Global Biomass Pellets Market Grows Steadily at a CAGR of 6.04%

Introduction

The global biomass pellets market is experiencing notable growth, primarily driven by increasing environmental consciousness and the urgent need to lower greenhouse gas emissions. As a carbon-neutral energy source made from organic waste like wood chips, sawdust, and agricultural residues, biomass pellets present a sustainable alternative to traditional fuels. Their high energy output, low moisture content, and efficient combustion make them an attractive choice for both industrial and residential applications.

Furthermore, the rising prices and unpredictability of fossil fuels are pushing businesses to explore more reliable and cost-effective energy options, with biomass pellets emerging as a practical solution. The wide availability of raw materials—especially in agriculture-based regions—facilitates large-scale production, enhancing market potential.

The growing emphasis on circular economy principles, which promote the conversion of waste into energy, also boosts the appeal of biomass pellets. As nations prioritize energy independence and seek renewable, locally available fuel sources, the demand for biomass pellets is expected to continue its upward trajectory.

Market Dynamics

Rising demand for clean and renewable energy drives the global market

A key driver propelling the global biomass pellets market is the surging demand for clean and renewable energy sources as the world seeks to minimize its dependence on fossil fuels. With the surging concerns about climate change and carbon emissions, both governments and industries are actively transitioning to more sustainable energy alternatives. Biomass pellets, produced from organic matter, serve as a carbon-neutral energy source suitable for electricity generation, heating, and various industrial applications. Their capacity to notably reduce greenhouse gas emissions compared to fossil fuels like coal and natural gas positions them as a vital component in global decarbonization efforts.

• Data from the Global Electricity Review indicates that in 2024, renewable energy contributed 40.9% to global electricity production—the highest share since the 1940s. Solar energy was a major contributor, delivering 474 TWh to the global grid, reflecting a 29% increase over the previous year.

This momentum underscores the broader global shift toward the adoption of renewable energy solutions, including biomass.

Rising government initiatives and subsidies create tremendous opportunities

Government initiatives and subsidies are significantly accelerating the adoption of biomass pellets as a renewable energy source. Numerous countries are implementing supportive policies aimed at promoting cleaner alternatives and reducing reliance on fossil fuels. These financial incentives help offset the high initial costs of pellet production and stimulate investment in sustainable energy infrastructure.

• In July 2024, India’s Ministry of New and Renewable Energy (MNRE) enhanced financial aid under the National Bioenergy Programme to boost biomass pellet manufacturing. The revised assistance offers ₹21 lakhs per metric ton per hour (MTPH) capacity for non-torrefied pellet plants and ₹42 lakhs per MTPH for torrefied pellet facilities. This increased support particularly benefits areas rich in agricultural residues, helping to curb pollution and expand the use of renewable energy.

Such government-driven efforts are playing a pivotal role in advancing the biomass pellet industry while supporting broader environmental objectives.

Regional Analysis

Europe dominates the global biomass pellets market due to strong regulatory support, ambitious climate targets, and established pellet production infrastructure. The EU’s Renewable Energy Directive (RED II) mandates increased use of renewable energy, driving demand for biomass in heating and power generation. Countries like Germany, Sweden, and Austria have integrated biomass pellets into district heating systems. For example, Denmark’s city of Aarhus shifted its coal-fired power plant to biomass pellets, significantly reducing emissions.

Additionally, the Netherlands is co-firing biomass pellets with coal to meet EU emission reduction targets. Rising investments in sustainable heating technologies and retrofitting of boilers in residential and commercial sectors further fuel growth. The growing demand for certified sustainable pellets, such as those meeting ENplus standards, also supports market expansion. As carbon neutrality becomes a priority, Europe’s biomass pellet consumption is set to increase steadily over the coming years.

Key Highlights

• The global biomass pellets market size was valued at USD 9.60 billion in 2024 and is estimated to grow from USD 10.17 billion in 2025 to reach USD 16.27 billion by 2033, growing at a CAGR of 6.04% during the forecast period (2025–2033).
• By source, the global biomass pellets market is segmented into agricultural residues, forestry residues, wood-based pellets, energy crops, industrial waste and co-products, and others.
• By type, the market is categorized into wood pellets, agro pellets, torrefied pellets, and others. The wood pellets segment dominated the market.
• By application, the market is divided into power generation, industrial heating, residential heating, commercial heating, combined heat and power (CHP), and others.

• Europe is the highest shareholder in the global market.

Competitive Players

1. Enviva Inc.
2. Drax Group plc
3. Pinnacle Renewable Energy Inc.
4. Graanul Invest AS
5. German Pellets GmbH
6. Pacific BioEnergy Corporation
7. Clean Energy Global
8. Pacific Green Technologies

Recent Developments

• In April 2025- Talwandi Sabo Power (TSPL) in Punjab, India, launched a torrefied bio-pellet plant. The facility processes agricultural residues into high-energy-density pellets, aiming to reduce coal consumption at its 1.98 GW power plant and mitigate stubble burning in the region.

Segmentation

1. By Source:
   1. Agricultural Residues
   2. Forestry Residues
   3. Wood-based Pellets
   4. Energy Crops
   5. Industrial Waste and Co-products
   6. Others
2. By Type:
   1. Wood Pellets
   2. Agro Pellets
   3. Torrefied Pellets
   4. Others
3. By Application:
   1. Power Generation
   2. Industrial Heating
   3. Residential Heating
   4. Commercial Heating
   5. Combined Heat and Power (CHP)
   6. Others
4. By Regions
   1. North America
   2. Europe
   3. Asia-Pacific
   4. Latin America
   5. The Middle East and Africa