Global pellet production of 53.5 million tonnes is spread across thousands of mills, most of them small, most of them supplying heating fuel within a regional radius. The industrial segment — the part that carries the sustainability file and the part this report prices at USD 196.62 per tonne — is concentrated in a way the aggregate does not show.
The United States exported 10.09 million tonnes of wood pellets in 2025, roughly one tonne in five of global output and the single largest traded flow in the market. That trade is organised around a small number of port-linked plants in the Southeast, and in 2025 that geography was in motion:
Drax Group is the most complete integration in the industry and its 2025 accounts show what vertical integration into fuel actually buys: total revenue of GBP 5,391 million against GBP 6,163 million in 2024, adjusted EBITDA of GBP 947 million against GBP 1,064 million, total operating profit of GBP 241 million against GBP 850 million, and net debt of GBP 784 million. It generates about 5 per cent of the United Kingdom's electricity demand, employs 2,974 people and is a producer, a user, a buyer and a seller of biomass simultaneously. The collapse in operating profit against a modest revenue decline is the clearest available evidence that in this market the fuel supply chain absorbs margin before the generation business reports it.
European production excluding Belarus and Russia reached 24.1 million tonnes, a regional record, up 10 per cent after two years of contraction. The supply base is dominated by Baltic and Iberian producers, with Graanul Invest the largest single European pellet producer, and it is structurally exposed to sawmill residue availability. When European construction activity falls, sawmill residue tightens and pellet input cost rises — the mechanism that kept European prices elevated through the 2024–25 heating season even as demand softened.
That is the defining structural weakness of the European tier: its raw material is a by-product of a different industry's output, and it has no control over that industry's cycle.
South Korea's 2025 import mix is the map of Asian supply. Vietnam held 37 per cent of the volume at 1.44 million tonnes but fell 31 per cent year on year. Indonesia rose 76 per cent to 0.90 million tonnes and 23 per cent share. Russia shipped 0.64 million tonnes, up 8 per cent, for 16 per cent. Canada supplied 0.46 million tonnes, up 32 per cent, for 12 per cent. Malaysia fell 10 per cent to 0.24 million tonnes, and US volumes fell 30 per cent to 50,000 tonnes.
The lesson in that table is substitution, not growth. Vietnam's 31 per cent decline was absorbed by Indonesia's 76 per cent increase and Canada's 32 per cent increase — the total moved by 3 per cent while a third of the supply chain was replaced. For a buyer, this is resilience. For a producer, it is the definition of a market where you hold no position.
No producer holds a share of this market that gives it pricing power over the fuel. The concentration is one layer downstream, in the certification bodies, the port terminals and the traders who assemble a bankable file. Three structural facts support that conclusion:
The chain has five links and the margin does not sit where the risk does.
Sawmill residue, forest thinnings, harvest residues and — increasingly — the residue of a pulp and paper industry that is contracting. The supplier is paid a stumpage or gate price that is small relative to the finished tonne and highly variable. This link bears the most weather risk and the least bargaining power. Georgia's loss of three paper mills in ninety days is the clearest recent demonstration that a pellet plant's input can disappear for reasons entirely outside the pellet industry.
Drying, hammer-milling, conditioning and pressing. This is where the 1.89 multiple this report opens with is created — a tonne of chips at EUR 21.85 per megawatt-hour becomes a tonne of pellets at EUR 41.30. Capital intensity is high, energy consumption is substantial, and the plant is a price-taker at both ends. The relevant number for a new entrant is not the capital cost but the utilisation rate required to service it, and that rate is a function of fibre availability, not of demand.
SBP, ISCC EU, RSB, GGL, ENplus, FSC and the national equivalents. This link adds no physical product and captures a disproportionate share of the premium, because it is the link that converts a commodity into a countable unit of renewable energy. Its cost is largely fixed per audit and per cargo, which is why it functions as a consolidation mechanism.
Inland haulage to a port, port storage, and a Handysize or Supramax cargo of 20,000 to 35,000 tonnes. Port stock behaviour is a leading indicator of delivered price and it moves fast: combined inventories at monitored Amsterdam, Rotterdam and Antwerp terminals fell by 15,500 tonnes, or 47 per cent, to around 17,500 tonnes over a single quarter in early 2025, alongside elevated vessel arrivals. A market with six weeks of visible stock at a major import hub has no buffer against a supply disruption.
The buyer is a utility, an independent power producer, a heating distributor or — newly — an industrial kiln or a conversion plant. This is where the premium is monetised and where the policy risk sits, because the buyer's willingness to pay the premium is a direct function of a subsidy or a carbon accounting rule that the buyer does not set.
Vertical integration from link two to link five is common and it is what Drax, Enviva and the large European producers have all attempted. It has not produced durable margin, because it integrates the plant with the buyer while leaving the fibre and the policy outside the boundary. The 2024–26 record — a Chapter 11 restructuring, a collapse in Drax's operating profit, and a 47 per cent fall in port stocks within one quarter — is what that partial integration looks like when three independent shocks arrive.
" investment_activity_content: "Investment in this market has overwhelmingly been directed at production capacity, and the results show it.
Enviva's Chapter 11 and emergence with USD 1 billion less debt is the largest single capital event in the recent history of the sector, and it was a de-leveraging, not an investment. Its Alabama plant — 1 million tonnes, ramping — was already committed capital that had to be completed because an unfinished plant is worth less than nothing. This is the characteristic shape of capital allocation in a commodity-adjacent market where capacity was built against contracted offtake that subsequently repriced.
The Drax contract to supply more than 1 million tonnes annually to a USD 2 billion sustainable aviation fuel plant in Texas is the first sign of a genuine change in the direction of capital. It is a reallocation rather than an addition: the same pellet stream, a different buyer, a different price basis, and a different regulatory file. Aviation fuel does not need a renewable electricity certificate; it needs a greenhouse gas savings calculation and a mass balance chain, which are harder to produce and more valuable.
At UNACEM North America's Drake Cement plant in Paulden, Arizona, the biomass programme moved from 0 per cent to a design heat share of 20 per cent, with coal falling from 41 per cent to 28 per cent of the mix and petroleum coke from 16 per cent to 8 per cent. The investment is in receiving, storage, metering and conveying — a capital item measured in single-digit millions at a single plant, not in billions. Every cement kiln that converts does this. The aggregate is the demand signal, and the individual transaction is too small to appear in any investment statistic.
Capital is flowing into conversion capacity — plants that can burn a substitute fuel — and into aviation, and it is not flowing into new pellet capacity at anything like the rate of the 2018–2022 build-out. That is consistent with the 3.47 per cent volume growth in this forecast and inconsistent with the assumption that the market's historic growth rate continues. The increment from here is disproportionately price and mix, not tonnage.
" technology_innovation_content: "The thermal engineering of this market has been settled for two decades. The unresolved technology is measurement, and it is worth more than the engineering.
A kiln or a boiler burning a variable blend of fossil and biogenic material must report how much of the resulting carbon dioxide is biogenic, because that determines the emissions factor and therefore the carbon cost. There is no agreed standard method for doing this. Carbon-14 testing to ASTM D6866 is the only defensible route and it is slow, expensive and rarely applied continuously.
The consequence for this market is direct: a fuel whose biogenic content cannot be verified cannot be fully credited, and the discount applied to it is a measurement discount rather than a quality discount. That is the technical reason palm kernel shells sit at USD 133.79 per tonne against industrial pellets at USD 196.62 — and it is why the certification layer described in Chapter 2 is not overhead but the product.
Torrefied pellets offer a higher energy density, hydrophobic handling and grindability closer to coal, which is exactly what a converted coal mill wants. They have been at pilot scale for fifteen years. The obstacle is not thermal; it is that torrefaction adds cost to a product that competes on price against coal plus carbon, and the premium a utility will pay for grindability is less than the cost of producing it. Until the carbon price rises enough to close that gap, torrefaction remains an option, not a market.
Korea's RPS amendment removes the certificate that justified co-firing. Japan's FIT closure for new certifications of 10 megawatts and above removes the mechanism for new large plants. The EU's sustainability criteria narrow what qualifies at all. These three are not correlated events but their effect compounds: a North American exporter selling to all three markets faces a simultaneous reduction in the price each will pay, and there is no fourth market of comparable size.
The quantification is straightforward. Japan and Korea together imported 11.91 million tonnes of pellets in 2025. Every 10 per cent reduction in that combined pull, redirected into a spot market with no alternative large buyer, reprices several million tonnes at the same time.
European pellet input costs did not fall through the 2024–25 heating season because sawmilling activity was subdued by lower building activity, and closing three Georgia paper mills removed both residue and a competing buyer within a single quarter. A market whose input is the waste of another industry has a supply curve it cannot control, and the 47 per cent quarterly fall in ARA port stocks demonstrates how little inventory stands between that supply curve and the delivered price.
The EU's no-go areas and harvesting requirements are verifiable only against a chain of custody that terminates at a forest stand. The industry's own audit infrastructure is not yet able to demonstrate, cargo by cargo, that a given tonne did not originate in primary forest, highly biodiverse forest or peatland. A single enforcement action against a large importer — or a member state deciding to test the question — would reprice European industrial pellets by more than the entire certification cost.
Below, the fossil alternative is coal plus a carbon price, and the carbon price is the only variable that has moved in biomass's favour. Above, heat pumps and electrification take the residential heating market that supplies 41.63 per cent of this report's value at its highest unit price. The European household count of 6.5 million is a base that grows 5 per cent in a good year and can reverse if electricity prices fall relative to pellet prices.
Feedstock exhaustion is not a binding constraint in the forecast window. The US Department of Energy estimates more than 161 million tons of biomass residuals are available annually in the United States alone, against 10.09 million tonnes of pellet exports. Technology substitution is not imminent, because torrefaction economics do not close and no alternative densified fuel is at scale. Demand collapse is unlikely in heating, which is a dispersed, non-cyclical, price-sensitive retail market.
" regulatory_landscape_content: "Bioenergy accounted for about 59 per cent of EU renewable energy consumption in 2021 (European Commission, 2023 Union bioenergy sustainability report), and EU industry consumed 21.1 million tonnes of oil equivalent of biomass in the same year. That position is now governed by the revised Renewable Energy Directive, EU/2023/2413, in force since 20 November 2023, which:
Only biomass that does not originate in the excluded areas can count toward renewable targets or receive subsidies. The practical effect is that the compliance file, not the fuel, determines eligibility — and eligibility determines the price.
The 8 gigawatt target for the 2030 energy mix was exceeded at 8.7 gigawatts by December 2025. New FIT/FIP certifications in the \"general wood and agricultural residues\" category — 94.8 per cent of new certifications in that class — ended for facilities of 10 megawatts or larger from April 2026, with existing contracts unaffected. A biomass category has been reinstated in the long-term decarbonised power auction, and the 2040 energy mix implies roughly 4 gigawatts of additional capacity. Sustainability requirements include legal and traceable supply chains, and most buyers now require third-party certification from mill through aggregator to loading anchorage.
The RPS amendment of late 2024 ends REC support for new biomass power plants, ends certificates for state-owned coal-and-biomass co-firing from 2025, phases out certificates for private co-firing from 2026, and lowers certificate weightings for dedicated biomass plants over time. This is the most consequential single regulatory change in this report, because Korea is the market where the certificate was the entire margin.
An export duty set monthly against the crude palm oil reference price — USD 10 per tonne in May 2026 — plus a plantation fund levy of USD 5 per tonne from 1 March 2026. These are statutory costs that sit between an FOB offer and a delivered cargo and they are set by a reference price the exporter does not control.
The UK remains the largest single European importer, with 8.1 million tonnes imported year to date in the 2024–25 period, and its support framework is the reason. North American demand is driven by state-level renewable portfolio standards and, increasingly, by aviation fuel incentives — a different file for the same tonne.
" faq_question_1: "How large is the global biomass fuel market?" faq_answer_1: "USD 12,345.6 million in 2025 across 59.3 million tonnes delivered, rising to USD 20,660.0 million and 77.9 million tonnes by 2033 at a compound rate of 6.65 per cent, an increment of USD 8,314.4 million or 1.673 times the base. That covers industrial wood pellets (52.08 per cent of value), heating pellets (41.63 per cent) and palm kernel shells (6.29 per cent), each priced at the delivered point in the region that buys it." faq_question_2: "Why is this market size smaller than other biomass figures I have seen?" faq_answer_2: "Because the scope is solid biomass fuel crossing a commercial boundary at the price the buyer paid. Captive bagasse, black liquor and on-site mill residue are excluded: they are burned where they are produced at an administrative transfer price and constitute an avoided disposal cost rather than a fuel market, and they are the single largest reason other estimates run into the hundreds of billions. Traded wood chips, firewood, refuse-derived fuel, the non-biogenic fraction of alternative fuels, liquid biofuels and certificate value are also excluded, each with its reason stated. The scope section gives the ladder back up so a reader can reconcile rather than take either number on trust." faq_question_3: "What drives the 6.65 per cent forecast rate?" faq_answer_3: "Two disclosed components: 3.47 points of volume growth on 59.3 million tonnes rising to 77.9 million, and 3.07 points of realised price growth on USD 208.19 per tonne rising to USD 265.21. The price half is the contentious one, because it requires delivered biomass to outpace general inflation for eight years in a market whose stated purpose is to undercut the fossil fuel it displaces. If realised price growth is zero, the 2033 market is USD 16,145 million and the compound rate 3.41 per cent." faq_question_4: "Why does a megawatt-hour of wood pellets cost about twice a megawatt-hour of wood chips?" faq_answer_4: "Because the tonne, not the energy, is the product. Baltic wood chips cleared at EUR 21.85 per megawatt-hour on the Baltpool exchange in the 2024-25 season; industrial pellets were assessed at EUR 195 per tonne CIF ARA, or EUR 41.30 per megawatt-hour, a 1.89 multiple on identical combustion chemistry, and 2.04 on residential grade. Across the whole base USD 5,813.5 million, or 47.1 per cent of the measured market, sits above a chip-equivalent energy price. That premium is the cost of a densified, uniform, certified, contractible, traceable tonne: the file, not the flame." global_schema: organization: "@id": MIWS-root#organization "@type": Organization url: "https://www.pheonixresearch.com/" name: Pheonix Research website: "@id": MIWS-root "@type": WebSite url: "https://www.pheonixresearch.com/" name: Pheonix Research api: "@id": MIWS-root#api "@type": WebAPI url: "https://www.pheonixresearch.com/" graph: node_id: MIMR-node_8acf9a7 graph_node_endpoint: "https://graph.pheonixresearch.com/api/v1/query/live/node/MIMR-node_8acf9a7" graph_snapshot: "https://graph.pheonixresearch.com/api/v1/read/live/graph" graph_exclusions: "https://graph.pheonixresearch.com/api/v1/read/live/exclusions" graph_meta: "https://graph.pheonixresearch.com/api/v1/read/live/meta" graph_bundle: "https://graph.pheonixresearch.com/api/v1/read/live/bundle" discovery: discovery_json: "https://www.pheonixresearch.com/.well-known/pheonix-discovery.json" llms_txt: "https://www.pheonixresearch.com/llms.txt" sitemap: "https://www.pheonixresearch.com/sitemap.xml" --- # Global Biomass Fuel Market Report, Size, Share and Forecast 2026–2033: Priced by the File, Not the Flame - **CAGR:** 6.65% - **Forecast Period:** 2026 - 2033 ## Executive Summary The global biomass fuel market was USD 12,345.6 million in 2025 across 59.3 million tonnes delivered, and reaches USD 20,660.0 million by 2033 at 6.65 per cent on 77.9 million tonnes — an increment of USD 8,314.4 million, or 1.673 times the base. Industrial wood pellets hold 52.08 per cent of value and supply 58.6 per cent of the increment; heating pellets hold 41.63 per cent at the highest price per tonne (USD 247.12) but grow slowest at 5.65 per cent; palm kernel shells are 6.29 per cent of value and grow fastest at 7.50 per cent. The central finding is that roughly half of the market's value — USD 5,813.5 million, or 47.1 per cent — sits above a chip-equivalent energy price, because the tonne is priced by its certification and traceability file rather than its calorific content: Baltic wood chips cleared at EUR 21.85 per megawatt-hour against industrial pellets at EUR 41.30, a 1.89 multiple on identical combustion chemistry, and the same industrial pellet clears at USD 211 per tonne in Amsterdam against USD 145 in Korea, a 1.46 multiple. Of the 6.65 per cent rate, 3.47 points is volume and 3.07 points is price. The growth rate is held below what volume alone supports because all three policy instruments that created industrial biomass demand are in retreat at once: South Korea's late-2024 RPS amendment withdraws REC support in stages from 2025, Japan exceeded its 8 GW 2030 target at 8.7 GW and closed new FIT/FIP certification for facilities of 10 MW and above from April 2026, and the EU extended its no-go areas and harvesting requirements to forest biomass. Europe runs an 11.95 million tonne structural deficit while Japan and Korea imported 11.91 million tonnes — two blocs each short almost exactly twelve million tonnes, one of them now removing the subsidy that justified the purchase. ## Market Report ## The tonne is not the product There is a number that every participant in this market quotes and almost nobody can produce: the volume of solid biomass fuel that changes hands commercially in a year. The most authoritative figure available is **53.5 million tonnes of wood pellets produced globally in 2025**, up 10 per cent on 2024 and the strongest year-on-year growth in recent years, against **51.5 million tonnes consumed** — a record (Bioenergy Europe, Pellet Statistical Report, Brussels, 24 June 2026). That is one product in one form. It excludes palm kernel shells, wood chips, briquettes, and every agricultural residue stream that a cement kiln or a biomass boiler actually burns. This report reconstructs the wider market from physical volume upward and prices it at the delivered point, and it reaches a base of **59.3 million tonnes and USD 12,345.6 million in 2025**, rising to **77.9 million tonnes and USD 20,660.0 million by 2033** at a compound rate of **6.65 per cent** — an increment of **USD 8,314.4 million** and a **1.673 multiple**. Of that growth rate, **3.47 points is volume and 3.07 points is price**. The volume half is unremarkable: forest residue is not becoming scarcer in any absolute sense, and the 161 million tons of biomass residuals the US Department of Energy estimates are available annually in the United States alone are not the constraint. The price half is where the market actually lives, and it behaves in a way that a commodity market should not. ### A megawatt-hour costs EUR 21.85 or EUR 41.30, and the fuel is not the difference In the 2024–25 heating season the Baltpool exchange cleared wood chip transactions across the three Baltic states at an average of **EUR 21.85 per megawatt-hour** — EUR 115.8 million for 5.3 terawatt-hours of turnover, with national averages of EUR 21.80 in Lithuania, EUR 22.01 in Latvia and EUR 21.34 in Estonia (Baltpool, 13 May 2025). The three markets converged to within three per cent of each other and prices stabilised after the suspension of Belarusian imports in 2022, which is what a functioning commodity market looks like. In the same period industrial wood pellets were assessed at **EUR 195 per tonne CIF ARA — EUR 41.30 per megawatt-hour** — and residential-grade ENplus A1 at EUR 210 per tonne, or EUR 44.47 per megawatt-hour (RBCN Biomass Market Update, Q1–Q2 2025). Same energy. Same combustion chemistry. A **1.89 multiple** on the industrial grade and 2.04 on the residential grade. Across the whole base, the value that sits above a chip-equivalent energy price is **USD 5,813.5 million, or 47.1 per cent of the measured market**. That premium is not fraud and it is not a bubble. It is the price of a densified, uniform, contractible, traceable tonne — and the components of it can be separated. What cannot be separated is that **roughly half of what this market is worth is attributable to what travels with the fuel rather than what is in it**. Every commercial decision in the category — where to site a plant, which certificate to carry, whether to sell on spot or term, whether to own a port — resolves to that fact. ### The three columns, and what each one is really selling | Channel | | 2025 volume (Mt) | | USD/tonne | | 2025 value (USD m) | | Share | | 2033 value (USD m) | | CAGR | | Share of increment | | Industrial wood pellets | | 32.7 | | 196.62 | | 6,429.6 | | 52.08% | | 11,297.5 | | 7.30% | | 58.6% | | Heating pellets | | 20.8 | | 247.12 | | 5,140.0 | | 41.63% | | 7,978.5 | | 5.65% | | 34.1% | | Palm kernel shells | | 5.8 | | 133.79 | | 776.0 | | 6.29% | | 1,384.0 | | 7.50% | | 7.3% | | **Total** | | **59.3** | | **208.19** | | **12,345.6** | | **100%** | | **20,660.0** | | **6.65%** | | **100%** | Value by channel, 2025, of USD 12,345.6 million: industrial wood pellets 52.08 per cent, heating pellets 41.63 per cent, palm kernel shells 6.29 per cent. The three channels are not three products. They are three *files*. **Industrial pellets** carry a sustainability and chain-of-custody file that a utility can present to a regulator in return for a subsidy, a renewable certificate, or a zero emissions factor. It is the largest channel at 52.08 per cent of value and it supplies 58.6 per cent of the increment. It is also the channel whose demand rests entirely on the subsidy it was built to satisfy. **Heating pellets** carry a quality certificate — ENplus, or its national equivalents — and a bag. They are sold to 6.5 million European households, a channel that grew 5 per cent to 15.3 million tonnes of residential consumption in 2025 even as industrial demand in Europe was being squeezed. It is priced highest per tonne at USD 247.12, grows slowest at 5.65 per cent, and is the most durable of the three. **Palm kernel shells** carry a legal-origin file and almost nothing else. Japan imported just over 4.0 million tonnes in 2025 under HS 1404.90, 74 per cent from Indonesia and 22 per cent from Malaysia, at a landed value of USD 126–141 per tonne. It grows fastest of the three at 7.50 per cent and it is **the only channel in this report that cannot be burned in Europe and still counted as renewable**. That last sentence is the report. ### Every door that built this market is closing at the same time The demand for industrial biomass fuel was constructed by three policy instruments in three jurisdictions, and all three are now in retreat or at their ceiling. **South Korea** imported 3.91 million tonnes of wood pellets in 2025, down 3 per cent from the 4.015 million tonne record of 2024, while the average import price rose 15 per cent to USD 145 per tonne and the import bill rose 12 per cent to USD 566 million (Lesprom Analytics, 11 February 2026). In late 2024 the country amended its Renewable Portfolio Standard rules governing Renewable Energy Certificate eligibility: certificate support ends for new biomass power plants, ends for state-owned coal-and-biomass co-firing from 2025, phases out for private co-firing from 2026, and the certificate weighting for dedicated biomass plants declines over time. That is not a demand wobble. It is the removal of the mechanism that caused the import curve to rise from 122,000 tonnes in 2012 to 3.91 million tonnes in 2025. **Japan** reached 8.7 gigawatts of installed biomass capacity by December 2025 against an 8 gigawatt target for the 2030 energy mix — it has already exceeded the policy it was built to satisfy. Wood pellet imports exceeded 8 million tonnes in 2025. And from fiscal 2026, beginning in April, new FIT/FIP certification has ended for facilities of 10 megawatts or larger using the "general wood and agricultural residues" category, which is the category that accounts for 94.8 per cent of new certifications in that class (Drax, presented to the 2026 pellet industry conference, 22 September 2026). Existing contracts are unaffected, and the long-term decarbonised power auction has reinstated a biomass category, with roughly 4 gigawatts of additional capacity implied by the 2040 energy mix. Japan is not closing. Japan has stopped opening. **Europe** consumes 70 per cent of global pellet demand and produces 45 per cent of world output, with production excluding Belarus and Russia rising 10 per cent to a record 24.1 million tonnes in 2025 (Bioenergy Europe). The revised Renewable Energy Directive, EU/2023/2413, in force since 20 November 2023, extended "no-go areas" for agricultural biomass to forest biomass — primary and old-growth forest, highly biodiverse forest, grassland, heathland, certain high-carbon-stock land and peatland — added specific harvesting requirements including for clear-cuts and deadwood extraction, and extended greenhouse gas savings criteria. Only biomass that does not originate in those areas can count toward renewables targets or receive subsidies. Europe's net position is worth stating plainly. At 36.05 million tonnes of consumption against 24.1 million tonnes of production, the continent runs a structural deficit of **11.95 million tonnes**. Japan and Korea together imported **11.91 million tonnes**. Two importing blocs, each short almost exactly twelve million tonnes, drawing on the same North American and Asian supply base, and one of them is now removing the subsidy that justified the purchase. The replacement demand exists — sustainable aviation fuel and cement co-processing — but it buys a different tonne at a different price under a different file, and it is not yet large enough to absorb what the three closing doors release. That is the risk this report is priced around, and it is why the forecast is 6.65 per cent rather than the double-digit rate the volume growth alone would support. ## Scope boundary: what is in the 59.3 million tonnes and what is not Published figures for "the biomass market" range across two orders of magnitude because they count different things. This report counts one thing: **solid biomass fuel delivered to a combustion or co-processing point, across a commercial boundary, at the price the buyer paid.** ### Included - Wood pellets, industrial grade, delivered CIF or DDP to a utility, independent power producer or large industrial user. - Wood pellets, heating grade, delivered to a distributor or end user, excluding retail bagging margin and appliance cost. - Palm kernel shells, delivered to a Japanese, Korean or other Asian buyer, FOB plus freight plus duty. ### Excluded, and why each exclusion matters - Captive bagasse, black liquor and on-site mill residue. These are the largest single reason this number is smaller than most published biomass figures. Bagasse at a Brazilian or Indian sugar mill, and black liquor at a kraft pulp mill, are burned where they are produced at a transfer price that is administrative rather than commercial. Hundreds of millions of tonnes of biomass energy move this way every year and none of them constitute a fuel market. They constitute an avoided disposal cost. - Traded wood chips. Real, large and priced — the Baltpool exchange alone cleared 5.3 terawatt-hours in one heating season — but the majority of chip volume moves within a hundred kilometres of where it is cut, on bilateral contracts that are not consistently reported. It is excluded from the base and used in this report only as the energy-price reference that establishes the pellet premium. - Firewood and unprocessed forestry residue. Materially large in Africa, South Asia and parts of Eastern Europe; not a priced, traceable market. - Refuse-derived fuel and the non-biogenic fraction of municipal waste. A separate market with a separate regulatory treatment. The Global Cement and Concrete Association's 2024 data put total alternative fuel use by its reporting companies at 25.57 million tonnes, of which 8.51 million tonnes — 33.28 per cent — is biomass. The remainder is fossil-derived waste and is not biomass fuel. - Liquid biofuels (ethanol, biodiesel, HVO) and biogas. Different products, different regulation, different report. - The energy produced. This is a fuel market, not an electricity or heat market. Certificate value — Renewable Energy Certificates, Renewable Transport Fuel Certificates, Guarantees of Origin, UK Renewable Obligation Certificates — is excluded as well, because it trades separately, at its own price, with its own volatility, and on some days it is worth more than the fuel. ### The ladder back up to the bigger numbers A reader who has seen a figure of USD 100 billion or more for this category should be able to reconcile it to USD 12,345.6 million without difficulty, and should be suspicious of any source that will not let them try. The ladder is: add traded wood chips (a modelled USD 3–5 billion at the EUR 21.85 per megawatt-hour reference, on volumes this report does not measure); add firewood and unprocessed residue; add captive bagasse and black liquor at a market-equivalent valuation, which is the single largest addition and the least defensible; add the certificate value stripped out above; and add the non-biogenic fraction of alternative fuels. Every rung is a legitimate thing to count. None of them is a fuel market in the sense used here, and adding them produces a number that no participant can act on. Market value 2025–2033, USD million, at the report's 6.65 per cent compound rate: USD 12,345.6 million to USD 20,660.0 million, an increment of USD 8,314.4 million. ## The base, reconstructed The reconstruction starts from the one figure that is measured rather than estimated: 53.5 million tonnes of global pellet production in 2025. Everything else is built from it, and every allocation is disclosed. ### Step one: split the 53.5 million tonnes by grade European small-scale consumption exceeded 19 million tonnes in 2025, of which residential consumption was 15.3 million tonnes, up 5 per cent, serving more than 6.5 million households (Bioenergy Europe). Europe accounts for 70 per cent of global demand, or 36.05 million tonnes of the 51.5 million consumed. Subtracting the 19 million tonnes of European small-scale use gives **17.05 million tonnes of European industrial consumption**, and small-scale use is 52.7 per cent of the European total — the majority of European pellet demand is a heating fuel, not a power fuel. Allocating the remaining 15.45 million tonnes of non-European consumption across Japan (8.0 million tonnes, matching reported imports of more than 8 million tonnes), South Korea (3.9 million tonnes, matching reported imports of 3.91 million), North America (3.4 million tonnes split 2.4 industrial and 1.0 heating) and the rest of the world (2.1 million tonnes) gives a global split of **32.7 million tonnes of industrial grade and 20.8 million tonnes of heating grade**. ### Step two: price each region at what it actually pays This is where a single global average price destroys the analysis. The same industrial pellet cleared at **USD 211 per tonne in Amsterdam** and **USD 145 per tonne in South Korea** — a 1.46 multiple on a physically comparable product. The European price reflects a compliance file that a Korean buyer does not need and, after the 2024 RPS amendment, increasingly cannot monetise. | Market | | Volume (Mt) | | USD/tonne | | Value (USD m) | | **Industrial wood pellets — 32.7 Mt, USD 6,429.6 m, USD 196.62/t blended** | | Northwest Europe | | 17.1 | | 211 | | 3,608.1 | | Japan | | 8.0 | | 205 | | 1,640.0 | | South Korea | | 3.9 | | 145 | | 565.5 | | North America | | 2.4 | | 170 | | 408.0 | | Rest of world | | 1.3 | | 160 | | 208.0 | | **Heating pellets — 20.8 Mt, USD 5,140.0 m, USD 247.12/t blended** | | Europe | | 19.0 | | 250 | | 4,750.0 | | North America | | 1.0 | | 230 | | 230.0 | | Rest of world | | 0.8 | | 200 | | 160.0 | | **Palm kernel shells — 5.8 Mt, USD 776.0 m, USD 133.79/t blended** | | Japan | | 4.0 | | 138 | | 552.0 | | South Korea | | 0.8 | | 130 | | 104.0 | | Other Asia | | 1.0 | | 120 | | 120.0 | ### Step three: state the volume-price split honestly The 2025 base of USD 12,345.6 million at USD 208.19 per tonne blended rises to USD 20,660.0 million at USD 265.21 per tonne by 2033, on 77.9 million tonnes. That is a volume compound rate of **3.47 per cent** and a realised price compound rate of **3.07 per cent**, combining to 6.65 per cent. Industrial pellets grow volume at 3.36 per cent, heating pellets at 3.27 per cent and palm kernel shells at 4.74 per cent. The price rate is the contentious half. It requires that the delivered price of biomass fuel rises faster than general inflation for eight consecutive years in a market whose stated purpose is to be cheaper than the fossil fuel it displaces. It is defensible for three reasons — statutory cost escalation in Indonesia, the widening sustainability compliance burden in Europe, and the entry of aviation fuel buyers into the same fibre catchment at a higher willingness to pay — and it is the assumption most likely to be wrong. If realised price growth is zero, the 2033 market is USD 16,145 million and the compound rate is 3.41 per cent. ## Unit economics: the file, the freight and the flame Three disclosed transactions in the same quarter show how far apart the price of the same fuel can sit, and what separates them. **The floor is the Asian FOB assessment.** Argus assessed Japan-compliant palm kernel shells at about **USD 101 per tonne FOB east coast Sumatra** in December 2025. Indonesian export declarations show 6.06 million tonnes exported for the year, 92 per cent of it to Japan, at about USD 103 per tonne FOB. **The delivered price is 36.6 per cent higher.** Japanese buyers paid about **USD 138 per tonne CIF** in May 2026, down from a peak of about USD 167 in July 2024. The USD 37 per tonne difference contains freight, and it also contains a statutory layer: an Indonesian export duty set monthly against the crude palm oil reference price, USD 10 per tonne in May 2026, plus a plantation fund levy of USD 5 per tonne from 1 March 2026. Fifteen of those thirty-seven dollars are the state. The remaining twenty-two are shipping, certification and margin. **The premium grade is 7.69 per cent above the industrial grade, for a certificate.** ENplus A1 residential pellets were assessed at EUR 210 per tonne CIF ARA against EUR 195 for industrial I2 — a EUR 15 spread. Nothing in the fuel changes. The chain-of-custody requirements, the fines tolerance, the ash specification and the audit trail do. **The cross-basin spread is 1.46.** Northwest European industrial pellets at USD 211 per tonne against South Korean imports at USD 145 per tonne. Europe is paying 46 per cent more for a tonne it cannot produce enough of; Korea is paying less for a tonne whose subsidy is being withdrawn. The two prices are converging on policy, not on fibre. ### Two things the unit economics reveal that the headline does not **First, the price floor is set by coal plus carbon, and it is moving.** A biomass pellet at EUR 41.30 per megawatt-hour competes with coal at a fraction of that price plus a carbon cost. In the EU Emissions Trading System, biomass combustion currently carries a zero-rated emissions factor, which is the entire basis on which it competes. Any change to that treatment — and the sustainability criteria in EU/2023/2413 are precisely the mechanism by which it could change for a specific cargo — reprices the tonne by more than the fuel's own production cost. **Second, the cost of certification is a fixed cost per cargo and therefore a barrier to small producers.** A GGL, RSB or ISCC EU chain-of-custody audit is largely invariant to volume. At a 30,000 tonne Handysize cargo that cost is trivial; at a 2,000 tonne regional lot it is prohibitive. This is the mechanism by which a fragmented production base consolidates without any producer becoming more efficient — and it is why the producer tier of this market looks more concentrated than its volume shares suggest. ## Chapter 1 — Competitive landscape: four producers hold the file, the fibre holds the market Global pellet production of 53.5 million tonnes is spread across thousands of mills, most of them small, most of them supplying heating fuel within a regional radius. The industrial segment — the part that carries the sustainability file and the part this report prices at USD 196.62 per tonne — is concentrated in a way the aggregate does not show. ### The North American export tier The United States exported **10.09 million tonnes of wood pellets in 2025**, roughly one tonne in five of global output and the single largest traded flow in the market. That trade is organised around a small number of port-linked plants in the Southeast, and in 2025 that geography was in motion: - Enviva emerged from Chapter 11 with roughly USD 1 billion less debt and its 1 million tonne Alabama plant ramping up — the largest single capacity addition in the basin, arriving from a company that had just restructured. - Georgia lost three major paper mills in under ninety days, which is a supply event disguised as a demand event. Pulp and paper mills are the primary source of the sawmill and manufacturing residue that pellet plants buy, and their closure removes both the residue and the competing buyer. Fibre in that catchment tightened while the plants that consume it were adding capacity. - Drax signed a contract to supply more than 1 million tonnes of pellets annually to a USD 2 billion sustainable aviation fuel plant in Texas — the first materially sized reallocation of a pellet stream from combustion to conversion. Drax Group is the most complete integration in the industry and its 2025 accounts show what vertical integration into fuel actually buys: total revenue of GBP 5,391 million against GBP 6,163 million in 2024, adjusted EBITDA of GBP 947 million against GBP 1,064 million, total operating profit of GBP 241 million against GBP 850 million, and net debt of GBP 784 million. It generates about 5 per cent of the United Kingdom's electricity demand, employs 2,974 people and is a producer, a user, a buyer and a seller of biomass simultaneously. The collapse in operating profit against a modest revenue decline is the clearest available evidence that in this market the fuel supply chain absorbs margin before the generation business reports it. ### The European producer tier European production excluding Belarus and Russia reached 24.1 million tonnes, a regional record, up 10 per cent after two years of contraction. The supply base is dominated by Baltic and Iberian producers, with Graanul Invest the largest single European pellet producer, and it is structurally exposed to sawmill residue availability. When European construction activity falls, sawmill residue tightens and pellet input cost rises — the mechanism that kept European prices elevated through the 2024–25 heating season even as demand softened. That is the defining structural weakness of the European tier: **its raw material is a by-product of a different industry's output**, and it has no control over that industry's cycle. ### The Asian supply tier South Korea's 2025 import mix is the map of Asian supply. Vietnam held 37 per cent of the volume at 1.44 million tonnes but fell 31 per cent year on year. Indonesia rose 76 per cent to 0.90 million tonnes and 23 per cent share. Russia shipped 0.64 million tonnes, up 8 per cent, for 16 per cent. Canada supplied 0.46 million tonnes, up 32 per cent, for 12 per cent. Malaysia fell 10 per cent to 0.24 million tonnes, and US volumes fell 30 per cent to 50,000 tonnes. The lesson in that table is substitution, not growth. Vietnam's 31 per cent decline was absorbed by Indonesia's 76 per cent increase and Canada's 32 per cent increase — the total moved by 3 per cent while a third of the supply chain was replaced. For a buyer, this is resilience. For a producer, it is the definition of a market where you hold no position. ### Where the market power actually sits No producer holds a share of this market that gives it pricing power over the fuel. The concentration is one layer downstream, in the certification bodies, the port terminals and the traders who assemble a bankable file. Three structural facts support that conclusion: - The largest traded flow — 10.09 million tonnes from the United States — is organised through a handful of port terminals whose throughput is the binding constraint, not the forests behind them. - The premium for a certified over an uncertified tonne, measured at the FOB-to-CIF gap, is 36.6 per cent, and a fixed-cost audit is the entry ticket. - Europe's 11.95 million tonne structural deficit is met by seaborne imports, and whoever controls the discharge terminal controls the delivered price in the largest consuming region. ## Chapter 2 — Value chain: the value is created at the mill gate and captured at the port The chain has five links and the margin does not sit where the risk does. ### Link one: fibre Sawmill residue, forest thinnings, harvest residues and — increasingly — the residue of a pulp and paper industry that is contracting. The supplier is paid a stumpage or gate price that is small relative to the finished tonne and highly variable. This link bears the most weather risk and the least bargaining power. Georgia's loss of three paper mills in ninety days is the clearest recent demonstration that a pellet plant's input can disappear for reasons entirely outside the pellet industry. ### Link two: densification Drying, hammer-milling, conditioning and pressing. This is where the 1.89 multiple this report opens with is created — a tonne of chips at EUR 21.85 per megawatt-hour becomes a tonne of pellets at EUR 41.30. Capital intensity is high, energy consumption is substantial, and the plant is a price-taker at both ends. The relevant number for a new entrant is not the capital cost but the utilisation rate required to service it, and that rate is a function of fibre availability, not of demand. ### Link three: certification SBP, ISCC EU, RSB, GGL, ENplus, FSC and the national equivalents. This link adds no physical product and captures a disproportionate share of the premium, because it is the link that converts a commodity into a countable unit of renewable energy. Its cost is largely fixed per audit and per cargo, which is why it functions as a consolidation mechanism. ### Link four: logistics Inland haulage to a port, port storage, and a Handysize or Supramax cargo of 20,000 to 35,000 tonnes. Port stock behaviour is a leading indicator of delivered price and it moves fast: combined inventories at monitored Amsterdam, Rotterdam and Antwerp terminals fell by 15,500 tonnes, or 47 per cent, to around 17,500 tonnes over a single quarter in early 2025, alongside elevated vessel arrivals. A market with six weeks of visible stock at a major import hub has no buffer against a supply disruption. ### Link five: the file, sold The buyer is a utility, an independent power producer, a heating distributor or — newly — an industrial kiln or a conversion plant. This is where the premium is monetised and where the policy risk sits, because the buyer's willingness to pay the premium is a direct function of a subsidy or a carbon accounting rule that the buyer does not set. ### The structural finding Vertical integration from link two to link five is common and it is what Drax, Enviva and the large European producers have all attempted. It has not produced durable margin, because it integrates the plant with the buyer while leaving the fibre and the policy outside the boundary. The 2024–26 record — a Chapter 11 restructuring, a collapse in Drax's operating profit, and a 47 per cent fall in port stocks within one quarter — is what that partial integration looks like when three independent shocks arrive. ## Chapter 3 — Investment activity: the capital went into tonnes, not files Investment in this market has overwhelmingly been directed at production capacity, and the results show it. ### Restructuring as the dominant form of capital allocation Enviva's Chapter 11 and emergence with USD 1 billion less debt is the largest single capital event in the recent history of the sector, and it was a de-leveraging, not an investment. Its Alabama plant — 1 million tonnes, ramping — was already committed capital that had to be completed because an unfinished plant is worth less than nothing. This is the characteristic shape of capital allocation in a commodity-adjacent market where capacity was built against contracted offtake that subsequently repriced. ### Conversion demand is the new capital magnet The Drax contract to supply more than 1 million tonnes annually to a USD 2 billion sustainable aviation fuel plant in Texas is the first sign of a genuine change in the direction of capital. It is a reallocation rather than an addition: the same pellet stream, a different buyer, a different price basis, and a different regulatory file. Aviation fuel does not need a renewable electricity certificate; it needs a greenhouse gas savings calculation and a mass balance chain, which are harder to produce and more valuable. ### Industrial conversion capital is small in dollars and large in consequence At UNACEM North America's Drake Cement plant in Paulden, Arizona, the biomass programme moved from 0 per cent to a design heat share of 20 per cent, with coal falling from 41 per cent to 28 per cent of the mix and petroleum coke from 16 per cent to 8 per cent. The investment is in receiving, storage, metering and conveying — a capital item measured in single-digit millions at a single plant, not in billions. Every cement kiln that converts does this. The aggregate is the demand signal, and the individual transaction is too small to appear in any investment statistic. ### What the investment pattern says about the forecast Capital is flowing into **conversion capacity** — plants that can burn a substitute fuel — and into **aviation**, and it is not flowing into new pellet capacity at anything like the rate of the 2018–2022 build-out. That is consistent with the 3.47 per cent volume growth in this forecast and inconsistent with the assumption that the market's historic growth rate continues. The increment from here is disproportionately price and mix, not tonnage. ## Chapter 4 — Technology and innovation: densification is solved, traceability is not The thermal engineering of this market has been settled for two decades. The unresolved technology is measurement, and it is worth more than the engineering. ### The biogenic fraction problem A kiln or a boiler burning a variable blend of fossil and biogenic material must report how much of the resulting carbon dioxide is biogenic, because that determines the emissions factor and therefore the carbon cost. There is no agreed standard method for doing this. Carbon-14 testing to ASTM D6866 is the only defensible route and it is slow, expensive and rarely applied continuously. The consequence for this market is direct: **a fuel whose biogenic content cannot be verified cannot be fully credited**, and the discount applied to it is a measurement discount rather than a quality discount. That is the technical reason palm kernel shells sit at USD 133.79 per tonne against industrial pellets at USD 196.62 — and it is why the certification layer described in Chapter 2 is not overhead but the product. ### Torrefaction, and why it has not arrived Torrefied pellets offer a higher energy density, hydrophobic handling and grindability closer to coal, which is exactly what a converted coal mill wants. They have been at pilot scale for fifteen years. The obstacle is not thermal; it is that torrefaction adds cost to a product that competes on price against coal plus carbon, and the premium a utility will pay for grindability is less than the cost of producing it. Until the carbon price rises enough to close that gap, torrefaction remains an option, not a market. ### Where innovation is actually landing - Feedstock flexibility. Plants designed for a single residue stream are being modified to accept multiple streams, including construction demolition wood and agricultural residue. This is a capital-light response to the fibre risk described in Chapter 2 and it is the single most common technology investment in the sector. - Digital chain of custody. Moisture, calorific value and mass balance measured continuously at receipt rather than by sampling, and reconciled against the supplier's certificate. This directly attacks the fixed-cost audit barrier and is the route by which smaller producers can enter. - Kiln-side substitution in cement. The technology is feed control, not combustion — a variable-energy, variable-moisture fuel requires a control system that can hold a calciner temperature inside a band. The Global Cement and Concrete Association reports biomass at 8.51 million tonnes of its members' 25.57 million tonnes of alternative fuel in 2024, and alternative fuel use is 12.8 times its 1990 level. The constraint on further substitution is feedstock logistics and measurement, not burner design. ## Chapter 5 — Market risk: three doors closing at once ### Risk one: the subsidy base is being withdrawn in sequence, not in parallel Korea's RPS amendment removes the certificate that justified co-firing. Japan's FIT closure for new certifications of 10 megawatts and above removes the mechanism for new large plants. The EU's sustainability criteria narrow what qualifies at all. These three are not correlated events but their effect compounds: a North American exporter selling to all three markets faces a simultaneous reduction in the price each will pay, and there is no fourth market of comparable size. The quantification is straightforward. Japan and Korea together imported 11.91 million tonnes of pellets in 2025. Every 10 per cent reduction in that combined pull, redirected into a spot market with no alternative large buyer, reprices several million tonnes at the same time. ### Risk two: the fuel supply is a by-product and its cycle is somebody else's European pellet input costs did not fall through the 2024–25 heating season because sawmilling activity was subdued by lower building activity, and closing three Georgia paper mills removed both residue and a competing buyer within a single quarter. A market whose input is the waste of another industry has a supply curve it cannot control, and the 47 per cent quarterly fall in ARA port stocks demonstrates how little inventory stands between that supply curve and the delivered price. ### Risk three: the tonnage is verifiable, the sustainability claim is not The EU's no-go areas and harvesting requirements are verifiable only against a chain of custody that terminates at a forest stand. The industry's own audit infrastructure is not yet able to demonstrate, cargo by cargo, that a given tonne did not originate in primary forest, highly biodiverse forest or peatland. A single enforcement action against a large importer — or a member state deciding to test the question — would reprice European industrial pellets by more than the entire certification cost. ### Risk four: substitution above and below Below, the fossil alternative is coal plus a carbon price, and the carbon price is the only variable that has moved in biomass's favour. Above, heat pumps and electrification take the residential heating market that supplies 41.63 per cent of this report's value at its highest unit price. The European household count of 6.5 million is a base that grows 5 per cent in a good year and can reverse if electricity prices fall relative to pellet prices. ### Risks we considered and weighted down **Feedstock exhaustion** is not a binding constraint in the forecast window. The US Department of Energy estimates more than 161 million tons of biomass residuals are available annually in the United States alone, against 10.09 million tonnes of pellet exports. **Technology substitution** is not imminent, because torrefaction economics do not close and no alternative densified fuel is at scale. **Demand collapse** is unlikely in heating, which is a dispersed, non-cyclical, price-sensitive retail market. ## Chapter 6 — Regulatory landscape: the certificate is the product ### European Union Bioenergy accounted for about 59 per cent of EU renewable energy consumption in 2021 (European Commission, 2023 Union bioenergy sustainability report), and EU industry consumed 21.1 million tonnes of oil equivalent of biomass in the same year. That position is now governed by the revised Renewable Energy Directive, EU/2023/2413, in force since 20 November 2023, which: - extended the "no-go areas" for agricultural biomass to forest biomass, covering primary and old-growth forest, highly biodiverse forest and grassland, heathland, certain high carbon stock land and peatland; - introduced specific harvesting requirements for forest biomass, including for clear-cuts and deadwood extraction; - extended greenhouse gas emissions savings criteria to new categories of installation. Only biomass that does not originate in the excluded areas can count toward renewable targets or receive subsidies. The practical effect is that the compliance file, not the fuel, determines eligibility — and eligibility determines the price. ### Japan The 8 gigawatt target for the 2030 energy mix was exceeded at 8.7 gigawatts by December 2025. New FIT/FIP certifications in the "general wood and agricultural residues" category — 94.8 per cent of new certifications in that class — ended for facilities of 10 megawatts or larger from April 2026, with existing contracts unaffected. A biomass category has been reinstated in the long-term decarbonised power auction, and the 2040 energy mix implies roughly 4 gigawatts of additional capacity. Sustainability requirements include legal and traceable supply chains, and most buyers now require third-party certification from mill through aggregator to loading anchorage. ### South Korea The RPS amendment of late 2024 ends REC support for new biomass power plants, ends certificates for state-owned coal-and-biomass co-firing from 2025, phases out certificates for private co-firing from 2026, and lowers certificate weightings for dedicated biomass plants over time. This is the most consequential single regulatory change in this report, because Korea is the market where the certificate was the entire margin. ### Indonesia An export duty set monthly against the crude palm oil reference price — USD 10 per tonne in May 2026 — plus a plantation fund levy of USD 5 per tonne from 1 March 2026. These are statutory costs that sit between an FOB offer and a delivered cargo and they are set by a reference price the exporter does not control. ### United Kingdom and North America The UK remains the largest single European importer, with 8.1 million tonnes imported year to date in the 2024–25 period, and its support framework is the reason. North American demand is driven by state-level renewable portfolio standards and, increasingly, by aviation fuel incentives — a different file for the same tonne. ## Articles on this market - The Biomass Fuel Market Is 59.3 Million Tonnes. The Number Everyone Quotes Is 53.5. — why the category's most-quoted figure measures one product in one form, what the 5.8 million tonnes it omits does to the denominator, and why 47.09 per cent of the market's value sits above a wood-chip-equivalent energy price. - The Same Pellet Clears at USD 211 in Amsterdam and USD 145 in Korea — the unit economics behind the forecast: USD 15 of a USD 37 FOB-to-CIF spread is Indonesian state revenue, a certificate is worth 7.69 per cent on an unchanged tonne, and the cross-basin multiple is 1.46. ## Methodology This report is built on two research layers in a disclosed proportion of approximately 70 per cent secondary and 30 per cent primary. The two layers do different jobs and the division is deliberate: the secondary layer carries the numbers; the primary layer establishes how the market actually prices, which no published dataset contains. ### Secondary layer (approx. 70 per cent) — itemised - Bioenergy Europe Pellet Statistical Report, Brussels, 24 June 2026 — global production 53.5 Mt, consumption 51.5 Mt, European shares and small-scale/residential consumption. - Rotterdam Biomass Commodities Network Biomass Market Update, 2025 — I2 and ENplus A1 CIF ARA assessments, ARA stock levels, Eurostat and BEIS import series. - Lesprom Analytics, 11 February 2026 — South Korean import volumes, values and prices by origin, and the 2024 RPS amendment. - Drax Group plc Annual Report and Accounts 2025 — revenue, EBITDA, operating profit, net debt, generation share. - Global Cement and Concrete Association, GNR 2024 dataset published 2026 — alternative fuel 25.57 Mt, biomass 8.51 Mt, substitution trend since 1990. - Baltpool exchange, 13 May 2025 — Baltic wood chip clearing prices and turnover for the 2024–25 heating season. - European Commission, bioenergy and biomass pages, and Directive (EU) 2023/2413. - Argus price assessments for Japan-compliant palm kernel shells, and Indonesian export declarations and fiscal instruments. - US Department of Energy / Idaho National Laboratory estimate of available biomass residuals. ### Primary layer (approx. 30 per cent) — itemised - Structured interviews with producers, traders and port terminal operators across the Baltic, Iberian, Southeast US and Southeast Asian supply tiers, covering fibre procurement, certification cost and utilisation economics. - Buyer-side interviews with utility fuel procurement teams in Japan, Korea and Northwest Europe, and with industrial fuel managers at cement and lime operations. - Conference and trade-floor engagement, including the 2026 international pellet industry conference at which the Japanese deployment and FIT/FIP position was presented. - A buying-criteria exercise establishing the relative weight buyers place on certification, moisture, calorific value and origin — the basis for the finding that the file, not the calorific value, sets the spread. ### What the primary layer contributes, and what it does not The primary layer **does not supply any number in this report**. It supplies the mechanism: why the FOB-to-CIF spread contains a statutory layer, why a fixed-cost audit consolidates production, why a 47 per cent quarterly fall in port stocks translates into a delivered price move, and why buyers in Rotterdam and Gunsan price the same product 1.46 apart. The base of USD 12,345.6 million, the 6.65 per cent rate, the 3.47/3.07 volume-price split and the 1.89 energy multiple are what the two layers produce together. ### No third-party research estimates No estimate published by another market research firm appears in this report, in any figure, or in any reconciliation. Where a comparison is drawn to a larger published market size, it is drawn in the scope boundary section against a category definition, not against another firm's number. The only commercial datasets used are price assessments and physical registries — the Argus and RBCN price series, the Lesprom trade series, the Baltpool exchange and the GCCA industry dataset — none of which is a market-sizing estimate. ### Rounding and reconciliation Values are stated in USD millions to one decimal place; shares and compound rates to two. Individual rows may not sum exactly to totals because of rounding. Currency conversions use EUR/USD of 1.09 where a euro-denominated assessment is compared to a dollar-denominated market value. Energy conversions assume 17.0 gigajoules per tonne (4.722 megawatt-hours) for wood pellets and 17.2 gigajoules per tonne (4.78 megawatt-hours) for palm kernel shells. These are stated so a reader can reprice the report on different assumptions. ### What this report does not know The allocation of the 53.5 million tonne global pellet figure across five regions and two grades is a reconstruction with a disclosed method, not a measured dataset, and it carries an error band. The heating-grade prices outside Europe and North America are modelled rather than assessed. The palm kernel shell volume outside Japan and Korea is estimated. And the realised price growth of 3.07 per cent per annum to 2033 is an assumption that, if wrong, moves the 2033 market by several billion dollars in either direction. Those four are the places to test. ## Sources - Bioenergy Europe, Pellet Statistical Report, Brussels, 24 June 2026. https://bioenergyeurope.org/global-pellet-market-hits-new-high-as-europe-weighs-its-clean-heat-options/ - Rotterdam Biomass Commodities Network, Biomass Market Update, 2025. https://www.rbcn.nl/wp-content/uploads/2025-Q2-RBCN-BMU.pdf - Lesprom Analytics, South Korea cuts wood pellet imports 3% in 2025, 11 February 2026. https://www.lesprom.com/en/news/South_Korea_cuts_wood_pellet_imports_3_in_2025_122290/ - Drax Group plc, Annual Report and Accounts 2025. https://www.drax.com/investors/annual-report/ - Drax, Status of Biomass power Implementation under FIT/FIP scheme in Japan, 2026 pellet industry conference, 22 September 2026. https://pellet.org/wp-content/uploads/2026/09/okamoto-drax-status-biomass-power-implementation-under-fitfip-japan-2026-conference-presentation.pdf - Global Cement and Concrete Association, GNR 2.0 — GCCA in Numbers, 2024 dataset published 2026. https://gccassociation.org/gnr/ - Baltpool, Heating season overview: biomass prices stabilise, 13 May 2025. https://www.baltpool.eu/en/heating-season-overview-biomass-prices-stabilise-creating-favourable-conditions-for-long-term-contracts/ - European Commission, Biomass — bioenergy sustainability reporting and Directive (EU) 2023/2413. https://energy.ec.europa.eu/topics/renewable-energy/bioenergy/biomass_en - US Environmental Protection Agency, Smart Sectors forum: Using Clean Cellulosic Biomass Fuel in Cement Manufacturing, 18 June 2025. - Argus Media, Japan-compliant palm kernel shell assessments; Indonesian export declarations and fiscal instruments. ## Related Pheonix research - Global Pyrolysis Oil Market, Size & Forecast 2026–2033 — https://www.pheonixresearch.com/energy-power/bio-fuels/market-report/global-pyrolysis-oil-market/ — the other report in this segment, and the liquid-thermal route out of the same residue streams. - Global Cement Market — https://www.pheonixresearch.com/construction-infrastructure/construction-material/market-report/global-cement-market/ — the demand-side frame for co-processing, and the carbon arithmetic that makes a substituted tonne valuable. - Global Biochar Market — https://www.pheonixresearch.com/agriculture-agritech/fertiliser/market-report/global-biochar-market/ — the competing use of the same feedstock, at a materially higher value per tonne. - Bio-Fuels segment — https://www.pheonixresearch.com/energy-power/bio-fuels/ — the full segment view, including fuel ethanol blending. ## Table of Contents Competitive Landscape — four producers hold the file, the fibre holds the market Value Chain — the value is created at the mill gate and captured at the port Investment Activity — the capital went into tonnes, not files Technology & Innovation — densification is solved, traceability is not Market Risk — three doors closing at once Regulatory Landscape — the certificate is the product ## Competitive Landscape Global pellet production of 53.5 million tonnes is spread across thousands of mills, most of them small, most of them supplying heating fuel within a regional radius. The industrial segment — the part that carries the sustainability file and the part this report prices at USD 196.62 per tonne — is concentrated in a way the aggregate does not show. The North American export tier The United States exported 10.09 million tonnes of wood pellets in 2025, roughly one tonne in five of global output and the single largest traded flow in the market. That trade is organised around a small number of port-linked plants in the Southeast, and in 2025 that geography was in motion: Enviva emerged from Chapter 11 with roughly USD 1 billion less debt and its 1 million tonne Alabama plant ramping up — the largest single capacity addition in the basin, arriving from a company that had just restructured. Georgia lost three major paper mills in under ninety days, which is a supply event disguised as a demand event. Pulp and paper mills are the primary source of the sawmill and manufacturing residue that pellet plants buy, and their closure removes both the residue and the competing buyer. Fibre in that catchment tightened while the plants that consume it were adding capacity. Drax signed a contract to supply more than 1 million tonnes of pellets annually to a USD 2 billion sustainable aviation fuel plant in Texas — the first materially sized reallocation of a pellet stream from combustion to conversion. Drax Group is the most complete integration in the industry and its 2025 accounts show what vertical integration into fuel actually buys: total revenue of GBP 5,391 million against GBP 6,163 million in 2024, adjusted EBITDA of GBP 947 million against GBP 1,064 million, total operating profit of GBP 241 million against GBP 850 million, and net debt of GBP 784 million. It generates about 5 per cent of the United Kingdom’s electricity demand, employs 2,974 people and is a producer, a user, a buyer and a seller of biomass simultaneously. The collapse in operating profit against a modest revenue decline is the clearest available evidence that in this market the fuel supply chain absorbs margin before the generation business reports it. The European producer tier European production excluding Belarus and Russia reached 24.1 million tonnes, a regional record, up 10 per cent after two years of contraction. The supply base is dominated by Baltic and Iberian producers, with Graanul Invest the largest single European pellet producer, and it is structurally exposed to sawmill residue availability. When European construction activity falls, sawmill residue tightens and pellet input cost rises — the mechanism that kept European prices elevated through the 2024–25 heating season even as demand softened. That is the defining structural weakness of the European tier: its raw material is a by-product of a different industry’s output, and it has no control over that industry’s cycle. The Asian supply tier South Korea’s 2025 import mix is the map of Asian supply. Vietnam held 37 per cent of the volume at 1.44 million tonnes but fell 31 per cent year on year. Indonesia rose 76 per cent to 0.90 million tonnes and 23 per cent share. Russia shipped 0.64 million tonnes, up 8 per cent, for 16 per cent. Canada supplied 0.46 million tonnes, up 32 per cent, for 12 per cent. Malaysia fell 10 per cent to 0.24 million tonnes, and US volumes fell 30 per cent to 50,000 tonnes. The lesson in that table is substitution, not growth. Vietnam’s 31 per cent decline was absorbed by Indonesia’s 76 per cent increase and Canada’s 32 per cent increase — the total moved by 3 per cent while a third of the supply chain was replaced. For a buyer, this is resilience. For a producer, it is the definition of a market where you hold no position. Where the market power actually sits No producer holds a share of this market that gives it pricing power over the fuel. The concentration is one layer downstream, in the certification bodies, the port terminals and the traders who assemble a bankable file. Three structural facts support that conclusion: The largest traded flow — 10.09 million tonnes from the United States — is organised through a handful of port terminals whose throughput is the binding constraint, not the forests behind them. The premium for a certified over an uncertified tonne, measured at the FOB-to-CIF gap, is 36.6 per cent, and a fixed-cost audit is the entry ticket. Europe’s 11.95 million tonne structural deficit is met by seaborne imports, and whoever controls the discharge terminal controls the delivered price in the largest consuming region. ## Value Chain The chain has five links and the margin does not sit where the risk does. Link one: fibre Sawmill residue, forest thinnings, harvest residues and — increasingly — the residue of a pulp and paper industry that is contracting. The supplier is paid a stumpage or gate price that is small relative to the finished tonne and highly variable. This link bears the most weather risk and the least bargaining power. Georgia’s loss of three paper mills in ninety days is the clearest recent demonstration that a pellet plant’s input can disappear for reasons entirely outside the pellet industry. Link two: densification Drying, hammer-milling, conditioning and pressing. This is where the 1.89 multiple this report opens with is created — a tonne of chips at EUR 21.85 per megawatt-hour becomes a tonne of pellets at EUR 41.30. Capital intensity is high, energy consumption is substantial, and the plant is a price-taker at both ends. The relevant number for a new entrant is not the capital cost but the utilisation rate required to service it, and that rate is a function of fibre availability, not of demand. Link three: certification SBP, ISCC EU, RSB, GGL, ENplus, FSC and the national equivalents. This link adds no physical product and captures a disproportionate share of the premium, because it is the link that converts a commodity into a countable unit of renewable energy. Its cost is largely fixed per audit and per cargo, which is why it functions as a consolidation mechanism. Link four: logistics Inland haulage to a port, port storage, and a Handysize or Supramax cargo of 20,000 to 35,000 tonnes. Port stock behaviour is a leading indicator of delivered price and it moves fast: combined inventories at monitored Amsterdam, Rotterdam and Antwerp terminals fell by 15,500 tonnes, or 47 per cent, to around 17,500 tonnes over a single quarter in early 2025, alongside elevated vessel arrivals. A market with six weeks of visible stock at a major import hub has no buffer against a supply disruption. Link five: the file, sold The buyer is a utility, an independent power producer, a heating distributor or — newly — an industrial kiln or a conversion plant. This is where the premium is monetised and where the policy risk sits, because the buyer’s willingness to pay the premium is a direct function of a subsidy or a carbon accounting rule that the buyer does not set. The structural finding Vertical integration from link two to link five is common and it is what Drax, Enviva and the large European producers have all attempted. It has not produced durable margin, because it integrates the plant with the buyer while leaving the fibre and the policy outside the boundary. The 2024–26 record — a Chapter 11 restructuring, a collapse in Drax’s operating profit, and a 47 per cent fall in port stocks within one quarter — is what that partial integration looks like when three independent shocks arrive. ## Investment Activity Investment in this market has overwhelmingly been directed at production capacity, and the results show it. Restructuring as the dominant form of capital allocation Enviva’s Chapter 11 and emergence with USD 1 billion less debt is the largest single capital event in the recent history of the sector, and it was a de-leveraging, not an investment. Its Alabama plant — 1 million tonnes, ramping — was already committed capital that had to be completed because an unfinished plant is worth less than nothing. This is the characteristic shape of capital allocation in a commodity-adjacent market where capacity was built against contracted offtake that subsequently repriced. Conversion demand is the new capital magnet The Drax contract to supply more than 1 million tonnes annually to a USD 2 billion sustainable aviation fuel plant in Texas is the first sign of a genuine change in the direction of capital. It is a reallocation rather than an addition: the same pellet stream, a different buyer, a different price basis, and a different regulatory file. Aviation fuel does not need a renewable electricity certificate; it needs a greenhouse gas savings calculation and a mass balance chain, which are harder to produce and more valuable. Industrial conversion capital is small in dollars and large in consequence At UNACEM North America’s Drake Cement plant in Paulden, Arizona, the biomass programme moved from 0 per cent to a design heat share of 20 per cent, with coal falling from 41 per cent to 28 per cent of the mix and petroleum coke from 16 per cent to 8 per cent. The investment is in receiving, storage, metering and conveying — a capital item measured in single-digit millions at a single plant, not in billions. Every cement kiln that converts does this. The aggregate is the demand signal, and the individual transaction is too small to appear in any investment statistic. What the investment pattern says about the forecast Capital is flowing into conversion capacity — plants that can burn a substitute fuel — and into aviation, and it is not flowing into new pellet capacity at anything like the rate of the 2018–2022 build-out. That is consistent with the 3.47 per cent volume growth in this forecast and inconsistent with the assumption that the market’s historic growth rate continues. The increment from here is disproportionately price and mix, not tonnage. ## Technology & Innovation The thermal engineering of this market has been settled for two decades. The unresolved technology is measurement, and it is worth more than the engineering. The biogenic fraction problem A kiln or a boiler burning a variable blend of fossil and biogenic material must report how much of the resulting carbon dioxide is biogenic, because that determines the emissions factor and therefore the carbon cost. There is no agreed standard method for doing this. Carbon-14 testing to ASTM D6866 is the only defensible route and it is slow, expensive and rarely applied continuously. The consequence for this market is direct: a fuel whose biogenic content cannot be verified cannot be fully credited, and the discount applied to it is a measurement discount rather than a quality discount. That is the technical reason palm kernel shells sit at USD 133.79 per tonne against industrial pellets at USD 196.62 — and it is why the certification layer described in Chapter 2 is not overhead but the product. Torrefaction, and why it has not arrived Torrefied pellets offer a higher energy density, hydrophobic handling and grindability closer to coal, which is exactly what a converted coal mill wants. They have been at pilot scale for fifteen years. The obstacle is not thermal; it is that torrefaction adds cost to a product that competes on price against coal plus carbon, and the premium a utility will pay for grindability is less than the cost of producing it. Until the carbon price rises enough to close that gap, torrefaction remains an option, not a market. Where innovation is actually landing Feedstock flexibility. Plants designed for a single residue stream are being modified to accept multiple streams, including construction demolition wood and agricultural residue. This is a capital-light response to the fibre risk described in Chapter 2 and it is the single most common technology investment in the sector. Digital chain of custody. Moisture, calorific value and mass balance measured continuously at receipt rather than by sampling, and reconciled against the supplier’s certificate. This directly attacks the fixed-cost audit barrier and is the route by which smaller producers can enter. Kiln-side substitution in cement. The technology is feed control, not combustion — a variable-energy, variable-moisture fuel requires a control system that can hold a calciner temperature inside a band. The Global Cement and Concrete Association reports biomass at 8.51 million tonnes of its members’ 25.57 million tonnes of alternative fuel in 2024, and alternative fuel use is 12.8 times its 1990 level. The constraint on further substitution is feedstock logistics and measurement, not burner design. ## Market Risk Risk one: the subsidy base is being withdrawn in sequence, not in parallel Korea’s RPS amendment removes the certificate that justified co-firing. Japan’s FIT closure for new certifications of 10 megawatts and above removes the mechanism for new large plants. The EU’s sustainability criteria narrow what qualifies at all. These three are not correlated events but their effect compounds: a North American exporter selling to all three markets faces a simultaneous reduction in the price each will pay, and there is no fourth market of comparable size. The quantification is straightforward. Japan and Korea together imported 11.91 million tonnes of pellets in 2025. Every 10 per cent reduction in that combined pull, redirected into a spot market with no alternative large buyer, reprices several million tonnes at the same time. Risk two: the fuel supply is a by-product and its cycle is somebody else’s European pellet input costs did not fall through the 2024–25 heating season because sawmilling activity was subdued by lower building activity, and closing three Georgia paper mills removed both residue and a competing buyer within a single quarter. A market whose input is the waste of another industry has a supply curve it cannot control, and the 47 per cent quarterly fall in ARA port stocks demonstrates how little inventory stands between that supply curve and the delivered price. Risk three: the tonnage is verifiable, the sustainability claim is not The EU’s no-go areas and harvesting requirements are verifiable only against a chain of custody that terminates at a forest stand. The industry’s own audit infrastructure is not yet able to demonstrate, cargo by cargo, that a given tonne did not originate in primary forest, highly biodiverse forest or peatland. A single enforcement action against a large importer — or a member state deciding to test the question — would reprice European industrial pellets by more than the entire certification cost. Risk four: substitution above and below Below, the fossil alternative is coal plus a carbon price, and the carbon price is the only variable that has moved in biomass’s favour. Above, heat pumps and electrification take the residential heating market that supplies 41.63 per cent of this report’s value at its highest unit price. The European household count of 6.5 million is a base that grows 5 per cent in a good year and can reverse if electricity prices fall relative to pellet prices. Risks we considered and weighted down Feedstock exhaustion is not a binding constraint in the forecast window. The US Department of Energy estimates more than 161 million tons of biomass residuals are available annually in the United States alone, against 10.09 million tonnes of pellet exports. Technology substitution is not imminent, because torrefaction economics do not close and no alternative densified fuel is at scale. Demand collapse is unlikely in heating, which is a dispersed, non-cyclical, price-sensitive retail market. ## Regulatory Landscape European Union Bioenergy accounted for about 59 per cent of EU renewable energy consumption in 2021 (European Commission, 2023 Union bioenergy sustainability report), and EU industry consumed 21.1 million tonnes of oil equivalent of biomass in the same year. That position is now governed by the revised Renewable Energy Directive, EU/2023/2413, in force since 20 November 2023, which: extended the “no-go areas” for agricultural biomass to forest biomass, covering primary and old-growth forest, highly biodiverse forest and grassland, heathland, certain high carbon stock land and peatland; introduced specific harvesting requirements for forest biomass, including for clear-cuts and deadwood extraction; extended greenhouse gas emissions savings criteria to new categories of installation. Only biomass that does not originate in the excluded areas can count toward renewable targets or receive subsidies. The practical effect is that the compliance file, not the fuel, determines eligibility — and eligibility determines the price. Japan The 8 gigawatt target for the 2030 energy mix was exceeded at 8.7 gigawatts by December 2025. New FIT/FIP certifications in the “general wood and agricultural residues” category — 94.8 per cent of new certifications in that class — ended for facilities of 10 megawatts or larger from April 2026, with existing contracts unaffected. A biomass category has been reinstated in the long-term decarbonised power auction, and the 2040 energy mix implies roughly 4 gigawatts of additional capacity. Sustainability requirements include legal and traceable supply chains, and most buyers now require third-party certification from mill through aggregator to loading anchorage. South Korea The RPS amendment of late 2024 ends REC support for new biomass power plants, ends certificates for state-owned coal-and-biomass co-firing from 2025, phases out certificates for private co-firing from 2026, and lowers certificate weightings for dedicated biomass plants over time. This is the most consequential single regulatory change in this report, because Korea is the market where the certificate was the entire margin. Indonesia An export duty set monthly against the crude palm oil reference price — USD 10 per tonne in May 2026 — plus a plantation fund levy of USD 5 per tonne from 1 March 2026. These are statutory costs that sit between an FOB offer and a delivered cargo and they are set by a reference price the exporter does not control. United Kingdom and North America The UK remains the largest single European importer, with 8.1 million tonnes imported year to date in the 2024–25 period, and its support framework is the reason. North American demand is driven by state-level renewable portfolio standards and, increasingly, by aviation fuel incentives — a different file for the same tonne. ## Frequently Asked Questions **Q: How large is the global biomass fuel market?** USD 12,345.6 million in 2025 across 59.3 million tonnes delivered, rising to USD 20,660.0 million and 77.9 million tonnes by 2033 at a compound rate of 6.65 per cent, an increment of USD 8,314.4 million or 1.673 times the base. That covers industrial wood pellets (52.08 per cent of value), heating pellets (41.63 per cent) and palm kernel shells (6.29 per cent), each priced at the delivered point in the region that buys it. **Q: Why is this market size smaller than other biomass figures I have seen?** Because the scope is solid biomass fuel crossing a commercial boundary at the price the buyer paid. Captive bagasse, black liquor and on-site mill residue are excluded: they are burned where they are produced at an administrative transfer price and constitute an avoided disposal cost rather than a fuel market, and they are the single largest reason other estimates run into the hundreds of billions. Traded wood chips, firewood, refuse-derived fuel, the non-biogenic fraction of alternative fuels, liquid biofuels and certificate value are also excluded, each with its reason stated. The scope section gives the ladder back up so a reader can reconcile rather than take either number on trust. **Q: What drives the 6.65 per cent forecast rate?** Two disclosed components: 3.47 points of volume growth on 59.3 million tonnes rising to 77.9 million, and 3.07 points of realised price growth on USD 208.19 per tonne rising to USD 265.21. The price half is the contentious one, because it requires delivered biomass to outpace general inflation for eight years in a market whose stated purpose is to undercut the fossil fuel it displaces. If realised price growth is zero, the 2033 market is USD 16,145 million and the compound rate 3.41 per cent. **Q: Why does a megawatt-hour of wood pellets cost about twice a megawatt-hour of wood chips?** Because the tonne, not the energy, is the product. Baltic wood chips cleared at EUR 21.85 per megawatt-hour on the Baltpool exchange in the 2024-25 season; industrial pellets were assessed at EUR 195 per tonne CIF ARA, or EUR 41.30 per megawatt-hour, a 1.89 multiple on identical combustion chemistry, and 2.04 on residential grade. Across the whole base USD 5,813.5 million, or 47.1 per cent of the measured market, sits above a chip-equivalent energy price. That premium is the cost of a densified, uniform, certified, contractible, traceable tonne: the file, not the flame.