Table of Contents
Overview
New York, NY – Nov 05, 2025 – The Global Wood Pellets Market is projected to reach USD 17.9 billion by 2034, growing from USD 9.6 billion in 2024 at a CAGR of 6.4% (2025–2034). Europe’s USD 4.7 billion dominance highlights its strong commitment to sustainable energy and biomass heating.
Wood pellets—compressed from sawdust and wood residues—serve as clean, carbon-neutral fuels for heating, industrial, and power applications due to their high energy density and uniform size. Market growth is fueled by renewable-energy policies and the global shift from coal to sustainable fuels.
Several funding programs are shaping this landscape: Texas’s USD 7.2 billion loan program for gas plants and Poland’s USD 14.7 billion nuclear approval influence diversification of the energy mix; India’s Rs 5,400 crore viability-gap funding for 30 GWh battery storage projects strengthens renewable ecosystems; and Texas’s USD 562 million fund for Baytown power projects supports hybrid energy expansion.
Moreover, investments such as the USD 500 million DRE Nigeria Fund and Nuveen’s USD 1.3 billion sustainable infrastructure credit fund emphasize rising global capital toward green energy, even as the U.S. canceled USD 13 billion in green-energy funds. Together, these initiatives sustain wood pellets as a reliable and complementary low-carbon solution in the world’s clean-energy transition.
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Key Takeaways
- The Global Wood Pellets Market is expected to be worth around USD 17.9 billion by 2034, up from USD 9.6 billion in 2024, and is projected to grow at a CAGR of 6.4% from 2025 to 2034.
- The Wood Pellets Market relies heavily on forest and wood residues, accounting for 54.8% feedstock.
- Utility-grade white pellets dominate the Wood Pellets Market, holding a significant 48.4% market share.
- Power generation drives the Wood Pellets Market, representing 59.9% of total application consumption globally.
- Industrial usage leads the Wood Pellets Market, contributing 67.3% of overall end-use demand worldwide.
- The European market value reached USD 4.7 billion, showing strong renewable adoption.
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Report Scope
| Report Features | Description |
|---|---|
| Market Value (2024) | USD 9.6 Billion |
| Forecast Revenue (2034) | USD 17.9 Billion |
| CAGR (2025-2034) | 6.4% |
| Segments Covered | By Feedstock (Forest/Wood Residue, Agricultural Residue, Energy-Crop and Sawdust Mix), By Grade (Utility-Grade (White), Premium-Grade, Standard-Grade, Torrefied Black Pellets), By Application (Power Generation, Heating, CHP), By End-use (Industrial, Residential, Commercial) |
| Competitive Landscape | Drax Group Plc, Enviva LP, ANDRITZ, The Westervelt Company, Inc., Energex, Wood Pellet Energy (UK) Ltd., United Company, Groupe Savoie Inc., Vermont Wood Pellet Co., Premium Pellet Ltd. |
Key Market Segments
By Feedstock Analysis
In 2024, Forest/Wood Residue dominated the By Feedstock segment of the Wood Pellets Market, capturing a 54.8% share. This dominance reflects the growing use of forestry by-products like sawdust, shavings, and logging residues, which offer abundant, low-cost, and reliable raw material sources for pellet production. Their consistent quality and availability make them the preferred feedstock choice. Increasing global focus on sustainable resource utilization also drives this trend, as using wood residues minimizes waste and enhances renewable energy output.
This reliance on forestry residues not only promotes environmental sustainability but also ensures stable supply chains, supporting the balance between energy affordability and ecological responsibility in the biomass sector. As governments and industries continue to promote circular resource use and carbon-neutral energy options, forest and wood residues will remain central to the long-term growth and efficiency of the global wood pellet industry.
By Grade Analysis
In 2024, Utility-Grade (White) dominated the By Grade segment of the Wood Pellets Market, securing a 48.4% share. This leadership stems from their extensive application in large-scale power generation, driven by features such as uniform composition, low ash content, and high combustion efficiency. These pellets are widely adopted for co-firing in power plants, serving as a dependable and cleaner substitute for coal while aligning with global renewable energy goals. Their cost-effectiveness, stable performance, and ability to be handled in bulk make them ideal for industrial-scale operations.
The strong presence of utility-grade pellets underscores their importance in reducing carbon emissions and ensuring a steady energy supply. As countries advance toward low-carbon power systems, the preference for white pellets continues to grow, reinforcing their central role in the ongoing transition to sustainable, biomass-based energy production worldwide.
By Application Analysis
In 2024, Power Generation dominated the By Application segment of the Wood Pellets Market, accounting for a 59.9% share. This leadership reflects the expanding use of wood pellets as a dependable renewable fuel for utility-scale electricity production. Power plants increasingly adopt pellets due to their high energy density, consistent quality, and easy adaptability to existing coal-fired systems, which allows a gradual yet effective shift toward cleaner energy. The growing share of pellets in power generation aligns with international climate policies focused on carbon reduction and sustainable energy diversification.
Their large-scale use demonstrates how biomass can meet rising electricity needs while supporting environmental goals. As nations continue to pursue energy transition targets, the efficiency and versatility of wood pellets reinforce their value in replacing conventional fossil fuels and promoting a resilient, low-emission power infrastructure worldwide.
By End-use Analysis
In 2024, the Industrial sector led the end-use segment of the Wood Pellets Market, holding a 67.3% share. This dominance reflects the widespread use of wood pellets across large-scale industrial facilities for energy generation and heat supply. Industries favor pellets for their high calorific value, uniform quality, and capacity to lower dependence on traditional fossil fuels. Their efficient bulk handling and suitability for continuous operations enhance productivity and sustainability. The strong market presence of industrial applications emphasizes their vital role in supporting cleaner energy transitions within manufacturing and processing sectors.
As industries worldwide adopt renewable energy to meet carbon reduction goals, wood pellets have become a preferred alternative for stable, low-emission power. This substantial share underscores the industrial sector’s contribution to the growth and global acceptance of wood pellets as a dependable and cost-effective renewable energy source.
Regional Analysis
The Wood Pellets Market displays diverse regional trends across Europe, North America, Asia Pacific, the Middle East & Africa, and Latin America, driven by varying renewable energy policies and biomass resources.
In 2024, Europe dominated with a 49.9% share, valued at USD 4.7 billion, supported by its strong renewable integration, advanced biomass heating systems, and strict carbon reduction goals. North America shows steady expansion, fueled by demand for sustainable heating and renewable power generation.
The Asia Pacific region is rapidly adopting wood pellets as governments promote energy diversification and reduced coal dependence. Though still emerging, the Middle East & Africa and Latin America are gradually developing biomass capabilities to strengthen energy security and lower costs.
Overall, Europe leads the global transition toward sustainable biomass energy, while other regions increasingly align with global clean energy targets through supportive policies and expanding renewable infrastructure.
Top Use Cases
- Home & small-scale heating: Wood pellets are commonly used in domestic pellet stoves and boilers to heat homes and buildings. Their uniform size, low moisture, and ash content make them clean and easy to store and handle.
- Industrial boiler fuel substitution: Large manufacturing facilities and plants burn wood pellets in industrial boilers instead of coal or gas. This helps reduce reliance on fossil fuels while utilizing wood-based residues.
- Power generation / co-firing in coal plants: Wood pellets are used in utility-scale power plants either alone or mixed with coal (co-firing) to produce electricity and heat, enabling existing infrastructure to shift toward biomass fuels.
- Combined heat and power (CHP) systems: In CHP setups, wood pellets are burned to generate both electricity and usable heat (e.g., for district heating or industrial processes), thereby maximizing energy efficiency.
- District heating & large-scale thermal systems: Wood pellets serve as fuel for district heating networks and large-capacity thermal units, supplying multiple buildings or entire communities with heat from biomass.
- Waste biomass valorisation & by-product utilisation: Wood pellet production and use allow forestry by-products (sawdust, shavings, logging residues) and other biomass waste streams to be turned into valuable fuel, reducing waste and enhancing resource efficiency.
Recent Developments
- In February 2025, ANDRITZ acquired LDX Solutions, a U.S. firm that supplies emission-control systems, including for wood-pellet plants (“wood pellets” referenced in its market sectors). This enhances ANDRITZ’s environmental/air-pollution offering relevant to biomass/pellet operations.
- In December 2024, Drax agreed heads of terms with Pathway Energy for a multi-year deal to supply over 1 million tonnes per annum of sustainable biomass pellets to a proposed US Gulf Coast sustainable aviation fuel (SAF) plant. The plant is expected to produce 30 million gallons of carbon-negative jet fuel annually. Drax may also become a strategic partner via a convertible loan note up to US$10 million.
- In December 2024, Enviva announced its successful emergence from Chapter 11 bankruptcy, having eliminated around US$1 billion of pre-petition debt. The company now has improved liquidity and a stronger financial footing to support growth, including completion of its Epes, Alabama plant — expected to produce ~1 million metric tons per year when fully ramped.
Conclusion
The Wood Pellets Market continues to evolve as a key component of the global clean energy transition. Growing environmental awareness and supportive government policies are encouraging the use of biomass fuels over conventional energy sources. Wood pellets offer a renewable, carbon-neutral alternative that supports both energy security and sustainability goals.
Advancements in pellet production technology, improved logistics, and rising adoption across industrial and residential applications are strengthening market stability. With increasing global investment in low-carbon solutions, wood pellets remain an important link between renewable resources and practical energy generation, driving long-term opportunities in the circular and sustainable energy landscape.
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