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Biomass Pellets Market was valued at USD 24.98 billion in 2024. Global Biomass Pellets Market size is estimated to grow at a CAGR of 11% over the forecast period.

Market Estimation & Definition

Biomass pellets are compacted renewable energy sources produced from organic feedstocks such as wood sawdust, agricultural residues, energy crops, and industrial waste. Designed for high energy efficiency and low emissions, these pellets are used in heating, electricity generation, and even as absorbents in animal bedding.

According to SMR’s latest analysis, the market for biomass pellets stood at USD 24.98 billion in 2024 and is projected to reach USD 57.58 billion by 2032. This growth reflects increasing adoption in both industrial-scale power generation and small-scale heating, driven by clean energy policies and rising energy security needs. The research base year is 2024, with historical analysis from 2019 and projections through 2032.

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Market Growth Drivers & Opportunities

Decarbonisation Mandates and Net-Zero Goals
One of the strongest forces propelling biomass pellets forward is the global shift toward carbon neutrality. Countries across Europe, North America, and Asia-Pacific have introduced regulatory frameworks to reduce greenhouse gas emissions. Biomass pellets offer an effective way to decarbonize heat and power sectors, particularly through co-firing in existing coal plants.

Cost-Effective Transition Fuel
Biomass pellets can be used in existing infrastructure with minimal retrofitting costs. For example, coal-fired power stations can co-fire or convert entirely to biomass with moderate capital expenditure. This allows governments and industries to lower emissions quickly and cost-effectively, while maintaining grid stability.

Abundant and Diverse Feedstock Availability
Wood processing industries, agriculture, and urban organic waste streams generate millions of tons of residue annually. This increasing availability of raw materials—such as sawdust, rice husks, crop stalks, and energy crops—ensures a sustainable supply of biomass for pellet production, particularly in regions like Asia and Latin America.

Residential and Commercial Heating Demand
With heating making up a significant portion of household energy use, modern pellet stoves and boilers have gained popularity in both developed and developing regions. These systems offer cleaner, more efficient alternatives to traditional wood-burning or fossil-fuel heaters. Government subsidies and consumer awareness are accelerating adoption, especially in colder climates.

Economic and Environmental Co-Benefits
Pelletisation of agricultural residues not only provides renewable energy but also addresses environmental issues like stubble burning, which causes air pollution in several parts of Asia. Additionally, pellet-based heating and power generation reduce reliance on imported fossil fuels, enhancing energy sovereignty.

Innovation and Integration Opportunities
Emerging technologies such as torrefied pellets, pellet gasification, and biomass-to-hydrogen processes are opening new pathways for industrial applications. There is also a growing opportunity to integrate pellet production with carbon-credit schemes and biochar production for soil regeneration.

Segmentation Analysis

By Source:
The market is segmented based on the type of biomass used for pellet production:

• Wood Sawdust leads the market, thanks to its high calorific value and year-round availability, especially in North America and Europe.

• Industrial Waste such as coffee husks and paper-mill residues are gaining traction in regions with dense industrial clusters.

• Energy Crops like miscanthus and switchgrass are becoming reliable sources due to their rapid growth cycles and low input requirements.

• Agricultural Residues such as rice husks, wheat straw, and corn stalks offer immense untapped potential in South and Southeast Asia.

• Other Biomass includes non-traditional sources and blends tailored to local fuel needs.

By Application:
Biomass pellets serve a diverse range of uses:

• Building Heating is the dominant application, especially in Europe and North America, where pellet stoves and boilers are supported by incentive programs.

• Power Generation is a rapidly growing segment as utilities look to reduce carbon footprints via co-firing or full conversion to biomass.

• Animal Bedding is an increasingly important use case, particularly in equestrian facilities and poultry farms, due to pellets' high absorbency and biodegradability.

• Others include niche applications like barbecue briquettes, carbonized pellets, and bioplastic feedstock.

For additional insights into this study, please refer to: https://www.stellarmr.com/report/Biomass-Pellets-Market/706 

Country-Level Insights

United States
The U.S. remains one of the largest producers and exporters of biomass pellets. The domestic market is projected to reach USD 1.5 billion in 2024, driven by strong policy support, a developed logistics network, and growing residential demand for renewable heating. Export volumes continue to grow as American pellets feed power stations in the UK, Europe, and Asia.

Germany
Germany stands at the forefront of biomass pellet consumption in Europe. Stringent building energy codes, fossil fuel phase-out plans, and generous government subsidies for pellet heating systems have cemented Germany’s leadership. Local production is robust, supported by the country’s significant sawmill and forestry sector.

Other Key Markets

• Japan and South Korea are key importers, with long-term supply contracts for biomass pellets used in co-firing with coal to meet climate commitments.

• India is promoting agricultural residue pelletisation under clean air and energy transition initiatives, notably to replace coal in industrial boilers.

• Brazil is exploring biomass pellets for industrial heat applications, especially using eucalyptus and sugarcane bagasse.

Competitor Analysis

The biomass pellet market is moderately consolidated, with a mix of multinational energy giants, regional leaders, and niche technology providers. The leading players differentiate themselves through access to raw materials, sustainability certifications, long-term supply contracts, and investment in logistics and port infrastructure.

Major producers based in North America and Europe are expanding capacity in response to growing demand from Asia-Pacific and Europe. Vertically integrated companies are securing their own feedstock sources, investing in pelletisation plants, and locking in buyers through long-term offtake agreements with utilities and industrial end-users.

Meanwhile, emerging companies in India and Southeast Asia are focusing on value-added segments like agro-waste pelletisation and supplying small-scale industries. Equipment providers that cater to micro- and SME-scale producers are also gaining attention, enabling distributed pellet production close to raw material sources.

Competitive dynamics are also shaped by the rising importance of sustainability and traceability. Certifications such as ENplus, FSC, and the Sustainable Biomass Program (SBP) are becoming prerequisites for accessing premium markets, especially in Europe and Japan.

Industry competition is expected to intensify over the forecast period, particularly as large power producers issue bulk tenders and consolidate supplier bases. Companies that ensure consistent quality, pricing stability, and sustainability compliance will have a strategic advantage.

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Conclusion

Biomass pellets are emerging as a critical transitional fuel in the global push toward a cleaner, low-carbon energy future. With robust policy support, growing environmental awareness, and cost-effective deployment opportunities, the industry is poised for sustained double-digit growth.

The combination of mature applications like power generation and heating, alongside new opportunities in carbon capture, circular economy, and clean industrial heat, places biomass pellets at the forefront of the renewable energy mix. As countries seek practical solutions for decarbonisation, producers that secure sustainable raw material supply, invest in processing efficiency, and build trusted partnerships with end-users will lead the next wave of market expansion.

About Stellar Market Research:

Stellar Market Research is a global leader in market research and consulting services, specializing in a wide range of industries, including healthcare, technology, automobiles, electronics, and more. With a team of experts, Stellar Market Research provides data-driven market insights, strategic analysis, and competition evaluation to help businesses make informed decisions and achieve success in their respective industries.

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