Wood Pellets Market

Wood Pellet Market Size:

The global wood pellet market size reached US$ 13.3 Billion in 2023. Looking forward, IMARC Group expects the market to reach US$ 22.2 Billion by 2032, exhibiting a growth rate (CAGR) of 5.7% during 2024-2032. The need for renewable energy sources, numerous government initiatives that elevate awareness of reducing carbon emissions, increasing biomass power generation, and the rise of wood pellets in existing residential and industrial applications are expected to increase the market demand.

Wood Pellet Market Analysis:

• Market Growth and Size: The rising awareness among the people about the depletion of natural resources and the escalating demand for renewable energy sources is facilitating the market growth.
• Major Market Drivers: The implementation of favorable policies by governing agencies of numerous countries is resulting in the rising usage of sustainable energy sources.
• Key Market Trends: Major trends are the availability of several types of feedstocks, such as agriculture residue and waste, along with increasing innovations in pellet manufacturing processes.
• Geographical Trends: Europe is currently leading the wood pellet market, driven by the implementation of stringent regulations and environmental consciousness among the masses. Besides this, North America is emerging as a fast-growing market, which can be attributed the rising awareness about the beneficial aspects of renewable energy.
• Competitive Landscape: Key companies in the industry are investing in advanced technologies to improve pellet manufacturing and collaborating with other industries to expand their operations and overall market share.
• Challenges and Opportunities: Challenges include the rising awareness about deforestation activities. On the other hand, the continuous demand for eco-friendly energy solutions is projected to overcome these challenges.

Wood Pellet Market Trends:

Increasing demand for renewable energy

The need for energy generation from renewable sources has been continuing to grow due to the growing world economy. This may be another important factor fueling the growth of the global wood pellet market. Climate change is wreaking havoc, and reducing greenhouse gas emissions is essential. Phasing out fossil fuels by governments is gaining popularity on the market. Wood pellets can be an attractive option because they are renewable. The product is most commonly made from compressed biomass, such as sawdust and wood shavings. Since the renewable energy industry, including bioenergy produced from wood, is spreading rapidly as countries scramble to diversify their energy sources and become carbon neutral, the wood pellet market opportunities may be promising. According to a report published by the World Bioenergy Association in 2021, the world produced 1.9 billion m³ of wood fuel and wood pellets are one of the bioenergy sectors, which is growing at the quickest rate in the world.

Government initiatives and policies

Government policies are also helping to increase the wood pellet market. The regulatory bodies of many countries are promoting the use of wood pellets under their renewable energy goals. The support in the form of subsidies, rewards, and policies suitable for both the producer and consumer of wood offers assistance in the growth of the market. Furthermore, regulatory bodies set renewable energy targets due to pollution and take steps to reduce their dependence on non-renewable energy, helping boost the market. Policies on waste management and deforestation, designed to enable the use of timber leftovers and enhance wood pellet production, are also increasing the market. Therefore, the pressure from regulatory bodies and the support in the form of policies significantly affect the price of wood biomass pellets, making it more affordable and accessible to many countries.

Government incentives and sustainable policies are significantly influencing the wood pellet market price, encouraging its growth and accessibility worldwide. For instance, the implementation of the Home Efficiency Rebate program, also known as the Clean Air program, in the US encourages the installation of biomass-fed heating systems, including those that run on wood pellets. By incentivizing households to swap out their old heating systems for biomass-fed systems, the program seeks to increase the market for wood pellets and improve the domestic wood pellet sector.

Escalating environmental concerns

Increasing environmental awareness among people regarding climate changes and air quality, coupled with the need to replace finite fossil fuel sources with clean fuel sources, creates a highly favorable market for wood pellets. Wood pellets are carbon-neutral because the CO₂ emitted during combustion is compensated by CO₂ absorbed during the biomass’s growth. This carbon-neutral property significantly boosts the market, as wood pellets are an attractive option for climate-conscious customers and industries. The steady growth of the market is driven by the application of wood pellets as a fuel, which minimizes traditional combustion, reduces the dependence on finite fossil fuel sources, and lessens air pollution, thereby enhancing air quality and promoting environmental sustainability. Wood pellet market statistics reflect significant growth, driven by escalating environmental concerns and a shift towards sustainable energy solutions.

Ongoing technological advancements

Technological advancements are increasing the efficiency and viability of the wood pellet market. Innovations in pellet manufacturing processes, such as improved pelletizing machinery and automation, have led to increased production capacity and cost-effectiveness. In confluence with this, continuous advancements in technologies facilitating the development of high-quality pellets with consistent energy content, making them more attractive for various applications, including residential heating, industrial processes, and power generation are aiding in market expansion.

Extensive research and development (R&D) in pellet combustion technologies have resulted in cleaner and more efficient burning, addressing concerns related to emissions and promoting the wider adoption of wood pellets as a mainstream energy source, thereby propelling the market forward. Technological advancements are positively impacting the future of the wood pellet market by enhancing production efficiency.

As per a publication made by the U.S. Department of Agriculture’s Forest Service in 2023, the Wood Innovations and Community Wood Energy programs is providing funds to assist creative wood product and renewable wood energy initiatives that will improve local economies and sustainable forest management.

Wood Pellet Industry Segmentation:

IMARC Group provides an analysis of the key trends in each segment of the market, along with forecasts at the global, regional, and country levels for 2024-2032. Our report has categorized the market based on feedstock type and application.

Breakup by Feedstock Type:

• Forest Wood and Waste
• Agriculture Residue
• Others
   

Forest wood and waste accounts for the majority of the market share

The report has provided a detailed breakup and analysis of the market based on the feedstock type. This includes forest wood and waste, agriculture residue, and others. According to the report, forest wood and waste represented the largest segment.

A renewable and abundant supply of forest wood not only promotes sustainable forestry practices but is also becoming a deciding factor in the choice of feedstock grade. More waste materials such as sawdust and wood shavings are being utilized to contribute to environmental safety and the transition to circular economy principles. A feedstock diversification associated with eco-friendly waste use is in line with a multitude of global efforts aimed at responsible and safe resource utilization, as well as sustainable biomass development. Moreover, the surging demand for wood pellets from agriculture residue is driven by its role in utilizing crop residues efficiently, providing an alternative to traditional agricultural waste disposal while contributing to renewable energy goals.

Besides this, the increasing utilization of other feedstock types, such as industrial residues and dedicated energy crops, offering flexibility in sourcing materials and supporting the sustainability of the wood pellet industry is providing an impetus to the market.

According to Food and Agricultural Organization (FAO), the global demand for wood products is expected to increase significantly by 2030, with industrial roundwood consumption projected to rise by 60%, influenced by population growth and inflating incomes, indicating a substantial uptick in the usage of wood-based materials like paper and paperboard.

Breakup by Application:

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

Residential heating holds the largest share in the market

A detailed breakup and analysis of the market based on the application has also been provided in the report. This includes power plants, residential heating, commercial heating, combined heat and power (CHP), and others. According to the report, residential heating accounted for the largest market share.

Among the factors that contribute to the growing demand for residential heating using wood pellets is an increasing aspiration for cleaner and environmentally sustainable fuel sources. Wood pellets are used as a convenient and environmentally-friendly replacement for traditional fossil fuels when heating houses. Furthermore, there is a rising emphasis on green practices and energy efficiency in areas where people live, which has aided the growth of the global wood pellet market in the residential sector.

As per the USDA in 2021, the EU wood pellet consumption set a new record of 23.1 million metric tons (MMT) mainly caused by increased residential use in Germany and co-firing of wood pellets with coal in the Netherlands.

Concurrently, the global push for a sustainable and renewable energy source, reducing dependence on conventional fuels, and promoting environmentally conscious electricity generation are fueling the utilization of wood pellets in power plants.

In line with this, the expanding product adoption in commercial heating as a cleaner and cost-effective solution, aligning with corporate sustainability goals is acting as another significant growth-inducing factor.

Furthermore, the growing application of wood pellets in combined heat and power (CHP) systems to optimize energy efficiency by simultaneously generating electricity and useful heat is strengthening the market growth.

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
   

Europe leads the market, accounting for the largest wood pellet market share

The market research report has also provided a comprehensive analysis of all the major regional markets, which include North America (the United States and Canada); Asia Pacific (China, Japan, India, South Korea, Australia, Indonesia, and others); Europe (Germany, France, the United Kingdom, Italy, Spain, Russia, and others); Latin America (Brazil, Mexico, and others); and the Middle East and Africa. According to the report, Europe accounted for the largest market share.

Europe’s dedication to renewable energy and carbon neutrality has driven the wood pellet market in the continent. Consideration of the tough environmental regulations in the various states, incentives from the government, and integrated policies targeting renewable targets have steered the utilization of wood pellets for heating and power generation, hence triggering market expansion. Additionally, the continent's commitment to reducing greenhouse gas emissions and transitioning away from fossil fuels has improved the market demand for wood pellets, making Europe one of the significant determinants of the global wood pellet market. In 2022, the European Union (EU) utilized 24.8 million metric tons of wood pellets as per the data submitted to the Global Agricultural Information Network of the USDA Foreign Agricultural Service.

Apart from this, the surging demand for wood pellets in North America propelled by increasing awareness of renewable energy and a transition away from conventional fuels is influencing the market expansion. Furthermore, the region's abundant biomass resources and supportive policies are contributing to the wood pellet market growth.

Concurrent with this, the expanding demand for wood pellets in the Asia Pacific driven by growing energy needs, environmental concerns, and government initiatives promoting sustainable practices is creating a favorable wool pellet market outlook.

Additionally, Latin America’s vast agricultural and forestry resources, while the surging need for diversified and sustainable energy sources in the Middle East and Africa is presenting remunerative opportunities for market growth.

Leading Key Players in the Wood Pellet Industry:

The competitive landscape of the global wood pellet market is characterized by a mix of established players and emerging entrants. Leading players boast high production capacities and vast distribution networks. They are focusing on partnerships, mergers, and acquisitions (M&As) to expand their market presence and product portfolios. The industry is highly influenced by quality competition and the requirement for sustainability certifications; thus, producers invest in advanced technologies to ensure the consistent quality of the pellets they produce. The market is volatile, with new regional players emerging due to the move to localize production, which makes the product more affordable while promoting innovation. Dynamism in the market is evident in production technology, where torrefaction and subsequent pellet combustion technologies have proven to be relatively successful and competitive.

The wood pellet market overview highlights moderate growth due to the increasing demand for renewable energy and sustainability goals. Apart from this, Enviva agreed to buy two U.S. wood pellet plants in Georgia and South Carolina for $175 million, expanding its production footprint and reinforcing its position in the biomass energy sector. The acquisition includes a significant facility in Waycross, Georgia, previously owned by Georgia Biomass Holding, a subsidiary of Innogy SE.

The market research report has provided a comprehensive analysis of the competitive landscape. Detailed profiles of all major companies have also been provided. Some of the key players in the market include:

• 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.
   

(Please note that this is only a partial list of the key players, and the complete list is provided in the report.)

Latest News:

• In May 2023, Andritz AG introduced a range of new and proven technologies, such as the world’s first autonomous logyard crane, the ANDRITZ PM30-6 pellet mill designed for biomass, and an adjustable plug screw feeder.
• In January 2023, Andritz AG announced its collaboration with Stora Enso Oyj to deliver an integrated solution for the conversion of the Oulu pulp and paper mill in Finland, including a new debarking line with Smart Wood Processing, an EcoFluid biomass power boiler, and recausticizing plant upgrades.
• In November 2021, Lignetics Inc. announced it had been acquired by EagleTree Capital, acting on behalf of its private equity fund, EagleTree Partners V.

Wood Pellet Market Report Scope:

Key Benefits for Stakeholders:

• IMARC’s industry report offers a comprehensive quantitative analysis of various market segments, historical and current market trends, market forecasts, and dynamics of the wood pellet market from 2018-2032.
• The research report provides the latest information on the market drivers, challenges, and opportunities in the global wood pellet market.
• The study maps the leading, as well as the fastest-growing, regional markets. It further enables stakeholders to identify the key country-level markets within each region.
• Porter's five forces analysis assists stakeholders in assessing the impact of new entrants, competitive rivalry, supplier power, buyer power, and the threat of substitution. It helps stakeholders to analyze the level of competition within the wood pellet industry and its attractiveness.
• The competitive landscape allows stakeholders to understand their competitive environment and provides insight into the current positions of key players in the market.