Biomass Pellets Market Size, Share & Trends Analysis Report By Product 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 14.14 billion in 2025 and is expected to reach USD 27.18 billion by 2035, growing at a CAGR of 6.8% from 2026 to 2035. The biomass pellets market is driven by increasing adoption of renewable energy sources to reduce carbon emissions and meet sustainability goals.

What are the Key Insights into the Biomass Pellets Market?

• The global Biomass Pellets market was valued at USD 14.14 billion in 2025 and is projected to reach USD 27.18 billion by 2035.
• The market is expected to grow at a CAGR of 6.8% during the forecast period from 2026 to 2035.
• The market is driven by rising demand for renewable energy, supportive government policies, and the need to reduce reliance on fossil fuels.
• In the product type segment, wood pellets dominate with approximately 62% market share due to their high energy density, consistent quality from abundant forest residues, and widespread use in power plants and heating systems.
• In the application segment, power generation dominates with around 45% share because it enables large-scale co-firing with coal, helping utilities meet emission reduction targets efficiently.
• In the end-user segment, industrial users hold the largest share at about 50% owing to their high energy requirements and the cost-effectiveness of biomass pellets in processes like manufacturing and heat production.
• Europe dominates the regional market with a roughly 32% share, driven by stringent environmental regulations, extensive district heating networks, and incentives under the European Green Deal promoting bioenergy adoption.

What is the Biomass Pellets Industry Overview?

The Biomass Pellets market encompasses the production, distribution, and utilization of compressed organic materials derived from agricultural residues, wood waste, and other biomass sources, serving as a renewable alternative to fossil fuels for energy generation and heating applications. Biomass pellets are defined as densified biofuel products made by compressing biomass feedstocks under high pressure, resulting in uniform cylindrical shapes with low moisture content, high energy density, and ease of transportation and storage. This market plays a crucial role in the global shift towards sustainable energy, supporting carbon-neutral initiatives by converting waste materials into efficient fuel sources that reduce greenhouse gas emissions compared to traditional coal or oil-based options.

What are the Biomass Pellets Market Dynamics?

Growth Drivers

The primary growth drivers for the Biomass Pellets market include escalating global efforts to combat climate change through renewable energy adoption, where biomass pellets offer a viable, carbon-neutral alternative to fossil fuels. Governments worldwide are implementing policies such as subsidies, tax incentives, and mandates for co-firing biomass in power plants, which significantly boost demand. Additionally, the abundance of agricultural and forestry residues as feedstocks ensures cost-effective production, while advancements in pelletization technology enhance efficiency and reduce emissions. Rising energy security concerns and volatile fossil fuel prices further propel industries and households towards sustainable options like biomass pellets, fostering long-term market expansion.

Restraints

Key restraints in the Biomass Pellets market revolve around supply chain vulnerabilities, including fluctuating availability of raw materials due to seasonal agricultural cycles and competition for biomass resources from other industries like paper manufacturing. High initial capital costs for pellet production facilities and transportation logistics pose barriers, especially in regions with underdeveloped infrastructure. Environmental concerns, such as potential deforestation if not managed sustainably, and regulatory hurdles related to certification standards can also hinder growth. Moreover, competition from cheaper alternative renewables like solar and wind may divert investments away from biomass, limiting market penetration in price-sensitive areas.

Opportunities

Opportunities in the Biomass Pellets market are abundant, particularly with the global push for net-zero emissions by 2050, creating demand for scalable bioenergy solutions in emerging economies. Innovations in torrefaction processes, which produce water-resistant and higher-energy-density pellets, open new avenues for export and industrial applications. Expanding into untapped markets like Asia-Pacific, where rapid urbanization drives energy needs, offers growth potential through partnerships and infrastructure development. Additionally, integrating biomass pellets into circular economy models, such as utilizing industrial waste as feedstock, can enhance sustainability and attract eco-conscious investors, paving the way for diversified revenue streams.

Challenges

Challenges facing the Biomass Pellets market include ensuring sustainable sourcing to avoid ecological impacts, as over-reliance on forest resources could lead to biodiversity loss without proper certification. Volatility in global trade, influenced by tariffs and geopolitical tensions, affects export-dependent producers. Technological limitations in achieving consistent pellet quality across varying feedstocks can result in inefficiencies during combustion, deterring adoption. Furthermore, public perception issues regarding air quality from biomass burning and the need for advanced emission control systems add complexity, requiring ongoing R&D and regulatory compliance to maintain market viability.

Biomass Pellets Market: Report Scope

Report Attributes	Report Details
Report Name	Biomass Pellets Market
Market Size 2025	USD 14.14 Billion
Market Forecast 2035	USD 27.18 Billion
Growth Rate	CAGR of 6.8%
Report Pages	225
Key Companies Covered	Enviva, Inc., Drax Group plc, Pinnacle Renewable Energy Inc., Fram Renewable Fuels, German Pellets GmbH, and Others
Segments Covered	By Product Type, By Application, By End-User, and By Region
Regions Covered	North America, Europe, Asia Pacific (APAC), Latin America, and The Middle East and Africa (MEA)
Base Year	2025
Historical Year	2020 - 2024
Forecast Year	2026 - 2035
Customization Scope	Avail customized purchase options to meet your exact research needs.

What is the Biomass Pellets Market Segmentation?

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

By product type, wood pellets emerge as the most dominant subsegment, holding over 60% share, due to their superior combustion efficiency and availability from forestry byproducts, which drives the market by enabling reliable large-scale energy production; the second most dominant is agricultural residue pellets, which support market growth through cost-effective utilization of crop waste, reducing environmental pollution from field burning.

By application, power generation stands as the most dominant, accounting for about 45% share, as it facilitates emission reductions in coal plants via co-firing, propelling overall market expansion; industrial heating follows as the second dominant, aiding market drive by providing sustainable heat for manufacturing processes, lowering operational costs and carbon footprints.

By end-user, industrial users dominate with around 50% share, driven by high-volume energy demands in sectors like cement and steel, which accelerates market growth through efficient fuel substitution; residential users are the second dominant, contributing to market advancement by offering eco-friendly home heating alternatives amid rising fossil fuel prices.

What are the Recent Developments in the Biomass Pellets Market?

• In June 2025, the Ministry of New and Renewable Energy revised guidelines for the National Biomass Program, enhancing financial incentives for pellet manufacturing to promote cleaner air and green energy, with up to USD 25,610 per metric tonne per hour for non-torrefied facilities.
• In January 2025, NTPC ordered 930,000 tonnes of biomass pellets for co-firing in Indian power plants, aiming to improve air quality and support sustainable energy practices.
• In May 2025, Valmet and Wilhelmina N.V. collaborated to commercialize TG2 steam-treated biomass pellets using BioTrac technology, targeting high-potassium agricultural residues for efficient coal substitution.
• In 2024, Enviva emerged from Chapter 11 bankruptcy, optimizing operations for sustainable growth and reinforcing its leadership in industrial wood pellet production.
• In December 2024, Drax announced plans for wood-fired power plants with bioenergy carbon capture and storage in the U.S., targeting energy-intensive sectors like AI data centers.

What is the Regional Analysis of the Biomass Pellets Market?

Europe is to dominate the global market.

Europe leads the global Biomass Pellets market with the largest share, often estimated at around 50-65% in recent years, driven by stringent environmental regulations, ambitious decarbonization targets under the European Green Deal and Renewable Energy Directive (RED II), and widespread adoption in district heating networks, residential pellet boilers, and utility-scale power generation. The region benefits from mature infrastructure for biomass utilization, high consumer acceptance of renewable heating solutions, and substantial subsidies or incentives that make pellets competitive against fossil fuels. Germany dominates within Europe as the leading producer and consumer, supported by its Energiewende policy emphasizing renewable energy transition, extensive installations of pellet-based heating systems, and strong domestic production from forestry residues; other key countries include Italy, Sweden, the UK, and France, where large-scale co-firing and residential heating drive demand.

North America holds a significant position as both a major producer and exporter, particularly to Europe and increasingly to Asia, thanks to abundant forestry resources in the Southeastern United States and Canada. The region grows steadily through incentives like the U.S. Renewable Fuel Standard and state-level programs promoting bioenergy, with pellets used in residential heating, industrial applications, and co-firing. The United States is the dominant country, home to leading producers like Enviva with multiple large-scale facilities and export-focused operations, leveraging cost-competitive production and sustainable forestry practices to supply global markets.

Asia-Pacific emerges as the fastest-growing region, fueled by rapid energy demand, urbanization, and policies aimed at reducing coal dependency for carbon neutrality goals. Countries heavily rely on imports due to limited domestic sustainable wood resources, with demand surging for power generation via co-firing in coal plants. Japan dominates as the leading importer and consumer, supported by its Feed-in Tariff (FIT) scheme and long-term targets for biomass in the energy mix to achieve carbon neutrality by 2050; South Korea follows closely with its Renewable Portfolio Standard driving substantial imports, while emerging production in Southeast Asian nations like Vietnam and Indonesia supports exports but also local utilization.

Latin America presents growing potential, primarily through the utilization of abundant agricultural residues such as sugarcane bagasse and other crop wastes, aligning with biofuel mandates and sustainability initiatives. Infrastructure challenges and lower current adoption limit scale, but the region offers opportunities for domestic production and export. Brazil dominates, capitalizing on its vast agricultural and forestry resources to produce pellets for both local energy needs and international markets, supported by government biofuel policies.

The Middle East and Africa remain the smallest but emerging market, where fossil fuel dominance persists, but diversification efforts and waste-to-energy projects create opportunities. South Africa leads the region, with initiatives converting invasive species and agricultural waste into pellets for local power generation and heating, alongside pilot projects in countries like Saudi Arabia under Vision 2030 for renewable integration in heating and industrial applications.

What are the Key Market Players in Biomass Pellets?

• Enviva, Inc. focuses on expanding production capacity through new facilities in the U.S. Southeast, emphasizing sustainable sourcing with certifications like FSC, and partnering with utilities for long-term supply agreements to ensure stable revenue.
• Drax Group plc pursues strategies like acquiring pellet plants and investing in bioenergy with carbon capture and storage (BECCS), aiming for negative emissions while diversifying into global pellet trading.
• Pinnacle Renewable Energy Inc. employs vertical integration by controlling feedstock supply chains and enhancing export capabilities to Asia and Europe, prioritizing efficiency improvements in pelletization to reduce costs.
• Fram Renewable Fuels adopts innovation in torrefied pellet technology for better durability and energy density, coupled with regional partnerships to tap into North American markets.
• German Pellets GmbH concentrates on European market dominance through large-scale production and compliance with EU sustainability standards, investing in R&D for advanced pellet blends.

What are the Biomass Pellets Market Trends?

• Increasing the co-firing of biomass pellets with coal in power plants to meet emission targets.
• Advancements in torrefaction technology for producing water-resistant, high-density pellets.
• Diversification of feedstocks beyond wood to include agricultural and industrial wastes.
• Growing adoption in residential heating due to rising fossil fuel costs and eco-awareness.
• Expansion of export infrastructure in North America to serve Asian demand.
• Integration of carbon capture in biomass facilities for net-negative emissions.
• Emphasis on sustainability certifications to address deforestation concerns.

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

By Product Type

• • Wood Pellets
  • Agricultural Residue Pellets
  • Industrial Waste Pellets
  • Torrefied Pellets
  • Others

By Application

• • Power Generation
  • Industrial Heating
  • Residential Heating
  • Commercial Heating
  • Combined Heat and Power (CHP)
  • Others

By End-User

• • Industrial
  • Residential
  • Commercial
  • Transportation
  • 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