The Global Wood Pellet market was valued at US$11.622 billion in 2020 and is expected to grow at a CAGR of 14.49% over the forecast period to reach a total market size of US$29.964 billion in 2027. Wood pellets are renewable energy carriers. These are produced from sawdust or other ground woody materials. According to international standards, product requirements for energy density, moisture, abrasion resistance, particle size, and shape for wood pellets are defined, turning wood pellets into a commodity. As such, standardized wood pellets offer promising properties for large-scale production. With the rising production of wood pellets, there has been a significant rise in the trade flows of wood pellets across the globe. There are different applications of wood pellets that are boosting their demand worldwide. For example, wood pellets are widely used as a convenient solid biofuel in automatic stoves and boilers in the domestic heating sector. Wood pellets reduce greenhouse gas (GHG) emissions from electricity generation when co-fired in coal-based power plants. Industrial wood pellets are used as a substitute for coal in power plants while premium pellets are used in pellet boilers and pellet stoves for heating.
Wood pellets have emerged as a viable and promising renewable energy source as a replacement for coal, especially in Europe and North America. The pellet market has been witnessing tremendous growth worldwide over the past few years, with increasing demand for both industrial applications in large-scale power plants and small-scale applications in residential heating systems.
The market for wood pellets is gaining remarkable traction since they have low carbon footprints. As such, growing concerns regarding environmental sustainability across the globe is the major factor behind the growing demand for wood pellets, which is driving the global market growth. Governments from various countries, as well as global organizations, are constantly taking the necessary steps and measures to achieve their set target for reducing carbon footprints or greenhouse gas (GHG) emissions. Limited availability of non-renewable resources and their adverse impact on the environment have made it necessary for the world economy to switch to alternative power sources without harming the environment. Governments across the globe have set their targets aimed at moving towards different renewable energy sources. Austria, for example, has set a goal of achieving 100 percent renewable electricity by 2030. France has committed to cutting its greenhouse gas (GHG) emissions and going ‘carbon-neutral’ by 2050 in line with the 2015 Paris Climate Agreement. The Philippines has pledged to reduce carbon emissions from the transportation, energy, waste, forestry, and industry sectors by 70% by 2030. The escalating environmental concerns about greenhouse gas emissions (GHGs) in different countries have made biomass fuels popular. In recent years, significant progress has been made in logistics and advancements in combustion technology, which has further boosted the growth of the global wood pellet market.
The use of wood pellets as fuel has gained widespread adoption for heating homes and power boilers, especially in the European region. The easy availability of raw materials such as timber and compacted sawdust, coupled with the low production cost, are some of the factors which are also contributing to the robust rise in demand for wood pellets, thereby driving the market growth.
The global wood pellet market players are actively engaged in R&D activities so as to increase the efficiency of the wood pellet manufacturing process and gain a competitive edge over their rivals. As such, new and advanced designs for pellet mills are being developed so as to obtain a high yield with optimum fuel input. Furthermore, extensive research is being carried out to produce wood pellets with a high-calorific value from the available feedstock. All these factors are anticipated to fuel the growth of the global wood pellet market during the next five years.
Europe is the largest consumer and the largest producer of wood pellet
By geography, the global wood pellets market has been segmented into five major regional markets- North America, South America, Europe, Middle East and Africa (MEA), and Asia Pacific (APAC). In 2019, Europe accounted for the major share in the global wood pellets market According to the USDA (United States Department of Agriculture) Foreign Agricultural Service’s Global Agricultural Information Network, the EU (European Union) consumed an estimated 27.35 million metric tons of wood pellets in 2018, up from 24.15 million tonnes in the previous year. Also, wood pellet consumption in this region is estimated to increase to 30 million metric tons in 2019, with imports rising to 12.2 million metric tons from 10.355 million metric tons in 2018. According to the report, the EU has 656 pellet plants in 2017, with a combined capacity of 2.75 million metric tons. Capacity is also expected to increase to 72% in 2019, up from 70% in 2018 and 67% in 2017 By country, the United Kingdom become the top consumer of wood pellets in the EU region in 2018, with 8 million metric tons, followed by Italy (3.75 million metric tons), Denmark (3.5 million metric tons), Germany (2.19 million metric tons), and Sweden (1.785 million metric tons). Stringent regulations regarding environmental sustainability and continuous efforts to achieve their emission targets within the specified time period contribute significantly to the dominance of the European region in the global wood pellets market. Supportive government initiatives and the incentives offered by the EU member states also drive the growth of the wood pellets market in this region.
North America is also increasing its wood pellet consumption owing to the regional price competitiveness with propane and residential heating oil. Rapid replacement of traditional burners for improved feed-in is also spurring the demand for wood pellets in this region.
The Asia Pacific (APAC) wood pellet market is projected to witness a noteworthy compound annual growth rate (CAGR) during the forecast period. Favourable government policies to ramp up the use of wood pellets for power generation along with the increasing number of power plants are fuelling the demand for wood pellets in APAC countries, especially in Japan, South Korea, and China. The growing focus on the renewable energy sector in APAC countries is further propelling the regional market growth. Samsung C&T has been continuously expanding its role in importing wood pellets to South Korea, a country that lacks natural energy resources. Also, the country is so aggressively subsidizing the biomass sector so heavily that it is actually hindering the adoption of other renewable energy sources like wind and solar. Japan is currently the world's largest buyer of palm kernel shells (PKS), accounting for more than 60% of total PKS exports in 2018. PKS is a primary fuel that is used by many independent power producers in Japan who want to get the benefit of the feed-in-tariff (FIT) which is a part of the country’s policy for low-carbon generation. The FIT scheme offers a 20-year subsidy to firms that generate renewable energy. Increasing investments in biomass plants in this region will also bolster the wood pellet market growth during the next five years. For example, in February 2019, Renova Inc made a final investment decision (FID) and achieved financial close for the 74.8 MW Tokushima Tsuda biomass power generation project in Tokushima prefecture. The biomass power plant will use wood pellets and PKS as a fuel source and is planned to get started by March 2023. Shell India invested $7.7 million in a local biomass firm- Punjab Renewable Energy- backed by Neev Fund, in August 2019.
South America is also expected to witness a decent CAGR between 2020 and 2025. The region consists of over one-fourth of the world’s forests. As such, rising investments in the forestry sector in this region will continue to drive the availability of raw materials, thus positively impacting the market growth by aiding the production of wood pellets. The Middle East and Africa will also grow at a considerable CAGR on account of the rising demand for wood pellets for residential cooking purposes in South Africa. Furthermore, the continuous efforts of governments in countries to reduce their reliance on coal-fired plants will further accelerate the demand for wood pellets in this region. For example, in 2018, the South African government announced plans to build a 25 MW biomass plant with the aim of supporting the country’s Renewable Energy Independent Power Producer Program.
Prominent key market players in the global Wood Pellet market include German Pellets GmbH, Energex, Wood & Sons, Drax Group plc, AS Graanul Invest, and AVPGroup, among others. These companies hold a noteworthy share of the market on account of their good brand image and product offerings. Major players in the global Wood Pellet market have been covered along with their relative competitive positions and strategies. The report also mentions recent deals and investments by different market players over the last two years.
Key Developments in the Market
The global pandemic slowed the global wood pellets market. The rapid spread of the novel virus, lockdown, and social distancing measures led to the closure of the production facilities, slowing down the production of the pellets. Furthermore, the international travel restrictions, halt in the airlines, and closure of the ports significantly impacted the imports and exports in a country. Also, due to the global economic recession, the demand for wood pellets was also significantly affected.
|Market size value in 2020||US$11.622 billion|
|Market size value in 2027||US$29.964 billion|
|Growth Rate||CAGR of 14.49% from 2020 to 2027|
|Forecast Unit (Value)||USD Billion|
|Segments covered||Application, End-User, And Geography|
|Regions covered||North America, South America, Europe, Middle East and Africa, Asia Pacific|
|Companies covered||German Pellets GmbH, Pinnacle Renewable Energy Inc, Energex, Enviva LP, Wood & Sons, Drax Group plc, AS Graanul Invest, AVPGroup, Lignetics, Canfor, Stora Enso, Svenska Cellulosa Aktiebolaget SCA (publ), The Brookridge Group, PIVETEAUBOIS|
|Customization scope||Free report customization with purchase|
Frequently Asked Questions (FAQs)
Q1. What will be the wood pellets market size by 2027?
A1. The wood pellet market is expected to reach a total market size of US$29.964 billion in 2027.
Q2. What is the size of the global wood pellets market?
A2. Wood Pellet Market was valued at US$11.622 billion in 2020.
Q3. What are the growth prospects for the wood pellets market?
A3. The global wood pellet market is expected to grow at a CAGR of 14.49% over the forecast period.
Q4. What factors are anticipated to drive the wood pellets market growth?
A4. Growing concerns regarding environmental sustainability across the globe are the major factor behind the growing demand for wood pellets which is driving the global market growth.
Q5. Which region holds the largest market share in the wood pellets market?
A5. Europe accounted for the major share in the global wood pellets market.
1.1. Market Overview
1.2. COVID-19 Scenario
1.3. Market Definition
1.4. Market Segmentation
2. RESEARCH METHODOLOGY
2.1. Research Data
3. EXECUTIVE SUMMARY
3.1. Research Highlights
4. MARKET DYNAMICS
4.1. Market Drivers
4.2. Market Restraints
4.3. Porter’s Five Force Analysis
4.3.1. Bargaining Power of Suppliers
4.3.2. Bargaining Power of Buyers
4.3.3. Threat of New Entrants
4.3.4. Threat of Substitutes
4.3.5. Competitive Rivalry in the Industry
4.4. Industry Value Chain Analysis
5. GLOBAL WOOD PELLET MARKET BY APPLICATION
6. GLOBAL WOOD PELLET MARKET BY END-USER
6.3. Residential and Commercial
7. GLOBAL WOOD PELLET MARKET BY GEOGRAPHY
7.2. North America
7.2.1. North America Wood Pellet Market, By Application, 2020 to 2027
7.2.2. North America Wood Pellet Market, By End User, 2020 to 2027
7.2.3. By Country
220.127.116.11. United States
7.3. South America
7.3.1. South America Wood Pellet Market, By Application, 2020 to 2027
7.3.2. South America Wood Pellet Market, By End User, 2020 to 2027
7.3.3. By Country
7.4. Europe, Middle East and Africa
7.4.1. Europe, Middle East and Africa Wood Pellet Market, By Application, 2020 to 2027
7.4.2. Europe, Middle East and Africa Wood Pellet Market, By End User, 2020 to 2027
7.4.3. By Country
18.104.22.168. The United Kingdom
7.5. Asia Pacific
7.5.1. Asia Pacific Wood Pellet Market, By Application, 2020 to 2027
7.5.2. Asia Pacific Wood Pellet Market, By End User, 2020 to 2027
7.5.3. By Country
22.214.171.124. South Korea
8. COMPETITIVE ENVIRONMENT AND ANALYSIS
8.1. Major Players and Strategy Analysis
8.2. Emerging Players and Market Lucrativeness
8.3. Mergers, Acquisitions, Agreements, and Collaborations
8.4. Vendor Competitiveness Matrix
9. COMPANY PROFILES
9.1. German Pellets GmbH
9.2. Pinnacle Renewable Energy Inc
9.4. Enviva LP
9.5. Wood & Sons
9.6. Drax Group plc
9.7. AS Graanul Invest
9.11. Stora Enso
9.12. Svenska Cellulosa Aktiebolaget SCA (publ)
9.13. The Brookridge Group
German Pellets GmbH
Pinnacle Renewable Energy Inc
Wood & Sons
Drax Group plc
AS Graanul Invest
Svenska Cellulosa Aktiebolaget SCA (publ)
The Brookridge Group
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