The Future Belongs to Wood Pellets | Global Industry Analysis 2025
Global Wood Pellets Market: Snapshot
Wood pellets have emerged as a viable and promising renewable energy source replacing coal in various advanced regions such as North America and Europe. The market for these biomass gained traction since they are considered to have low carbon footprints. The use of wood pellets as fuels has gained adoption for heating homes and power boilers, especially in various countries of Europe. The easy availability of raw materials such as timber and compacted sawdust and the low cost of production are key factors offering robust impetus to the wood pellets market. The mounting environmental concern about greenhouse gas emissions (GHGs) in countries such as the U.S., Canada, and Russia has made biomass fuels popular. In recent years, considerable progress made in logistics and advancement in combustion technology have boosted the wood pellets market.
The market for wood pellets is projected to expand at a CAGR of 14.10% from 2015 to 2023 and the opportunities in the market is expected to swell to US$20 bn in 2023. The rising financial incentives by various federal agencies in North America, numerous favorable government policies, and the low cost of raw materials for making wood pellets are the primary factors driving the wood pellets market.
Europe and North America Provides Lucrative Growth Avenues
Based on geography, the market is segmented into Europe, Asia Pacific, North America, Centraland South America, and the Middle East and Africa. Of these, Europe is a major market for wood pellets and led the market in 2015. The substantial demand for wood pellets from the U.K. has fuelled this regional market. The regional market is propelled by numerous government initiatives such as significant fiscal subsidies to boost the generation of renewable sources of energy. This has incentivized the use of wood pellets to produce electrical energy in this region.
North America is another prominent region for wood pellets. Several stiff regulations related to emission norms have fueled this regional market. The recent formulation of federal policies that seek to establish the carbon-neutrality of biomass is another crucial factor boosting the wood pellets market in countries such as the U.S. Furthermore, the continued expansion of wood pellet plants by several manufacturers in various cities of the U.S. is expected to boost the production of wood pellets, thereby catalyzing the regional market.
The primary applications of the wood pellets are for heating and in power plants. The heating application segment held a major market share in 2016 and is expected to lead the overall market by revenue through the forecast period. The wide application of wood pellets for heating industrial and residential establishments is expected to boost the growth of segment in the coming years. The growing popularity of pellet fuel in advanced nations such as Canada is expected to bolster the demand for wood pellets in various regions. Recent advancements in wood pellet manufacturing processes have improved the commercial production of biomass, thereby accentuating the demand for wood pellets in heating applications. Furthermore, the setting of these manufacturing units are less capital-intensive than those for wind and solar energy, which has boosted the application of wood pellets for heating applications.
Some of the major players operating in the wood pellets market are Andritz AG, Energex, Rentech, Inc., The Westervelt Company, Enito SINGPELLET Pte Ltd., F.E. Wood & Sons, Rentech, Inc., and Allance Pellet Machinery.