The global biomass pellets market is valued at USD 13.1 billion in 2026 and is projected to reach USD 25.1 billion by 2036, expanding at a CAGR of 6.7% during the forecast period. Growth is driven by rising demand for renewable heating and power generation across residential, commercial, and industrial sectors. Efforts to replace coal and fuel oil with biomass-based alternatives are supporting adoption. Europe remains a key consumption hub due to its established pellet-based power plants and district heating systems, while North America benefits from residential and commercial heating demand. Asia Pacific is emerging as an important growth region, supported by utility-scale biomass power generation in Japan and South Korea.
Global Segment Leaders
- Wood Pellets: Wood pellets account for 65.9% of the market, making them the leading product type. Their high energy density, consistent quality, established certification standards, and compatibility with residential heating systems and utility-scale power plants support their position.
- Residential Heating: Residential heating represents 39.0% of market demand. Adoption of pellet stoves and boilers as alternatives to conventional heating fuels, particularly in colder regions, supports this segment.
- Energy and Power Generation: Biomass pellets are increasingly used in power plants and coal co-firing applications as utilities diversify their fuel mix and pursue renewable energy objectives.
- Industrial Applications: Industrial demand is supported by the use of biomass pellets for process heat in manufacturing, food processing, chemical production, and other energy-intensive operations.
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Country-Level Performance
Brazil is projected to record the fastest growth among the profiled countries, with a CAGR of 6.9% from 2026 to 2036. Growth is supported by the availability of sugarcane bagasse and forestry residues, alongside investment in bioenergy projects. India follows at a CAGR of 6.8%, driven by agricultural residue utilization, biomass co-firing programs, and demand from thermal power plants and industrial boilers.
China is expected to expand at a CAGR of 6.7%, supported by emission-control policies and the replacement of coal in industrial heating applications. Japan is projected to grow at 6.6%, reflecting utility-scale power generation and long-term biomass fuel procurement. Canada is expected to record a CAGR of 6.5%, supported by forestry resources, export-oriented production, and domestic heating demand.
The United States is projected to grow at a CAGR of 6.1%, driven by residential pellet heating, biomass co-firing, and fuel diversification among power utilities. Germany is expected to record the lowest growth rate among the seven profiled countries, at a CAGR of 5.8%, supported by residential pellet boiler adoption and renewable heating integration.
These country-level growth drivers are based on the supplied market analysis. The provided material does not include specific external statistics or source citations for each country’s demand drivers.
Regional Context
Brazil and India are the fastest-growing markets in the country assessment, benefiting from agricultural and forestry residues, bioenergy investment, and initiatives promoting biomass utilization. China and Japan also demonstrate relatively strong growth, supported by industrial emission-reduction efforts, coal substitution, and utility-scale power generation.
Canada and the United States benefit from forestry resources, established pellet production and distribution infrastructure, residential heating demand, and biomass co-firing applications. Germany represents the slower-growing market among the profiled countries, reflecting its established residential pellet heating base, long equipment replacement cycles, and continued integration of renewable heating technologies.
The full report covers North America, Latin America, Western Europe, Eastern Europe, South Asia, East Asia, and the Middle East and Africa, with country-level assessments spanning more than 40 countries.
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Competitive Landscape
The biomass pellets market features established producers competing through feedstock availability, production capacity, product quality, logistics efficiency, and long-term supply agreements. Key companies profiled include Enviva Partners, LP; Drax Group plc; Pinnacle Renewable Energy Inc.; Rentech Inc.; Green Circle Bio Energy, LLC; Zilkha Biomass Energy; Graanul Invest; Fram Renewable Fuels; The Westervelt Company; Biopower Ltd.; Babcock & Wilcox Enterprises; and Sumitomo Corporation.
Recent industry developments highlight changes in supply strategies and investment priorities. In January 2025, Drax signed a long-term agreement with Pathway Energy in Texas to supply approximately 1 million tonnes of wood pellets annually for sustainable aviation fuel production. In February 2025, Enviva announced the closure of its Amory, Mississippi, wood pellet plant as part of post-restructuring cost-reduction measures.
In May 2026, Louisiana passed legislation supporting the wood pellet industry. During the same month, the UK Environment Agency proposed a permit amendment to enable carbon capture at Drax Power Station, with the consultation period scheduled to close on June 24, 2026.
Market participants continue to face challenges related to feedstock availability, transportation costs, price volatility, and sustainability requirements. Producers are responding through diversified sourcing strategies, production efficiency improvements, and supply-chain investments. Companies that secure reliable raw materials and maintain consistent product quality are better positioned to serve residential, industrial, and utility customers.
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