According to Fortune Business Insights, the global Biomass Fuel (Wood Pellets and Palm Kernel Shell (PKS)) Market was valued at USD 20.42 billion in 2025 and is projected to grow from USD 22.43 billion in 2026 to USD 42.80 billion by 2034, registering a CAGR of 8.41% during 2026–2034. Europe dominated the market with a 60.41% share in 2025. The market is benefiting from the global shift toward renewable energy, increasing decarbonization efforts, growing industrial demand for cleaner fuels, and the utilization of agricultural and forestry residues for energy generation.
Biomass Fuel Market Overview
Biomass fuel has emerged as an important component of the global renewable energy mix. Wood pellets and palm kernel shells (PKS) are increasingly used as alternatives to conventional fossil fuels in power generation, industrial heating, residential heating, and other applications.
Biomass fuels can help energy-intensive industries reduce their dependence on coal, oil, and natural gas. Their growing adoption is also supported by renewable energy targets, emissions-reduction policies, and government incentives across major economies.
The market includes several feedstocks, combustion technologies, and end-use applications. Among these, wood pellets currently represent the dominant feedstock, while direct combustion remains the leading combustion method.
Biomass Fuel Market Size and Forecast
The global Biomass Fuel (Wood Pellets and Palm Kernel Shell (PKS)) Market is experiencing strong expansion as governments and businesses seek scalable renewable energy solutions.
2025 Market Size: USD 20.42 billion
2026 Market Size: USD 22.43 billion
2034 Forecast Market Size: USD 42.80 billion
CAGR: 8.41% from 2026 to 2034
Forecast Period: 2026–2034
The market's growth reflects increasing demand for renewable fuels across industrial, transportation, commercial, and residential sectors.
Biomass fuel is produced from organic materials such as wood residues, agricultural waste, forestry byproducts, and other renewable biological resources. Wood pellets are manufactured by compressing processed wood materials into dense, standardized fuel products.
Palm kernel shells are a byproduct of palm oil production and can be used as a relatively low-cost biomass fuel. Their availability in major palm oil-producing countries makes PKS an important feedstock for domestic and international biomass markets.
Biomass can be converted into useful energy through technologies including direct combustion, gasification, and pyrolysis.
Key Drivers of the Biomass Fuel Market
Rising Demand for Renewable Energy
The transition away from fossil fuels is one of the most important factors supporting biomass fuel adoption. Governments, utilities, and industrial companies are increasingly investing in renewable energy technologies to meet emissions-reduction and net-zero objectives.
Biomass fuels can provide dispatchable energy and can complement intermittent renewable sources such as solar and wind.
Growing Industrial Demand
Industries such as cement, steel, paper, chemicals, and food processing require significant amounts of heat and electricity. Biomass fuels offer these industries an opportunity to substitute fossil fuels with renewable alternatives.
The industrial application segment is expected to account for 42.87% of the market in 2026, making it the leading application segment.
Increasing Waste-to-Energy Adoption
Waste-to-energy initiatives are creating additional opportunities for biomass utilization. Agricultural residues, municipal waste, forestry byproducts, and other organic materials can be converted into useful energy.
The integration of waste management with renewable energy generation is particularly attractive in regions seeking to reduce landfill volumes while increasing domestic energy production.
Supportive Government Policies
Renewable energy mandates, subsidies, tax incentives, emissions regulations, and carbon-reduction programs are encouraging biomass adoption.
Europe, Japan, South Korea, the U.S., and other markets have introduced policies that support the use of biomass and renewable fuels in electricity generation, heating, and industrial applications.
Challenges Facing the Biomass Fuel Market
High Upfront and Operating Costs
Biomass projects often require significant investment in boilers, gasifiers, feedstock preparation systems, storage facilities, and transportation infrastructure.
The cost of collecting, drying, storing, and transporting biomass can also be significant because feedstocks may have relatively low energy density and require substantial handling.
Feedstock Supply Constraints
Biomass availability can vary by season and geography. Agricultural residues and forestry resources are not uniformly distributed, creating challenges for consistent procurement.
In developing markets, insufficient collection, storage, and transportation infrastructure can further increase supply-chain costs.
Latest Trends in the Biomass Fuel Market
Shift Toward Advanced Biomass Fuels
One of the most important trends is the development and adoption of advanced biomass fuels. Torrefied pellets, for example, can provide higher energy density, improved water resistance, and easier handling compared with conventional biomass materials.
These characteristics can help reduce logistics costs and improve supply-chain efficiency. Advanced biomass fuels can also be co-fired with coal in some existing power-generation facilities, potentially reducing the need for extensive infrastructure modifications.
Growing Interest in Biomass Carbon Capture
Bioenergy with carbon capture and storage, commonly known as BECCS, is receiving increasing attention because it combines renewable energy generation with carbon capture.
When sustainably sourced biomass is used and emissions are captured and stored, the technology has the potential to contribute to negative-emissions strategies.
Increasing Use of Palm Kernel Shells
PKS is gaining attention as an alternative biomass feedstock due to its availability as a byproduct of palm oil processing. Countries such as Indonesia, Malaysia, and Thailand have significant palm oil industries, providing access to PKS for domestic and export markets.
Power producers are increasingly exploring biomass co-firing as a pathway to reduce coal consumption. The ability to integrate biomass with existing power infrastructure can potentially lower the capital requirements associated with complete plant conversion.
Biomass Fuel Market Segmentation
The market is segmented into:
Wood Pellets
Palm Kernel Shell (PKS)
Others
Wood pellets dominate the market. The segment is projected to account for 86.37% of the market share in 2026.
Their broad use in residential heating, industrial heating, and electricity generation supports their leading position. Europe, Japan, and South Korea are among the markets promoting biomass use in energy production.
The palm kernel shell segment is projected to grow at a CAGR of 8.59% during the forecast period. PKS is a byproduct of palm oil production and is widely available in Malaysia, Indonesia, Thailand, and other palm oil-producing nations.
The market is categorized into:
Direct Combustion
Gasification
Pyrolysis
Others
Direct combustion is projected to remain the leading segment, accounting for 56.29% of the global market share in 2026.
Its established technology, relatively straightforward implementation, and suitability for industrial heating and electricity generation support its dominance.
The biomass pyrolysis segment is expected to record a CAGR of 9.33% during the forecast period. Pyrolysis produces bio-oil, biochar, and syngas, creating opportunities across energy and industrial applications.
The market is divided into:
Industrial
Transportation
Commercial
Residential
Others
The industrial segment is expected to lead with a 42.87% market share in 2026. Industrial users are increasingly adopting biomass fuels to reduce emissions and replace conventional fossil fuels.
The residential segment is another important application, accounting for 28.27% of the market. Biomass heating systems can provide households with an alternative to conventional fossil-fuel-based heating.
Regional Analysis of the Biomass Fuel Market
Europe is the largest regional market for biomass fuel. The region generated USD 12.48 billion in revenue in 2025 and is projected to reach USD 13.87 billion in 2026.
Europe accounted for 60.41% of the market in 2024 and remains the dominant regional market. The region's strong position is supported by ambitious climate targets, renewable energy policies, coal phase-out initiatives, and the use of biomass in district heating and combined heat and power systems.
The U.K., Germany, and France markets are projected to reach approximately USD 3.46 billion, USD 1.97 billion, and USD 1.38 billion, respectively, in 2026.
Asia Pacific accounted for 19.95% of global market revenue in 2025 and is projected to reach USD 4.39 billion in 2026.
Countries including India, China, Indonesia, Malaysia, Thailand, and Vietnam possess substantial quantities of agricultural residues, wood waste, and palm oil byproducts.
These resources are supporting biomass adoption in industrial and energy applications.
The markets for China, Japan, and South Korea are projected to reach approximately USD 1.40 billion, USD 0.65 billion, and USD 1.17 billion, respectively, in 2026.
North America represented 14.10% of global revenue in 2025 and is projected to reach USD 3.13 billion in 2026.
The U.S. is an important contributor to regional demand, with its biomass fuel market valued at approximately USD 2.78 billion in 2025.
The region is supported by renewable energy initiatives, carbon-reduction programs, and investments in biomass-based energy and clean hydrogen production.
Key Companies in the Biomass Fuel Market
Major companies profiled in the Biomass Fuel (Wood Pellets and Palm Kernel Shell (PKS)) Market include:
Iwatani Corporation
Enviva Inc.
Drax Global
CM Biomass
Hanwha Co., Ltd.
BIO ENECO SDN. BHD.
Valfei Products Inc.
Mallard Creek Inc.
Graanul Invest
Segezha Group
Energex
Companies are focusing on biomass supply, international sourcing, certified feedstocks, technology development, partnerships, and expansion of renewable energy capabilities.
Recent Industry Developments
In July 2025, Danish biomass company CM Biomass announced strong financial results for the 2024/25 financial year, continuing stable trading volumes despite downward pressure on biomass prices and global economic challenges.
In April 2025, Utility Global Corporation and the Construction Division of Hanwha Corporation announced a partnership focused on producing clean and economical hydrogen from biogas obtained from wastewater treatment plants.
In November 2024, JFE Shoji Group and BIO ENECO signed a Memorandum of Understanding for an annual supply of 150,000 tonnes of Green Gold Label-certified palm kernel shells for 15 years. The agreement strengthens biomass fuel supply for Japan.
In August 2024, Hanwha Energy announced plans to convert its combined heat and power plant in Gunsan, South Korea, from coal to biomass. Under the plan, biomass would power 55% of the plant's 222-megawatt capacity.
Future Outlook for the Biomass Fuel Market
The outlook for biomass fuel remains positive as industries and governments pursue cleaner energy alternatives. Market expansion is likely to be supported by industrial decarbonization, renewable energy targets, waste-to-energy initiatives, and technological improvements in biomass processing.
Advanced fuels, including torrefied pellets, could become increasingly important because they offer improved handling characteristics and energy density. At the same time, supply-chain efficiency, sustainable feedstock sourcing, and cost optimization will remain critical for long-term market development.
The global market is expected to reach USD 42.80 billion by 2034, representing substantial growth from its 2025 valuation of USD 20.42 billion.
The Biomass Fuel (Wood Pellets and Palm Kernel Shell (PKS)) Market is positioned for strong growth as the global energy sector moves toward renewable and lower-carbon alternatives. Wood pellets currently dominate the feedstock landscape, while direct combustion leads among combustion technologies and industrial applications represent the largest end-use segment.
Although high investment costs, feedstock availability, logistics, and supply-chain consistency remain challenges, advances in biomass processing and increasing government support are creating new opportunities. The growing focus on advanced biomass fuels, waste-to-energy projects, biomass co-firing, and carbon capture could further strengthen the market's long-term potential.
1. What is the Biomass Fuel (Wood Pellets and Palm Kernel Shell (PKS)) Market size in 2026?
The global Biomass Fuel (Wood Pellets and Palm Kernel Shell (PKS)) Market is projected to reach USD 22.43 billion in 2026.
2. What will be the Biomass Fuel Market size by 2034?
The global Biomass Fuel (Wood Pellets and Palm Kernel Shell (PKS)) Market is projected to reach USD 42.80 billion by 2034, growing at a CAGR of 8.41% from 2026 to 2034.
3. Which feedstock segment dominates the Biomass Fuel Market?
The wood pellets segment is expected to dominate the market, accounting for 86.37% of the global market share in 2026. Its extensive use in power generation, industrial heating, and residential heating supports its leading position.
4. Which application segment leads the Biomass Fuel Market?
The industrial segment is expected to remain the leading application segment, accounting for 42.87% of the market share in 2026. Growing industrial efforts to reduce fossil-fuel consumption and carbon emissions are supporting demand.
5. What are the key trends shaping the Biomass Fuel Market?
Key trends include the shift toward advanced biomass fuels, increasing waste-to-energy initiatives, growing biomass co-firing, greater use of palm kernel shells, and rising interest in biomass carbon capture and storage. Advanced biomass fuels such as torrefied pellets are gaining attention because of their higher energy density, improved handling, and suitability for industrial-scale applications.
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