The global wood pellet market was valued at USD 14.0 Billion in 2024 and is projected to reach USD 22.6 Billion by 2033, growing at a CAGR of 5.5% from 2025 to 2033. The market is driven by increasing demand for renewable energy, environmental policies promoting carbon neutrality, and advancements in pellet production technology. Europe dominates the market with a share of over 47.9% in 2024.
Study Assumption Years
- Base Year: 2024
- Historical Year/Period: 2019-2024
- Forecast Year/Period: 2025-2033
Wood Pellet Market Key Takeaways
- Current Market Size: USD 14.0 Billion in 2024
- CAGR: 5.5% during 2025-2033
- Forecast Period: 2025-2033
- Europe leads the global market holding over 47.9% share in 2024.
- Forest wood and waste is the largest feedstock segment with around 33.6% market share.
- Residential heating dominates applications with approximately 58.4% share.
- North America’s US wood pellet exports reached 9.5 million metric tons valued at $1.75 billion in 2023.
- Asia-Pacific growth driven by Japan and South Korea as largest importers outside UNECE region.
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Market Growth Factors
- Increasing Demand for Renewable Energy
The global wood pellet market is propelled by the escalating need for renewable energy amidst growing world economies. Rising atmospheric CO2, which is now 50% higher than pre-industrial levels according to NOAA, drives governments to phase out fossil fuels in favor of renewable biofuels like wood pellets. The World Bioenergy Association reported in 2021 that wood pellets constitute one of the fastest-growing bioenergy sectors globally, produced from compressed biomass such as sawdust and wood shavings. These renewable features make wood pellets an attractive fuel option, supporting the transition to sustainable energy.
- Government Initiatives and Policies
Government policies worldwide are significantly augmenting wood pellet market growth by promoting renewable energy consumption. Regulatory frameworks such as the European Union Renewable Energy Directive have caused exponential growth in pelletized wood fiber trade. Subsidies, tax benefits, and support programs such as the US Home Efficiency Rebate (Clean Air Program) encourage adoption of biomass-based heating systems using wood pellets. Additionally, policies aimed at waste management and sustainable forestry facilitate the use of timber residues, lowering costs and expanding market accessibility globally.
- Escalating Environmental Concerns
Environmental awareness regarding climate change and air quality is a pivotal catalyst. Countries are committed to reducing greenhouse gas emissions by 42% by 2030 and 57% by 2035 per the UNEP Emissions Gap Report 2024. Wood pellets are considered carbon-neutral since CO2 emissions from combustion are offset by absorption during biomass growth. This attribute makes them favorable for climate-conscious consumers and industries. The replacement of finite fossil fuels with clean biofuel enhances air quality and promotes sustainability, fueling steady market growth.
Market Segmentation
By Feedstock Type:
- Forest Wood and Waste
- Constitutes approximately 33.6% of the market in 2024, favored for abundant availability and cost-effectiveness. Residues like sawdust, wood chips, and trimmings serve as sustainable raw materials supporting circular economy efforts.
- Agriculture Residue
- Others
By Application:
- Power Plants
- Residential Heating
- Leads application segment with around 58.4% share in 2024, driven by the growing preference for environmentally sustainable, convenient heating fuel alternatives supported by technological advances in pellet stove efficiency and distribution.
- Commercial Heating
- Combined Heat and Power (CHP)
- Others
By Region:
- Asia Pacific
- Europe
- North America
- Latin America
- Middle East and Africa
Regional Insights
Europe dominates the wood pellet market with a share of over 47.9% in 2024, owing to its strong environmental regulations, renewable energy targets, and government incentives that encourage pellet use for heating and power generation. In 2022, the EU consumed 24.8 million metric tons of wood pellets backed by advanced infrastructure and increasing sustainable forestry investments, reinforcing Europe's leadership in the industry.
Recent Developments & News
- October 2024: BKtech expanded wood pellet production capacity to meet rising global demand for renewable energy in industrial and power applications.
- October 2024: East German company Leag acquired Swedish wood pellet producer Scandbio AB, marking entry into Scandinavia and strengthening biomass production capabilities.
- May 2023: Andritz AG launched new biomass technologies including the world’s first autonomous logyard crane and advanced pellet mill.
- January 2023: Andritz AG partnered with Stora Enso to convert the Oulu pulp and paper mill in Finland with integrated biomass power solutions.
- November 2021: Lignetics Inc. was acquired by EagleTree Capital’s private equity fund.
Key Players
- Asia Biomass Public Company Limited
- Drax Group
- Enviva LLC
- Fram Fuels
- Groupe Savoie
- I.C.S. (Lacroix) Lumber Inc.
- Lauzon
- Lignetics Group
- Sinclar Group Forest Products
- Stora Enso
- Svenska Cellulosa Aktiebolaget SCA (publ)
- Vermont Wood Pellet Company
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