Industry Outlook
In terms of market volume, the global market for wood pellets stood at 34,033.8 Kilo Tons in 2020 and expected to reach 59,415.4 Kilo Tons by 2026, expanding at a CAGR of 6.6% during the forecast period from 2021 to 2026. Europe dominated the wood pellets market in 2020 and expected to retain market dominance throughout the forecast period. However, Asia Pacific is identified as the fastest growing market during the forecast period.
Wood pellets are a type of fuel that are made from sawdust and industrial wastes involving manufacturing of wood products such as furniture, construction and milling lumber. Wood pellets are considered as a viable alternative to fossil fuels such as natural gas or coal. Virgin trees are most suitable for producing wood pellets. Wood pellets are cylindrical in shape and have a diameter of 6-12 mm and a length of 1-3 cm. Wood pellets are dry, therefore can be easily stored. Further, the hydraulic rate of wood pellets is stable when compared with other biomass fuels. Moreover, wood pellets have a high energy density, making allowing them to be transported for long distances. Wood pellets also emit lower amounts of carbon dioxide (CO2), thus making them a suitable alternative to fossil fuels.
Rising demand for renewable energy is a key factor driving the growth of the wood pellets market at present. Wood pellets are considered to be a source of renewable energy and are easily available, thus making it an important source of energy. Further, wood pellets are carbon dioxide (CO2) neutral i.e. the carbon that is released during the burning process is a part of natural circulation of carbon. Wood pellets do not require a high initial investment, thereby making them a suitable alternative to conventional fossil fuels. Europe is by far the largest consumer of wood pellets and it accounts for almost half of the regions renewable energy consumption. In countries such as Finland and Poland, wood accounts for close to 70% of the renewable energy demand. In addition, growing concerns over industrial pollution has led the governing bodies of several countries to shift to renewable sources of energy such as wood fuel. Industries contribute significantly to the economic development and welfare of a country, however, the pollution emitted from industrial activities poses significant threat to the environment. In U.S., more than 5 billion metric tons of carbon dioxide (CO2) were generated from energy consumption in 2020. Further in 2019, more than 35 billion metric tons of CO2 emissions were generated from fossil fuels and cement across the globe. These factors have paved the way for the heightened demand for wood pellets. However, rising construction activities have paved the way for deforestation, which is a key factor restraining the growth of the market.
Heat Generation, Based on End-use is Likely to Continue Dominating the Wood Pellets Market in the Coming Years
Based on end-use, the heat generation segment accounted for the dominant share in 2020 and is likely to display similar trends in the coming years as well. This segment witnessed a steady growth in the past decade owing to the rising cost of alternative heating fuels. Wood pellets combined with the right type of heating devices such as pellet boilers and pellet stove inserts can transform more than 90% of the energy contained in the fuel into usable heat. Further, usage of wood pellets for heating purposes also has very less effect on the environment since wood absorbs the same amount of carbon dioxide as emitted during the combustion process.
However, the power generation segment is identified as the fastest growing segment during the forecast period from 2021 to 2026. Growing incidences of industrial pollution have created concerns over human health. Further, fossil fuels emit several air pollutants that have adverse effects on the environment as well. Sulfur dioxide (SO2) is emitted through the burning of coal and can result in acid rain and the formation of harmful particulate matters. Further, SO2 emissions also result in respiratory ailments such as nasal congestion, asthma, pulmonary inflammation and various others. Nitrogen oxide (NOX), a byproduct of fossil fuel combustion can result in acid rain or smog, which can make people more vulnerable to bronchitis, and asthma among others. These factors have created concerns over environmental pollution and on human health as well, which in turn has urged the commercial industries to shift to cleaner sources of energy such as wood pellets, which poses minimal threat to the environment.
Europe Likely to Dominate the Wood Pellets Market During the Forecast Period
The global market for wood pellets was dominated by Europe in 2020 and the region is expected to retain its dominance throughout the forecast period. The region is massive consumer for pellets. A major portion of the wood pellets that are produced in the region are used for heat generation. However, the growth of the wood pellet market in region is going through a slowdown on account of mild winters and low price of fossil fuels, growing competition from other technologies and declining sales of pellet heating appliances. Due to these factors, several producers of wood pellets operating in the region have overproduced in 2019, resulting in overstock. However, the power generation sector is witnessing a robust growth in United Kingdom and Belgium. The wood pellets industry in Belgium is primarily driven by the presence of large scale power plants, and the EU 20 percent renewable fuels target for energy use by 2020. Further, the wood pellet production in Germany has witnessed a promising growth over the past few years, making it the biggest producer of wood pellets in the European Union. Rising local consumption of wood pellets coupled with the increasing demand for pellet boilers and pellet stoves are some of the key factors driving the growth of the wood pellets market in Germany. Moreover, the optimistic growth of wood pellets in the country is also attributed to the ENplus certification of wood pellets. The country’s target is to increase the share of renewable energy consumption to approximately 18% by the end of 2020.
However, the demand for wood pellets in Asia Pacific is expected to witness a significant growth during the forecast period from 2021 to 2026. Demand for renewable energy in the region is on the rise as the governments are seeking alternatives to fossil fuels in order to reduce carbon footprint and to ensure long term energy security. China is expected to be one of the key markets for wood pellets in the coming years. Rapidly growing population, insatiable demand for energy, rising pollution levels are some of the key factors that are expected to augment demand for wood pellets in China in the coming years. Further, Malaysia is aiming to increase its share of renewable energy to 17% by 2030, while Thailand is aiming to increase its share to 25% by 2030. These factors are expected to augment market demand for wood pellets in Asia Pacific in the coming years.
Collaborations & Joint Ventures are Some of the Key Strategies of the Companies Operating in the Wood Pellets Market
Key players operating in the global wood pellets market include Agon Biomass, AS Graanul Invest, Drax Biomass Inc., Enviva Partners LP, German Pellets GmbH, Pinnacle Renewable Energy Inc., Premium Pellet Ltd., Rentech Inc., Viridis Energy Inc., and Zilkha Biomass Energy LLC among others.
In October 2021, Enviva Partners LP formed an off-take agreement to supply 180,000 metric tons of wood pellets per year to Marubeni Corporation for a period of 15 years starting from 2023. Further, in September 2021, Pinnacle Renewable Holdings Inc. acquired 70% stake in an industrial wood pellet production facility that is located in Aliceville, Alabama from the Westervelt Company. The production plant at Aliceville produces approximately 270,000 metric tons of wood pellets annually for industrial use. This acquisition is expected to increase the production capacity of Pinnacle Renewable Holdings Inc., for wood pellets, and also expected to enhance the company’s position in the South East U.S., which is one of the major fiber baskets in North America.
This research report describes leading continents and their major countries, along with profiles of key players operating in overall market and their planned developments. Our report further defines the overall market dynamics such as drivers, challenges, and opportunities prevalent in the market to understand global wood pellet market more explicitly. Our in-depth quantitative and quantitative analysis of each segment up to country level highlights revenue pockets and investment opportunities in the market.
Historical & Forecast Period
This study report represents analysis of each segment from 2022 to 2032 considering 2023 as the base year. Compounded Annual Growth Rate (CAGR) for each of the respective segments estimated for the forecast period of 2024 to 2032.
The current report comprises of quantitative market estimations for each micro market for every geographical region and qualitative market analysis such as micro and macro environment analysis, market trends, competitive intelligence, segment analysis, porters five force model, top winning strategies, top investment markets, emerging trends and technological analysis, case studies, strategic conclusions and recommendations and other key market insights.
Research Methodology
The complete research study was conducted in three phases, namely: secondary research, primary research, and expert panel review. key data point that enables the estimation of Wood Pellets market are as follows:
Market forecast was performed through proprietary software that analyzes various qualitative and quantitative factors. Growth rate and CAGR were estimated through intensive secondary and primary research. Data triangulation across various data points provides accuracy across various analyzed market segments in the report. Application of both top down and bottom-up approach for validation of market estimation assures logical, methodical and mathematical consistency of the quantitative data.
| ATTRIBUTE | DETAILS |
|---|---|
| Research Period | 2022-2032 |
| Base Year | 2023 |
| Forecast Period | 2024-2032 |
| Historical Year | 2022 |
| Unit | USD Million |
| Segmentation | |
Application
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End-use
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Region Segment (2022-2032; US$ Million)
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Key questions answered in this report
