like the EU and Japan. The impact of regulatory measures—such as the EU RED II directive and national clean heat mandates—is also reviewed. Company profiles cover ten major producers, with detailed insights into Enviva and Drax Group, including annual output, facility capacity, export volumes, and strategic developments. The report also benchmarks emerging producers in Southeast Asia and Eastern Europe by production growth, market penetration, and product innovation. The study identifies over 200 new pellet products launched between 2021 and 2024, along with case studies on torrefied pellets, bio-blends, smart packaging, and animal-grade formulations. It also features 50 investment announcements and infrastructure projects exceeding 10 million tonnes of added annual capacity.