The global Wood Pellet Market was valued at USD 14.8 Billion in 2025, with forecasts projecting growth to USD 23.3 Billion by 2034. This expansion corresponds to a CAGR of 5.20% during 2026-2034. The market growth is mainly driven by increasing demand for renewable energy, supportive government initiatives, advancements in pellet production technology, and growing usage in power generation and residential heating.
Study Assumption Years
- Base Year: 2025
- Historical Year/Period: 2020-2025
- Forecast Year/Period: 2026-2034
Wood Pellet Market Key Takeaways
- The global wood pellet market size was valued at USD 14.8 Billion in 2025.
- The market is expected to exhibit a CAGR of 5.20% during 2026-2034.
- Increasing biomass power generation and government initiatives to lower carbon emissions are driving market growth.
- The rise in wood pellet use for residential and industrial applications supports the expanding demand.
- Technological advancements and cost-effectiveness compared with fossil fuels enhance market adoption.
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Market Growth Factors
One of the primary growth factors driving the wood pellet market is the accelerating global transition toward renewable energy sources. Governments and utilities are increasingly adopting biomass solutions to meet carbon reduction targets, directly supporting wood pellet market growth. Wood pellets are widely used for heat and power generation due to their low carbon footprint and high energy density. Secondary keywords such as biomass fuel, renewable heating solutions, and sustainable energy alternatives further highlight their role in replacing coal and fossil fuels. Strong policy incentives, renewable energy mandates, and emissions trading systems across Europe and Asia are significantly boosting wood pellet consumption in both residential and industrial applications.
The availability of sustainable feedstock and continuous improvements in production technologies are strongly contributing to wood pellet market trends. Feedstocks such as sawdust, forest residues, and agricultural waste ensure a reliable raw material supply while supporting circular economy practices. Secondary keywords, including wood pellet feedstock, sustainable forestry residues, and pellet manufacturing technology, emphasize efficiency gains across the value chain. Modern pelletizing equipment, enhanced drying systems, and quality standardization are improving output consistency and lowering production costs. These advancements, combined with strong export demand and regional supply chain development, are enabling manufacturers to scale operations and meet long-term market demand.
The expanding use of wood pellets across residential and industrial sectors is another key driver supporting the wood pellet market size expansion. In residential heating, pellet stoves and boilers are gaining popularity due to their cost efficiency, automation, and environmental benefits. At the industrial level, wood pellets are increasingly used in combined heat and power plants and large-scale thermal facilities. Secondary keywords such as wood pellet applications, industrial biomass energy, and residential pellet heating systems reflect this diversification. Rising energy costs, improved pellet combustion technologies, and growing awareness of clean heating solutions are collectively strengthening demand across both small-scale households and large industrial users globally.
Market Segmentation
By Feedstock Type:
- Forest Wood and Waste: Dominates the market with around 33.6% share in 2024, favored for widespread availability and cost-effectiveness. Residues such as sawdust and wood chips from forestry support sustainable pellet production.
By Application:
- Residential Heating: Leads with approximately 58.4% market share in 2024. Wood pellets are preferred as a cleaner, efficient alternative to fossil fuels for residential heating, supported by improved pellet stove technologies and government incentives.
Regional Insights
Europe dominates the global wood pellet market with a market share exceeding 47.9% in 2024. The region benefits from stringent environmental regulations, government incentives, and integrated renewable energy policies driving wood pellet use for heating and power generation. The EU consumed 24.8 million metric tons of wood pellets in 2022, supported by advanced pellet production and distribution infrastructure alongside investments in sustainable forestry and biomass projects.
Recent Developments & News
- October 2024: BKtech announced a significant expansion of wood pellet production capacity to meet growing global renewable energy demand.
- October 2024: East German company Leag acquired Swedish pellet producer Scandbio AB, marking its entry into the Scandinavian biomass market.
- May 2023: Andritz AG launched new pellet technologies, including an autonomous logyard crane and the ANDRITZ PM30-6 pellet mill designed for biomass.
- January 2023: Andritz AG partnered with Stora Enso Oyj to upgrade Finland's Oulu pulp and paper mill with biomass solutions.
- November 2021: Lignetics Inc. was acquired by EagleTree Capital, enhancing investment in wood pellet production.
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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