Biomass Fuel (Wood Pellets and PKS) Market Industry Growth Prospects and Emerging Trends 2034

Biomass fuel includes renewable organic materials such as wood pellets and palm kernel shells that are used to produce heat, electricity, and bio-based fuels. These fuels offer an alternative to conventional fossil fuels while supporting energy security and environmental sustainability. Biomass energy has evolved over decades, transitioning from traditional wood burning to advanced solid biofuels and modern combustion technologies. Wood pellets are manufactured from compressed sawdust and forestry residues, offering high energy density and uniform quality. Palm kernel shell (PKS), a by-product of palm oil processing, is widely used as an industrial biomass fuel due to its high calorific value and cost efficiency.

The global Biomass Fuel (Wood Pellets and Palm Kernel Shell (PKS)) Market in 2026 is gaining significant traction as countries and industries intensify efforts to reduce carbon emissions and transition toward sustainable energy solutions. Biomass fuels, derived from organic materials, are increasingly recognized as reliable renewable energy sources capable of supporting power generation, heating, and industrial energy needs.

According to industry analysis, the global biomass fuel (wood pellets and palm kernel shell (PKS)) market size was valued at USD 20.42 billion in 2025. The market is projected to grow from USD 22.43 billion in 2026 to reach USD 42.80 billion by 2034, registering a robust CAGR of 8.41% during the forecast period.

Market Drivers

The expansion of the biomass fuel market is driven by several structural and policy-level factors:

• Rising Demand for Renewable Energy: Governments worldwide are prioritizing renewable energy adoption to meet climate targets. Biomass fuel plays a critical role in replacing coal and other fossil fuels, particularly in power generation and industrial heating.

• Supportive Government Policies: Incentives, renewable energy mandates, and carbon reduction policies are encouraging investments in biomass fuel infrastructure and technology.

• Industrial Decarbonization: Energy-intensive industries are increasingly shifting toward biomass fuels to lower greenhouse gas emissions and comply with environmental regulations.

• Waste Utilization: The use of agricultural residues, forestry waste, and industrial by-products supports circular economy initiatives and reduces landfill waste.

Market Restraints

Despite favorable growth prospects, the biomass fuel market faces certain challenges:

• High Initial Capital Investment: Biomass fuel production and power generation facilities require substantial upfront investment, including equipment, storage, and logistics infrastructure.

• Feedstock Supply Volatility: Availability and pricing of raw materials such as wood residues and agricultural waste can vary due to seasonal and geographic factors.

• Logistics and Storage Challenges: Biomass fuels require specialized storage and transportation solutions to prevent degradation and maintain fuel quality.

Market Segmentation

By Feedstock

Based on feedstock, the market is segmented into wood pellets, palm kernel shell (PKS), and others. Wood pellets accounted for the largest market share of 86.37% in 2026. Their dominance is attributed to widespread adoption across residential, commercial, and industrial heating applications.

Palm kernel shell (PKS) is expected to witness strong growth, registering a CAGR of 8.59% during the forecast period. The increasing availability of PKS in palm-producing regions and its cost-effective nature are supporting market expansion.

By Combustion Method

By combustion method, the market is categorized into direct combustion, pyrolysis, and others. Direct combustion held the largest share of 56.29% in 2026 due to its operational simplicity and established infrastructure.

Pyrolysis is emerging as a promising technology, driven by the growing demand for liquid biofuels and advanced biomass conversion techniques.

By Application

The industrial segment dominated the market with a share of 42.87% in 2026. Industries such as cement, steel, and manufacturing increasingly rely on biomass fuels to reduce emissions and enhance sustainability.

The residential and commercial segments are also witnessing steady growth as consumers adopt biomass-based heating systems to reduce dependence on fossil fuels.

Explore the full research report with detailed insights and TOC: https://www.fortunebusinessinsights.com/biomass-fuel-wood-pellets-and-palm-kernel-shell-pks-market-114073 

Regional Insights

Regionally, the biomass fuel market is analyzed across North America, Europe, Asia Pacific, Latin America, and the Middle East & Africa.

• Europe: Europe led the market with a valuation of USD 12.48 billion in 2025, supported by stringent emission reduction targets and strong renewable energy adoption.

• North America: The region recorded a market value of USD 2.88 billion in 2025, driven by renewable fuel standards and investments in clean energy projects.

• Asia Pacific: Asia Pacific accounted for USD 4.07 billion in 2025, benefiting from abundant agricultural residues and increasing energy demand.

• Rest of the World: Latin America and the Middle East & Africa are gradually adopting biomass fuels to improve energy access and sustainability.

Competitive Landscape

The global biomass fuel market is moderately fragmented, with key players focusing on capacity expansion, strategic partnerships, and supply chain optimization.

Top Companies in the Market:

• Iwatani Corporation (Japan)

• Enviva Inc. (U.S.)

• Drax Global (U.K.)

• CM Biomass (Denmark)

• Hanwa Co., Ltd. (Japan)

• BIO ENECO SDN. BHD. (Malaysia)

• Valfei Products Inc. (Canada)

• Mallard Creek Inc. (U.S.)

• Graanul Invest (Estonia)

• Segezha Group (Russia)

• Energex (Australia)

In July 2025, Danish biomass leader CM Biomass reported strong financial performance for the 2024/25 financial year, maintaining stable trading volumes despite downward pressure on biomass prices and broader global economic challenges.

Future Market Scope

The biomass fuel (wood pellets and PKS) market is expected to benefit from continuous technological advancements, rising investments in renewable energy infrastructure, and growing awareness of sustainable fuel alternatives. Expansion of waste-to-energy projects and industrial decarbonization initiatives will further support long-term market growth.

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