Global Wood Pellet Market 2025 - 2033: Growth Driven by Renewable Energy Demand

Wood pellet market size was valued at USD 14.0 Billion in 2024 to reach USD 22.6 Billion by 2033, exhibiting a CAGR of 5.5% during 2025-2033.

The global wood pellet market is witnessing significant growth, driven by the increasing demand for renewable energy sources and the need to reduce carbon emissions. In 2024, the market was valued at USD 14.0 billion and is projected to reach USD 22.6 billion by 2033, exhibiting a CAGR of 5.5% during 2025-2033. Factors such as government initiatives promoting sustainable energy, advancements in pellet production technology, and the cost-effectiveness of wood pellets compared to fossil fuels are propelling market expansion. 

Study Assumption Years

  • Base Year: 2024
  • Historical Years: 2019-2024
  • Forecast Years: 2025-2033

Wood Pellet Market Key Takeaways

  • The global wood pellet market reached USD 14.0 billion in 2024 and is expected to grow to USD 22.6 billion by 2033, with a CAGR of 5.5% from 2025 to 2033.
  • Europe dominated the market in 2024, accounting for over 47.9% of the global share, driven by strong renewable energy policies and infrastructure.
  • Forest wood and waste emerged as the leading feedstock type, holding approximately 33.6% market share in 2024, due to their availability and cost-effectiveness.
  • Residential heating was the largest application segment in 2024, comprising around 58.4% of the market, fueled by the demand for sustainable and efficient heating solutions.
  • Technological advancements in pellet production and combustion technologies are enhancing efficiency and reducing emissions, supporting market growth.
  • Government incentives, including subsidies and tax benefits for adopting bioenergy solutions, are further boosting market adoption across various regions.
  • The Asia-Pacific region is experiencing robust growth, primarily driven by increasing demand for renewable energy in countries like Japan, South Korea, and China. 

 Market Growth Factors

  1. Rising Demand for Renewable Energy

Wood pellets are increasingly used as sustainable fuel in power plants and households. With governments promoting low-carbon energy, wood pellets are replacing coal in thermal power generation. Residential heating in cold regions also drives demand. Feedstock includes sawdust, wood chips, and forestry residues. Manufacturers are scaling production to meet energy transition goals. The growing emphasis on reducing greenhouse gas emissions and carbon neutrality commitments globally is boosting the adoption of wood pellets. Industrial and residential applications, including combined heat and power (CHP) plants, enhance their market attractiveness. This trend ensures consistent demand, long-term contracts, and opportunities for investment in pellet production facilities worldwide.

  1. Increasing Industrial Applications

Wood pellets are used in industrial boilers, power generation, and CHP plants. Industries like paper, cement, and food processing adopt pellets for heating. Feedstock sources include sawdust, shavings, and agricultural biomass. Industrial adoption reduces reliance on fossil fuels, helping companies meet sustainability targets and reduce their carbon footprint. Bulk consumption in industries ensures stable demand and supports large-scale pellet production. The versatility in boiler and furnace compatibility makes pellets a preferred fuel choice. As industrial sectors expand their green energy initiatives, the wood pellet market benefits from long-term contracts and growth opportunities. Rising industrial awareness about renewable energy solutions further accelerates demand for high-quality pellets.

  1. Residential Heating Adoption

 Wood pellets are widely used for domestic heating in stoves, fireplaces, and furnaces. Feedstock includes sawdust, forestry residues, and wood chips. Increasing awareness of eco-friendly heating options, especially in Europe and North America, is boosting residential usage. Wood pellets offer high energy efficiency, lower emissions, and cost savings compared to oil or gas heating. Consumers are adopting automated pellet stoves with low maintenance requirements. Seasonal demand in winter drives market growth, with consumers preferring locally sourced, sustainable fuel. Rising interest in home-based renewable energy solutions contributes to long-term market stability. Residential adoption strengthens market presence and encourages innovations in pellet stove technologies.

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Market Segmentation

By Feedstock Type

  • Forest Wood and Waste: Comprising residues like sawdust and wood chips, this segment leads the market due to its abundance and cost-effectiveness in pellet production.
  • Agriculture Residue: Includes crop residues such as straw and husks, offering an alternative to traditional agricultural waste disposal while contributing to renewable energy goals.
  • Others: Encompasses various other biomass materials utilized in pellet production, supporting diversification in feedstock sources.

By Application

  • Power Plants: Utilization of wood pellets for electricity generation, aiding in the transition from coal to renewable energy sources.
  • Residential Heating: Dominant application segment, driven by the demand for sustainable and efficient heating solutions in households.
  • Commercial Heating: Adoption of wood pellets in commercial settings for space and water heating, contributing to energy efficiency.
  • Combined Heat and Power (CHP): Integration of wood pellets in systems that simultaneously generate electricity and useful heat, enhancing energy utilization.
  • Others: Includes various other applications of wood pellets across different industries and sectors.

Breakup by Region

  • North America (United States, Canada)
  • Asia Pacific (China, Japan, India, South Korea, Australia, Indonesia, Others)
  • Europe (Germany, France, United Kingdom, Italy, Spain, Russia, Others)
  • Latin America (Brazil, Mexico, Others)
  • Middle East and Africa

Regional Insights

Europe holds the largest share in the global wood pellet market, accounting for over 47.9% in 2024. The region's strong commitment to renewable energy and carbon neutrality, coupled with supportive government policies and advanced infrastructure, drives the demand for wood pellets in power generation and heating applications. Additionally, Europe's focus on reducing greenhouse gas emissions and transitioning away from fossil fuels further bolsters market growth.

Recent Developments & News

In October 2024, PT Bukit Asam Tbk launched a Wood Pellet Pilot Plant in Tanjung Enim, South Sumatra, producing 200 kg of biomass from Red Kaliandra per hour. This initiative aims to support coal co-firing in power plants and contribute to emission reduction efforts, aligning with government sustainability goals. Such developments highlight the increasing investments in wood pellet production to meet renewable energy targets and reduce carbon emissions. 

Key Players

Andritz AG, Asia Biomass Public Company Limited, Drax Group PLC, Energex, Enviva LP, Fram Renewable Fuels LLC, Land Energy Limited, Lignetics Inc., Mallard Creek Inc., Pacific BioEnergy Corporation, Stora Enso Oyj, Svenska Cellulosa Aktiebolaget, Tanac S.A., etc.

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