Biomass Pellets Market

Market Size (2026)
USD 13.1 Bn
Forecast (2036)
USD 25.1 Bn
CAGR (2026 to 2036)
6.7%

How big is Biomass Pellets Market in 2026?

The biomass pellets market is estimated at USD 12.3 billion in 2025 and is expected to reach USD 13.1 billion in 2026. Demand for biomass pellets is projected to grow at a CAGR of 6.7% and reach USD 25.1 billion by 2036.

Sales of biomass pellets follow coal exits and home heating, and the biomass pellets market is estimated at USD 12.3 billion in 2025. Demand for biomass pellets is expected to reach USD 13.1 billion in 2026 and USD 25.1 billion by 2036 at a projected 6.7% CAGR. Home boilers and converted coal units both burn this dense, dry fuel, and residential users are expected to lead end use in 2026 with 39% of the split. Drax reported pellet output of 1.9 million tonnes for January to June 2026, against 2.1 million tonnes a year earlier, after closing Williams Lake in British Columbia.[1] Mill capacity is shifting toward the cheapest fibre basins, so future volume will come from fewer, larger plants.

Biomass Pellets Market Value Analysis
Biomass Pellets Market Value Analysis

Porter's model points to buyer and supplier power. Buyer power runs high, as a short list of utilities in the United Kingdom, Japan and South Korea buys most industrial pellets on multi-year contracts, and the new Drax contract for difference from April 2027 allows dispatch of up to 2.6 GW in line with system needs.[1] Flexible dispatch cuts guaranteed tonnes per supplier. Supplier power is rising as sawmill curtailments in western Canada tighten fibre. FMI analysis shows producers with owned fibre and port access holding margin through 2036, and mills buying residues on the open market facing the hardest squeeze.

Key Market Trends & Insights

  • Within product type, wood pellets are expected to account for 65.9% of 2026 sales, agricultural pellets an estimated 18.4%, industrial pellets 11.2% and others 4.5%. Germany produced over 4 million tonnes of pellets in 2025, and about 98% met the ENplus A1 grade, top agrar reported in March 2026.[2]
  • Pellet stoves and boilers give residential users an expected 39% share of 2026 end use sales, with energy generation close behind at about 31.6%. Commercial buildings are estimated at 14.2%, ahead of industrial process heat on 11.5% and agriculture on 3.7%.

Regional Highlights

  • Brazil, at 6.9%, is first in the country table and runs 0.2 points above the 6.7% rate for sales of biomass pellets, as Northeast mills plan cargoes for European buyers.
  • Co-firing rules keep India close behind at 6.8%. China grows in line with the global figure at 6.7%, and Japan follows on 6.6% as new biomass power units start. Canada, at 6.5%, adds a converted coal station in New Brunswick. Export-led growth in the United States is expected near 6.1%, and Germany follows at 5.8%.
  • Japan imported 8.64 million tons of wood pellets in 2025, 35% higher than in 2024, with Vietnam supplying 5.68 million tons, Lesprom reported in January 2026.[3]

Market Size & Forecast

Table 1: Market Size and Forecast for the Biomass Pellets Market (USD billion and percentage), 2025 to 2036

Metric Value
2025 Market Size USD 12.3 billion
Estimated Market Size in 2026 USD 13.1 billion
Projected Market Size by 2036 USD 25.1 billion
CAGR, 2026 to 2036 6.7%
Added Revenue, 2026 to 2036 USD 12.0 billion
Market Expansion Multiple 1.9x

Pellet buying follows two clocks. Power stations buy by the shipload under contracts of ten years or longer, and households buy bagged or bulk pellets each heating season. U.S. wood pellet exports exceeded 1.08 million metric tons in July 2026, 11% above July 2025, Biomass Magazine reported from USDA data.[4] The European Union expects wood pellet consumption to grow about 2% in 2026 as households buy more.[5] Boiler makers supply the hardware for both groups, and the biomass boiler market carries an expected 8.4% CAGR as schools, hospitals and district networks replace oil-fired plant. About USD 12.0 billion of new sales of biomass pellets is projected between 2026 and 2036, nearly doubling the 2026 level, FMI data indicate. Mild winters and cheap gas remain the main near-term risk to household volume.

Coal Conversion, Export Mills and Heating Policy

Coal plant conversions are the biggest source of new industrial tonnage. NB Power's board approved conversion of the Belledune station in New Brunswick to pellets made from wood and agricultural hemp in August 2026, and supply agreements already cover most of the fuel the station will need.[6] In India, all coal-fired plants are required to co-fire 5% agro-residue pellets from 2025-26, Power Line reported in November 2025.[7] Each conversion turns a coal yard into a pellet buyer for the remaining life of the unit.

Subsidy design decides the tonnage each plant burns. The United Kingdom confirmed on 1 September 2026 that small-scale biomass generators will receive no replacement support once the Renewables Obligation expires in April 2027, Biomass Magazine reported.[8] Large stations with new contracts keep burning, and small combined heat and power units without support are likely to cut runs or close.

Table 2: Supply, Trade and Policy Indicators for the Biomass Pellets Market (volumes, capacity and rules), 2025 to 2026

Indicator Data Point Relevance Source
Drax pellet production, H1 2026 1.9 million tonnes; 2.1 million tonnes in H1 2025 Largest integrated producer trimming Canadian output [1]
Japan wood pellet imports, 2025 8.64 million tons; up 35%; USD 1.68 billion Demand for industrial pellets at Asian power stations [3]
U.S. wood pellet exports, July 2026 Above 1.08 million metric tons; up 11% on July 2025 Export flow from the U.S. Southeast [4]
India co-firing policy, November 2025 5% pellets at all coal plants; 7% in the NCR Mandated demand for agro-residue pellets [7]
Belledune conversion, September 2026 Board approval in August 2026; fuel mostly contracted Coal-to-pellet switch in Canada [6]
Canindé pellet plant, Brazil, September 2026 100,000 tonnes per year, 300,000 tonnes within five years New export capacity in Brazil [9]
German pellet heating, 2025 About 35,000 stoves and boilers sold; up 14% Residential heating base in Germany [2]
Vietnam pellet capacity, end-2026 Above 300,000 tonnes per year of additions Asian supply growth for Japan and South Korea [10]

Analyst Perspective

“Long contracts with a few power stations set the floor for industrial pellet volumes, and policy now sets the height of growth above that floor in each country. India, Japan and Canada are writing pellets into coal plant rules and new capacity, and Brazil is building export mills with European buyers already signed. I expect producers with owned fibre, rail access and certified supply chains to secure the next round of ten-year contracts, and residential pellet sales to follow the installed stock of boilers, with weather setting only the swing from one winter to the next.”

- Nikhil Kaitwade, Principal Consultant, Future Market Insights.

How is the biomass pellets market segmented?

The market is segmented into product type, end use, and region. Wood pellets are expected to lead product type with 65.9% share in 2026, and residential users are likely to lead end use with 39%.

By product type: wood pellets, agricultural pellets, industrial pellets, and others.

By end use: energy, residential, commercial, industrial, and agriculture.

By region: pellet mills, ports, power stations and heating users in North America, Latin America, Western Europe, Eastern Europe, East Asia, South Asia and Pacific, and Middle East and Africa.

Why do wood pellets lead biomass pellets sales by product type?

Biomass Pellets Market Analysis by Product Type
Biomass Pellets Market Analysis by Product Type

Wood pellets are expected to lead product type sales with 65.9% share in 2026, against an estimated 18.4% for agricultural pellets and 11.2% for industrial pellets.

Table 3: Product Type Share for the Biomass Pellets Market (percentage share), 2026

Product Type Estimated Share (2026)
Wood Pellets 65.9%
Agricultural Pellets 18.4%
Industrial Pellets 11.2%
Others 4.5%
Total 100.0%

Table 4: Product Type Leadership and Market Growth for the Biomass Pellets Market (segment and CAGR percentage), 2026 to 2036

Metric Value
Global CAGR (2026 to 2036) 6.7%
Leading Segment Wood Pellets

As boiler makers certify burners for low-ash wood fuel, wood pellets are expected to lead the product type split in 2026, holding 65.9%. Sawdust and shavings from sawmills give a steady, dry feedstock, and the ENplus A1 grade lets homeowners buy on a known standard. Agricultural pellets, an estimated 18.4%, use straw, husks and bagasse, and coal plants in India now burn them under co-firing rules. Industrial pellets, near 11.2%, come from paper sludge, food-processing waste and other plant residues, and the biomass gasification market is predicted to grow at an 8.9% CAGR as syngas plants seek uniform feed. Others hold about 4.5%. Higher ash in straw and husk pellets keeps agricultural grades mostly in large boilers built to handle slag.

  • Premium bagged grades for stoves and bulk industrial grades for power stations form the two main wood pellet lines.
  • About 98% of German pellet output in 2025 met ENplus A1, the highest quality class, top agrar reported in March 2026.[2]

Why do residential users lead biomass pellets sales by end use?

Residential users are projected to lead end use sales with 39% share in 2026, with energy generation at about 31.6% and commercial buildings near 14.2%.

Table 5: End Use Share for the Biomass Pellets Market (percentage share), 2026

End Use Estimated Share (2026)
Residential 39%
Energy 31.6%
Commercial 14.2%
Industrial 11.5%
Agriculture 3.7%
Total 100.0%

Millions of European and North American homes run pellet stoves and boilers through each winter, and residential users are projected to lead, at 39% of 2026 end use sales. Bagged pellets carry a retail premium over bulk power grades, so the residential line holds a larger share of value than of tonnes. Energy generation, about 31.6%, covers dedicated biomass units and co-fired coal plants in the United Kingdom, Japan, South Korea and India. Commercial buildings, near 14.2%, include schools, hotels and public offices on small district loops. Industrial users, at 11.5%, burn pellets for process steam, and refiners testing biomass routes to hydrogen add a further outlet, with the refinery biomass hydrogen tech market projected at a 10% CAGR. Agriculture, 3.7%, heats greenhouses and grain dryers. Electric heating competes for the same homes, and the heat pump market carries an expected 10.2% CAGR. Pellet boilers keep an edge in rural houses off the gas grid with high heat loads.

  • Pellet stoves, central pellet boilers and small pellet furnaces make up most residential volume.
  • EU wood pellet consumption is expected to grow about 2% in 2026 on higher residential use, Biomass Magazine reported in July 2026.[5]

What are the drivers, restraints, and opportunities in the biomass pellets market?

Coal phase-outs and co-firing rules keep demand for biomass pellets rising. Subsidy expiry and tight fibre supply squeeze margins, and new export mills in the southern hemisphere open fresh supply for European and Asian buyers.

  • Driver: Governments that close or convert coal plants turn each unit into a long-term pellet buyer, and co-firing mandates add steady volume at plants still burning coal.
  • Restraint: Expiring support schemes and sawmill closures cut both the number of paying buyers and the supply of cheap residues.
  • Opportunity: Fast-growing plantations and dry scrubland in the southern hemisphere give new producers low-moisture fibre close to export ports.

Coal Exits Create Long-Term Pellet Buyers

Coal exit deadlines create the largest new pellet contracts. Federal rules in Canada phase out coal-fired power by 2030, and NB Power said conversion would keep Belledune running beyond that date.[6] Japan expects over 200 MW of new biomass generation to come online by the end of 2026, Argus reported in December 2025.[10] Every converted or new unit signs fuel supply for a decade or more, which gives mills the bankable offtake needed for new plants.

Subsidy Expiry and Fibre Shortage Squeeze Margins

Producers of biomass pellets face pressure from both ends. Drax closed Williams Lake and placed the Canadian business under strategic review, citing a constrained fibre market and lower margins.[1] In the United Kingdom, small biomass generators lose Renewables Obligation support from April 2027 with no replacement planned.[8] FMI analysis has mills relying on sawmill residues in western Canada facing higher input costs as sawmills cut shifts.

Southern Hemisphere Mills Open Fresh Supply

New export capacity is moving south of the equator, unlocking a fresh export lane for caatinga pellets bound for Europe. Norpellets Biomass Energy and Royal Houweling plan an R$ 80 million plant in Canindé, Ceará, starting at 100,000 tonnes per year and expanding to 300,000 tonnes within five years, Movimento Econômico reported in September 2026.[9] Low-moisture scrubland wood shortens drying time, and Pecém port gives a short sea route to Rotterdam and Antwerp. Torrefied grades may later feed gasifiers making jet fuel, and the sustainable aviation fuel market is forecast to grow at a 58% CAGR from a small 2026 base.

Which country CAGRs are profiled in the biomass pellets market?

Table 6: Country CAGR Comparison for the Biomass Pellets Market (CAGR percentage), 2026 to 2036

Biomass Pellets Market Growth by Market
Biomass Pellets Market Growth by Market
Country CAGR (2026 to 2036)
Brazil 6.9%
India 6.8%
China 6.7%
Japan 6.6%
Canada 6.5%
United States 6.1%
Germany 5.8%

How do country-level CAGRs compare in the biomass pellets market?

A new export mill in Ceará is planned to ship 100,000 tonnes in the first phase, Movimento Econômico reported in September 2026.[9] With such projects under way, Brazil leads FMI's country table at 6.9%. India follows on 6.8%, carried by co-firing at every coal plant, and China matches the 6.7% rate for the biomass pellets market. Japan and Canada come next, at 6.6% and 6.5%, as power stations in both countries lock in long fuel contracts. Export mills give the United States 6.1%, under the overall 6.7% CAGR for the biomass pellets market, and Germany, at 5.8%, shows the slowest pace in the table, with a large installed base of household boilers already in place.

  • Export mills in Ceará and the South of Brazil add certified capacity for European buyers.
  • Co-firing at coal plants carries India, with paddy straw pellets required near Delhi.
  • Agricultural residue pellets for industrial boilers and new export cargoes support China.
  • New biomass power units and long import contracts carry Japan.
  • Coal-to-pellet conversion at Belledune and export mills in British Columbia support Canada.
  • Southeast export mills shipping to Europe and Asia carry the United States.
  • A large stock of pellet boilers and stable domestic production pace Germany.

Full report country CAGRs cover: Brazil, India and China as the three fastest, led by export mills and coal plant co-firing; Japan and Canada just below on power station contracts; the United States and Germany further back on mature heating bases; other standard countries grouped by region.

Country-wise Analysis

Brazil Biomass Pellets Market Outlook (2026 to 2036)

Export plants put Brazil on an expected 6.9% CAGR for sales of biomass pellets. Norpellets Biomass Energy signed an import contract with Royal Houweling in the Netherlands in July 2026, and the Canindé plant is to send pellets by rail to Pecém for shipment, Movimento Econômico reported on 23 September 2026.[9] Eucalyptus residues in the South and scrubland wood in the Northeast give Brazilian mills dry fibre at low cost.

Key takeaway: Export mills with European offtake keep Brazil first.

India Biomass Pellets Market Outlook (2026 to 2036)

Under a Ministry of Power policy reported by Power Line on 13 November 2025, every coal-fired plant is required to co-fire 5% agro-residue pellets, with plants in the National Capital Region adding 2% torrefied charcoal and sourcing half of biomass from local paddy straw.[7] FMI expects India to grow at a 6.8% CAGR, with straw collection and pellet mills spreading across Punjab and Haryana.

Key takeaway: Co-firing rules carry India.

China Biomass Pellets Market Outlook (2026 to 2036)

China shipped about 69 thousand tons of wood pellets to Japan in 2025, up from negligible volumes in 2024, Lesprom reported in January 2026.[3] Most output in China comes from straw and crop residues burned in industrial boilers and rural heating in the north. A 6.7% rate is projected for China, level with the rate for sales of biomass pellets as a whole.

Key takeaway: Crop residue pellets and early exports set the pace in China.

Japan Biomass Pellets Market Outlook (2026 to 2036)

Japan bought 8.64 million tons of imported wood pellets in 2025 at an average USD 194 per ton, and Canada supplied 1.29 million tons of that volume.[3] New biomass power units of over 200 MW are due online by the end of 2026, Argus reported.[10] FMI data indicate a 6.6% CAGR for Japan, with feed-in tariff contracts fixing fuel volumes for years ahead.

Key takeaway: Imported pellets for new power units carry Japan.

Canada Biomass Pellets Market Outlook (2026 to 2036)

NB Power plans to keep the Belledune station running past the 2030 coal deadline on wood and hemp pellets, with most fuel already contracted from Canadian suppliers.[6] Drax closed the Williams Lake mill in British Columbia and is reviewing the remaining Canadian pellet business.[1] Domestic conversion and Pacific exports give Canada a 6.5% CAGR in FMI's outlook, a step below the rate for sales of biomass pellets.

Key takeaway: Coal conversion at home offsets mill closures in Canada.

United States Biomass Pellets Market Outlook (2026 to 2036)

Mills in the U.S. Southeast exported over 1.08 million metric tons of wood pellets in July 2026, up 15% from June, according to USDA figures reported by Biomass Magazine.[4] Export tonnage follows UK and Japanese contracts, and home heating use is flat. Flat home heating leaves the United States on a 6.1% CAGR, 0.6 points below the 6.7% CAGR for the biomass pellets market.

Key takeaway: Export contracts set the pace for the United States.

Germany Biomass Pellets Market Outlook (2026 to 2036)

About 35,000 pellet stoves and boilers were sold in Germany in 2025, 14% above 2024, and around 777,500 pellet systems are expected to be running by the end of 2026, top agrar reported in March 2026.[2] Pellets averaged EUR 343 per tonne in 2025. With home mills covering most pellets burned in Germany, sales there are likely to increase at a 5.8% CAGR for the decade to 2036, the slowest pace in the table.

Key takeaway: A large boiler base and home production pace Germany.

Who are the notable companies in the biomass pellets market?

Drax Group, Enviva, Graanul Invest, The Westervelt Company, Green Circle Bio Energy, Fram Renewable Fuels, Sumitomo Corporation and Norpellets Biomass Energy are the profiled companies.

Biomass Pellets Market Company Highlight
Biomass Pellets Market Company Highlight

FMI's company set mixes integrated producers that also burn pellets, independent mills selling under contract, a trading house and a new export entrant. Pellet Production adjusted EBITDA at Drax was GBP 64 million for the half to June 2026, down from GBP 74 million.[1] Norpellets Biomass Energy is preparing a first plant in Ceará with a Dutch partner.[9] Enviva, Graanul Invest, The Westervelt Company, Green Circle Bio Energy, Fram Renewable Fuels and Sumitomo Corporation complete the group.

  • Integrated producers and generators: Drax Group and Enviva.
  • Independent pellet mills: Graanul Invest, The Westervelt Company, Green Circle Bio Energy, Fram Renewable Fuels and Norpellets Biomass Energy.
  • Trading and supply houses: Sumitomo Corporation.

Competitive Benchmarking: Biomass Pellets Market

Table 7: Competitive Benchmarking for the Biomass Pellets Market (qualitative documentation ratings), 2026

Company Industrial Pellets Residential Pellets Contract Disclosure Recency
Drax Group High Low High High
Enviva High Low Medium Low
Graanul Invest High High Low Medium
Norpellets Biomass Energy Medium Medium Medium High

Dated 2025 and 2026 filings and releases on each theme set the scores. No rating implies a market-share position.

Key Developments in the Biomass Pellets Market

  • On 23 September 2026, Movimento Econômico reported the launch of a 100,000 tonne per year pellet project in Canindé, Brazil.[9]
  • NB Power said on 17 September 2026 that the board had approved conversion of Belledune to wood and hemp pellets.[6]
  • A UK official confirmed on 1 September 2026 that small biomass generators will get no new subsidy after April 2027, Biomass Magazine reported on 15 September.[8]
  • July 2026 U.S. wood pellet exports were above 1.08 million metric tons, Biomass Magazine reported on 10 September 2026.[4]
  • In the half-year statement of 30 July 2026, Drax gave pellet output of 1.9 million tonnes and a new CfD from April 2027.[1]
  • Pellet heating sales in Germany grew 14% in 2025 to about 35,000 units, top agrar reported on 15 March 2026.[2]
  • Japanese wood pellet imports of 8.64 million tons for 2025 were reported by Lesprom on 29 January 2026.[3]
  • On 13 November 2025, Power Line reported a new Ministry of Power policy for 5% pellet co-firing in coal plants.[7]

Key Players in the Biomass Pellets Market

Integrated Producers and Generators

  • Drax Group
  • Enviva

Independent Pellet Mills

  • Graanul Invest
  • The Westervelt Company
  • Green Circle Bio Energy
  • Fram Renewable Fuels
  • Norpellets Biomass Energy

Trading and Supply Houses

  • Sumitomo Corporation

Biomass Pellets Market - Report Scope

Table 8: Report Scope for the Biomass Pellets Market (coverage fields and definitions), 2026 to 2036

Coverage field Report scope
Market breakdown Product type; end use; region
Quantitative units USD billion
Market definition Densified solid fuel pellets made from wood residues, agricultural residues and industrial organic waste, sold in bags or bulk for home heating, commercial and industrial boilers, agriculture and power generation.
Regions covered North America; Latin America; Western Europe; Eastern Europe; East Asia; South Asia and Pacific; Middle East and Africa
Countries covered United States; Canada; Brazil; Mexico; Argentina; Chile; Germany; France; United Kingdom; Italy; Spain; Benelux; Nordics; Poland; Czech Republic; Romania; Hungary; China; Japan; South Korea; India; ASEAN; Australia and New Zealand; GCC Countries; South Africa; Türkiye; Israel
Key companies profiled Drax Group, Enviva, Graanul Invest, The Westervelt Company, Green Circle Bio Energy, Fram Renewable Fuels, Sumitomo Corporation, Norpellets Biomass Energy
Forecast period 2026 to 2036

Biomass Pellets Market - Research Methodology

Table 9: Research Methodology for the Biomass Pellets Market (research methods and approach), 2026 edition

Method Approach
Data Sources Producer results, utility releases, trade statistics, energy policy notices and trade press from May 2025 onward.
Desk Research Desk research covers pellet output, export flows, coal plant conversions, co-firing rules, heating subsidies and fibre supply.
Market Sizing and Forecasting Sizing starts from the 2026 base of USD 13.1 billion and the 6.7% CAGR for 2026 to 2036.
Data Validation Tonnage, trade and policy figures were matched to the release, notice or article that first carried them.

Biomass Pellets Market by Segments

Biomass Pellets Market segmented by Product Type:

  • Wood Pellets
  • Agricultural Pellets
  • Industrial Pellets
  • Others

Biomass Pellets Market segmented by End Use:

  • Energy
  • Residential
  • Commercial
  • Industrial
  • Agriculture

Biomass Pellets Market by Region

  • North America
    • United States
    • Canada
  • Latin America
    • Brazil
    • Mexico
    • Argentina
    • Chile
  • Western Europe
    • Germany
    • France
    • United Kingdom
    • Italy
    • Spain
    • Benelux
    • Nordics
  • Eastern Europe
    • Poland
    • Czech Republic
    • Romania
    • Hungary
  • East Asia
    • China
    • Japan
    • South Korea
  • South Asia and Pacific
    • India
    • ASEAN
    • Australia and New Zealand
  • Middle East and Africa
    • GCC Countries
    • South Africa
    • Türkiye
    • Israel

Research Sources and Bibliography

This bibliography is provided for reader reference. The full report contains the complete reference list and detailed citations.

This Report Answers

  • How big is the biomass pellets market during 2026?
  • What market size is projected by 2036?
  • Which product type holds notable share?
  • Which end use holds notable share?
  • Which countries have notable growth?
  • Which companies are notable in the market?

Frequently Asked Questions

How large is the biomass pellets market expected in 2026?

In 2026, FMI places the biomass pellets market at USD 13.1 billion, up from an estimated USD 12.3 billion in 2025. Sales of biomass pellets are projected to reach USD 25.1 billion by 2036.

What CAGR is projected for the biomass pellets market through 2036?

Demand for biomass pellets is expected to grow at a 6.7% CAGR from 2026 to 2036. Coal plant conversions, co-firing rules and home heating carry that growth.

Which product type holds a notable market share in 2026?

Wood pellets are expected to lead with 65.9% share in 2026. Agricultural pellets hold an estimated 18.4%.

Which end use holds a notable market share in 2026?

Residential users are likely to lead with 39% share. Energy generation follows at about 31.6%.

Which country has a notable expansion outlook through 2036?

Brazil leads FMI's country table with a 6.9% CAGR. India follows at 6.8%.

Who are the key companies in the biomass pellets market?

Drax Group and Enviva lead integrated pellet supply, and Graanul Invest, The Westervelt Company, Green Circle Bio Energy, Fram Renewable Fuels and Norpellets Biomass Energy run independent mills. Sumitomo Corporation completes the profiled companies.

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Biomass Pellets Market