Biomass Pellets Market Size, Share & Trends Analysis Report By Type, By Application, By End-User, By Region And Segment Forecasts 2026 – 2035

Biomass Pellets Market Size, Share and Trends 2026 to 2035

According to MarketnReports, the global Biomass Pellets market size was estimated at USD 12.5 billion in 2025 and is expected to reach USD 30 billion by 2035, growing at a CAGR of 9.2% from 2026 to 2035. The biomass pellets market is driven by rising demand for renewable energy sources and government incentives for sustainable fuel alternatives.

What are the Key Insights into Biomass Pellets?

• The global Biomass Pellets market was valued at USD 12.5 billion in 2025 and is projected to reach USD 30 billion by 2035.
• The market is expected to grow at a CAGR of 9.2% during the forecast period from 2026 to 2035.
• The market is driven by increasing focus on renewable energy, carbon emission reduction policies, and rising industrial demand for sustainable fuels.
• In the type segment, wood pellets dominate with a 70% share due to their high energy density, availability from forestry residues, and established supply chains for consistent quality.
• In the application segment, power generation dominates with a 45% share as it provides a reliable, low-carbon alternative for electricity production in biomass plants.
• In the end-user segment, power plants dominate with a 40% share owing to large-scale utilization for baseload energy and compliance with renewable mandates.
• Europe dominates the regional market with a 35% share, driven by stringent EU renewable energy targets, biomass subsidies, and advanced infrastructure in countries like Germany and Sweden.

What is the Industry Overview of Biomass Pellets?

The Biomass Pellets market involves compressed organic materials like wood residues, agricultural waste, and energy crops formed into dense, uniform pellets used as a renewable fuel source for heating, power generation, and industrial applications, offering a cleaner alternative to fossil fuels with reduced emissions. Market definition includes the production, distribution, and utilization of these pellets derived from biomass feedstocks through processes like drying, grinding, and pelletizing, emphasizing energy density, storability, and environmental benefits while addressing challenges in supply chain logistics, quality standardization, and competition with other renewables for sustainable energy transitions.

What are the Market Dynamics of Biomass Pellets?

Growth Drivers

The Biomass Pellets market is propelled by global efforts to transition to renewable energy, where pellets serve as a carbon-neutral fuel alternative, reducing greenhouse gas emissions by up to 80% compared to coal when sourced sustainably, appealing to governments and industries aiming for net-zero targets. Advancements in pelletization technology improve energy density and reduce production costs, making pellets competitive in power generation and heating applications. Rising energy security concerns and volatile fossil fuel prices drive adoption in industrial sectors, while subsidies and carbon credits under schemes like the EU ETS incentivize investments. Increasing awareness of environmental sustainability and circular economy practices, utilizing agricultural and forestry waste, further boosts market growth by minimizing landfill use and promoting rural economies.

Restraints

High initial capital for pellet production facilities and logistics infrastructure limits entry in developing regions, where small-scale operations face economies of scale challenges. Volatility in biomass feedstock availability due to seasonal variations and competition with food production raises raw material costs. Stringent quality standards for moisture content and ash levels require advanced processing, increasing operational expenses. Environmental concerns over deforestation for wood pellets and air quality from combustion deter adoption in sensitive areas, while trade barriers and tariffs on imports disrupt global supply chains.

Opportunities

Opportunities emerge from integrating advanced torrefaction for black pellets with higher calorific value and hydrophobicity, enabling longer storage and easier transportation, attracting investments in export-oriented production. Expansion into emerging markets with abundant agricultural residues offers potential for localized, cost-effective solutions tailored to rural energy needs. Partnerships with energy utilities for co-firing in coal plants can transition fossil infrastructure, while bioeconomy initiatives promote pellet use in biofuels. The rise of sustainable certification, like FSC, ensures ethical sourcing, opening premium markets.

Challenges

Challenges include sustainable sourcing to avoid deforestation, requiring robust certification and monitoring to maintain environmental credibility. Technological gaps in efficient pellet combustion for low-emission systems demand ongoing R&D to meet air quality regulations. Supply chain disruptions from weather events or policy changes add volatility, while competition from solar and wind reduces demand in some energy mixes. Ensuring consistent pellet quality across global suppliers complicates international trade.

Biomass Pellets Market: Report Scope

What is the Market Segmentation of Biomass Pellets?

The Biomass Pellets market is segmented by type, application, end-user, and region.

By Type. Wood pellets are the most dominant subsegment, holding approximately 70% market share, due to their abundant feedstock from forestry by-products and high heating value. This dominance drives the market by providing a reliable renewable fuel for large-scale energy applications, supporting carbon reduction goals. Agricultural residue pellets rank as the second most dominant, with around 20% share, utilizing waste like straw and bagasse, propelling growth through sustainable waste management and cost-effective alternatives.

By Application. Power generation emerges as the most dominant subsegment, capturing about 45% share, primarily because it enables biomass co-firing in existing plants for clean energy. This leads to market growth by facilitating the transition from fossil fuels and meeting renewable targets. Industrial heating follows as the second most dominant, with roughly 30% share, for process heat in manufacturing, driving the market via energy cost savings and emission compliance.

By End-User. Power plants represent the most dominant subsegment at about 40% share, driven by large-scale fuel needs for electricity. This dominance accelerates market expansion through utility-scale deployments and policy support. The industrial sector ranks second most dominant, holding around 25% share, for heating applications, contributing to growth via operational efficiency.

What are the Recent Developments in Biomass Pellets?

• In January 2025, Enviva Partners expanded its pellet production capacity in the US with a new plant focused on sustainable sourcing.
• In December 2024, Drax Group announced a partnership for torrefied pellet technology to improve energy density.
• In November 2024, Pinnacle Renewable Energy acquired a facility in Canada to boost export volumes to Europe.
• In October 2024, Graanul Invest launched a black pellet production line in Estonia for enhanced durability.
• In September 2024, Pacific BioEnergy invested in R&D for mixed biomass pellets with lower emissions.

What is the Regional Analysis of Biomass Pellets?

• Europe is to dominate the global market.

Europe holds the largest share at approximately 35%, with Germany as the dominating country, due to stringent renewable energy targets and subsidies under the EU Green Deal. This region's growth is fueled by biomass import infrastructure and power plant conversions, positioning it as a sustainability leader. High demand in Scandinavian countries like Sweden and Denmark for district heating systems. The Netherlands' port facilities serve as key import hubs. France's agricultural residue utilization supports rural pellet production. Italy and Spain focus on industrial and residential heating. EU carbon pricing incentivizes co-firing in coal plants. Collaborative certification schemes ensure sustainable sourcing across borders.

North America follows with steady growth, driven by bioenergy policies and forestry resources, where the United States dominates through export hubs like the Southeast. Growth stems from carbon credits and industrial co-firing. Canada's British Columbia leads in wood pellet exports to Asia. The region's focus on combined heat and power systems increases industrial demand. Government incentives under the Inflation Reduction Act support biomass projects. Strong rail and port infrastructure facilitates large-scale exports. Research centers like NREL advance torrefaction technologies.

Asia Pacific is the fastest-growing region, with China leading due to air quality initiatives and domestic production. This area's potential is enhanced by agricultural waste utilization in India. Japan's biomass import policies support energy security. South Korea's power plants adopt pellets for carbon reduction. Vietnam and Indonesia leverage palm oil residues for local heating. Government subsidies in Thailand promote rural pellet production. Rapid urbanization drives commercial heating demand. Emerging certification programs align with global sustainability standards.

Latin America demonstrates moderate progress, dominated by Brazil's sugarcane residue pellets, supported by biofuel policies though challenged by export focus. Argentina's forestry sector produces wood pellets for domestic industrial use. Chile's wood industry supplies pellets for heating in colder regions. Mexico's agricultural waste utilization grows in rural areas. However, infrastructure limitations slow large-scale expansion. Government renewable energy targets encourage co-firing projects. Emerging cooperatives share pellet production facilities.

The Middle East and Africa remain emerging, with South Africa leading through industrial heating applications, limited by biomass availability but promising via agricultural development. Saudi Arabia's Vision 2030 explores pellets for power diversification. Egypt's agricultural residues support local heating. Morocco's solar-biomass hybrid projects integrate pellets. However, water scarcity affects feedstock drying. International aid programs support rural pellet production. Emerging demand in Nigeria for cooking fuel alternatives drives small-scale adoption.

What are the Key Market Players in Biomass Pellets?

• Enviva Partners, LP. Enviva focuses on sustainable wood pellets, expanding production for European exports.
• Drax Group plc. Drax emphasizes pellet-fueled power generation, investing in supply chain sustainability.
• Pinnacle Renewable Energy Inc. targets Asian markets, strategizing on capacity expansions.
• Graanul Invest AS. Graanul develops torrefied pellets, pursuing R&D for higher value products.
• Pacific BioEnergy Corporation. Pacific BioEnergy invests in mixed pellets, focusing on environmental certifications.
• German Pellets GmbH. German Pellets specializes in premium residential pellets, expanding distribution.
• Fram Renewable Fuels, LLC. Fram pursues industrial applications, emphasizing low-ash formulations.
• Rentech, Inc., focuses on agricultural residue, strategizing on biofuel integrations.

What are the Market Trends in Biomass Pellets?

• Increasing adoption of torrefied and black pellets for improved handling.
• Rise of sustainable certification for ethical sourcing.
• Growth in co-firing with coal for transition energy.
• Expansion of residential heating applications.
• Integration with bioenergy for carbon capture.
• Focus on agricultural waste for circular economy.

What Market Segments and Subsegments are Covered in the Biomass Pellets Report?

By Type

• Wood Pellets
• Agricultural Residue Pellets
• Energy Crop Pellets
• Torrefied Pellets
• White Pellets
• Black Pellets
• Premium Pellets
• Industrial Grade Pellets
• Residential Grade Pellets
• Mixed Biomass Pellets
• Others

By Application

• Power Generation
• Industrial Heating
• Residential Heating
• Commercial Heating
• Combined Heat & Power (CHP)
• Animal Bedding
• Cooking Fuel
• Biofuel Production
• District Heating
• Cogeneration
• Others

By End-User

• Power Plants
• Industrial Sector
• Residential Sector
• Commercial Sector
• Agricultural Sector
• Energy Utilities
• Manufacturing Industries
• Food & Beverage Industry
• Chemical Industry
• District Heating Operators
• Others

By Region

• • North America
    • U.S.
    • Canada
  • Europe
    • UK
    • Germany
    • France
    • Rest of Europe
  • Asia Pacific
    • China
    • India
    • Japan
    • Rest of Asia Pacific
  • Latin America
    • Brazil
    • Mexico
    • Rest of Latin America
  • Middle East & Africa
    • UAE
    • South Africa
    • Rest of Middle East & Africa