Industrial Wood Pellets Market growth is driven by biomass as a clean energy source and rising demand from power plants during the forecast period 2026-2030.
According to a TechSci Research report, the global Industrial Wood Pellets Market was valued at USD 7.85 billion in 2024 and is expected to reach USD 15.20 billion by 2030, growing at a CAGR of 11.48%. The market’s growth is driven by a rising emphasis on sustainability certification programs and stricter environmental regulations. As biomass energy demand increases, there is a growing need for transparency in sourcing, production, and emissions reporting.
To meet sustainability goals, international organizations and governments are enforcing strict standards to ensure wood pellets contribute to carbon neutrality without leading to deforestation or biodiversity loss. Programs such as the Sustainable Biomass Program (SBP), Forest Stewardship Council (FSC), Programme for the Endorsement of Forest Certification (PEFC), and the Renewable Energy Directive (RED II) set stringent criteria for biomass procurement. Pellet manufacturers must adhere to these sustainability standards, or they risk market exclusion and reputational damage.
The industry’s shift towards third-party certified pellets, which ensure responsible forest management, is gaining momentum. Power utilities, particularly in Europe and North America, now require sustainability credentials before entering long-term contracts. Additionally, industries using wood pellets for district heating and industrial heating applications are aligning with carbon reduction commitments, further boosting demand for eco-friendly pellet production.
To address these demands, major pellet producers are adopting blockchain-based tracking systems and AI-powered tools to enhance supply chain transparency. These technologies verify that pellets are legally sourced and meet sustainability criteria. As corporate ESG (Environmental, Social, and Governance) initiatives become more prominent, companies in the wood pellet sector are strengthening their sustainability efforts to stay competitive.
The increasing regulatory focus on sustainability is expected to drive innovation in the industrial wood pellet market, leading to better environmental performance, improved efficiency, and enhanced stakeholder trust. Companies adopting certified sourcing, carbon offset programs, and circular economy principles will gain a competitive edge in this highly regulated market.
Market Segmentation by End-User
The Power Generation segment dominated the Industrial Wood Pellets Market in 2024. Power generation facilities worldwide are turning to wood pellets as a renewable, sustainable alternative to fossil fuels like coal. This shift is driven by regulatory pressure to reduce carbon emissions and mitigate climate change.
Governments globally are tightening environmental regulations to reduce greenhouse gas emissions, and wood pellets provide a carbon-neutral energy source. The carbon released during combustion is offset by the carbon absorbed by trees during their growth. This makes wood pellets a highly attractive option for meeting renewable energy targets.
Technological advancements in biomass power generation, such as improved combustion technologies and more efficient boilers, have made biomass power plants more competitive with traditional fossil fuel-based power generation. Additionally, co-firing wood pellets with coal in existing power plants has become a common practice, reducing emissions with minimal infrastructure changes.
Economic factors also favor the Power Generation segment, as wood pellets are becoming more cost-competitive with fossil fuels. Fluctuating fossil fuel prices and government incentives for renewable energy projects further drive the adoption of wood pellets in power generation. Public awareness and pressure to transition to cleaner energy sources have also played a role in this segment’s growth.
The scalability and versatility of wood pellets, making them suitable for both large-scale power plants and smaller distributed generation systems, also support the growth of this segment. This flexibility enhances energy security and resilience, positioning wood pellets as a key solution for clean energy generation.
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Regional Growth
Asia Pacific is expected to be the fastest-growing region in the industrial wood pellets market during the forecast period. The region is witnessing an increasing demand for renewable energy and biomass-based heating solutions, driven by countries like Japan, South Korea, and China.
Japan is making significant investments in biomass energy to reduce its reliance on coal and nuclear power. The country’s Feed-in Tariff (FiT) program has spurred the growth of biomass power plants, significantly increasing the demand for industrial wood pellets. Similarly, South Korea is expanding its biomass power generation capacity and phasing out coal-fired plants, further boosting wood pellet demand.
China, the world’s largest energy consumer, is also ramping up its adoption of renewable energy sources. The government’s push for cleaner energy and the growing number of biomass power plants are contributing to a rising need for industrial wood pellets. The growing environmental awareness and shift towards sustainable fuel sources across the region make Asia Pacific the fastest-growing market for industrial wood pellets.
Key market players in the Global Industrial Wood Pellets Market are: –
Drax Group PLC
Enviva Inc.
The Westervelt Company
Fram Renewable Fuels LLC
Rentech Inc.
German Pellets GmbH
Energex American Inc.
LIGNETICS Inc.
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“The industrial wood pellets market is primarily driven by governmental initiatives and renewable energy policies, which are catalyzing a shift towards cleaner energy sources. As countries worldwide commit to carbon emission reduction targets, the carbon-neutral attributes of wood pellets are in alignment with sustainability objectives. Moreover, heightened awareness of climate change is prompting businesses to adopt eco-friendly alternatives, thus driving up demand for wood pellets.
Technological advancements have significantly improved pellet production efficiency, rendering it more economically feasible. The adoption of wood pellets contributes to energy security by diversifying energy sources and reducing reliance on imported fossil fuels. Power plants are increasingly integrating wood pellets into their operations, either exclusively or in combination with coal, as a means to effectively mitigate carbon emissions. ” said Mr. Karan Chechi, Research Director with TechSci Research, a research-based global management consulting firm.
“Industrial Wood Pellets Market – Global Industry Size, Share, Trends, Opportunity, and Forecast Segmented by Application (Heating and Electricity Production), By End User (Power Generation, Food Processing, Waste Management & Recycling, Others), By Region & Competition 2020-2030” provides statistics & information on market size, structure, and future market growth. The report intends to provide cutting-edge market intelligence and help decision makers take sound investment decisions. Besides the report also identifies and analyzes the emerging trends along with essential drivers, challenges, and opportunities in Global Industrial Wood Pellets Market.
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