Wood Pellets Market to Grow by USD 5.89 Billion (2024-2028), Driven by Strict CO2 Regulations, Report Highlights How AI is Redefining the Market Landscape - Technavio

NEW YORK, Sept. 25, 2024 /PRNewswire/ -- Report with market evolution powered by AI- The global wood pellets market size is estimated to grow by USD 5.89 billion from 2024-2028, according to Technavio. The market is estimated to grow at a CAGR of 8.09% during the forecast period. Stringent regulations on co2 emissions is driving market growth, with a trend towards declining use of coal in power industry. However, installation requirement for biomass boiler and feedstock storage poses a challenge. Key market players include AS Graanul Invest, Binderholz GmbH, Bio Eneco, BioPower Sustainable Energy Corp., BrasPine Madeiras Ltda, CT Pellet, Drax Group Plc, ECARE, Energy Pellets of America LLC, Enviva Inc., Highland Pellets LLC, JP Green Fuels Pvt. Ltd., Land Energy Girvan Ltd., Laxmi Subhi Sales Corp., Lignetics Inc., Pfeifer Holding GmbH, PREMIUM PELLETS s.r.o, PRODESA, proPellets Austria, SNOW ENTITIES Inc., and VIRIDIS ENERGY INC..

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Key Market Trends Fueling Growth

The global power industry is witnessing a shift towards cleaner energy sources as coal power gradually loses its dominance. Renewable resources, particularly solar and wind, are gaining popularity due to their low or zero emissions. China's decision to cancel 103 coal power plants, including those under construction and in planning stages, represents a significant loss of 120 GW in cumulative capacity. India, for instance, has established a renewable power capacity of 168.4 GW as of January 31, 2023, accounting for 40.9% of the country's total energy capacity. This capacity includes 41.9 GW from wind energy, 10.2 GW from biomass, and 46.85 GW from hydropower. The decline in coal usage for power generation is expected to continue, with India's Fatehgarh solar project being a recent example of the industry's shift towards renewable sources. Wood pellets are among the alternative energy sources poised to substitute coal, generating power and heat with lower emissions.

The Wood Pellets Market is experiencing significant growth due to increasing trends towards renewable energy and decreasing reliance on fossil fuels. Lumber production, private landowners, loggers, and mill residuals are key feedstock sources. Wood biomass is in high demand for heating applications in both residential and commercial segments. Drax power station's shift to biomass power generation using Drax Biomass is a notable development. Transportation costs and partnerships with shipping firms are crucial for market expansion. Heating and power generation applications drive demand, with biomass power generation leading the way. CO2 emissions are a concern, but wood pellets are carbon neutral and reduce greenhouse gases. Brand recognition is essential for wood pellet dealers. Law enforcement agencies monitor compliance with regulations. Renewable energy sector growth includes power boilers, co-firing, and use of agricultural residue, wood waste, and sawmill residues as woody feedstock. Self-cleaning systems in wood pellet and biomass boilers are desirable. Biomass boiler grants and incentives promote adoption. In 2020, Enviva Pellets Waycross produced over 1 million metric tons. Cell line development and partnerships with solar photovoltaic and wind energy companies are future trends. Implementation of compliances, energy efficiency, and feedstock sources like natural gas, mountain pine beetle-affected trees, and fire-damaged trees, are ongoing challenges. 

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Market Challenges

• Biomass boilers utilizing wood pellets as fuel have become increasingly popular due to their environmental benefits. However, the installation and storage of these boilers pose significant challenges. Due to their larger size, biomass boilers require adequate fuel storage containers or silos. Space constraints in urban areas make fuel storage a challenge for many industries. Regulations and standards for boiler installation also vary across regions, adding complexity. Biomass boilers are relatively new compared to conventional boilers, bringing technological challenges such as design, emission control, and size. The risk of explosion is a concern due to their similarities to conventional boilers. Power boilers require rapid start-up capabilities and high operating efficiencies, making tube failures a priority. Complex failure paths and thermal transients make mitigation difficult, necessitating regular maintenance. These challenges may hinder the growth of the global wood pellets market during the forecast period.
• The wood pellets market faces several challenges in the renewable energy sector. One major issue is reducing CO2 emissions from power stations, such as Drax, which use wood pellets for co-firing with biomass. Drax Biomass and other pellet producers must ensure their feedstock, including agricultural residue, wood waste, and sawmill residues, is sustainable and carbon neutral. Law enforcement agencies monitor compliance with regulations, including those related to greenhouse gases and chlorine content. Brand recognition is crucial for pellet producers like Enviva Pellets Waycross, as they compete with other energy sources, such as natural gas and renewable energy sources like solar photovoltaic and wind energy. Producers must also invest in technology, such as self-cleaning systems for wood pellet boilers and biomass boilers, to improve efficiency and reduce costs. Feedstock sources, including agricultural residue and wood waste, must be consistently available to meet demand. Producers must also adapt to changing feedstock sources, such as those affected by natural disasters, like the Mountain Pine Beetle or fire-damaged trees. Producers must also comply with international energy agency regulations and implement new technologies, like cell line development, to remain competitive.

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Segment Overview

This wood pellets market report extensively covers market segmentation by

1. End-user
• 1.1 Residential
• 1.2 Commercial and industrial
2. Application
• 2.1 Power generation
• 2.2 Combined heat and power
• 2.3 Heating
3. Geography
• 3.1 Europe
• 3.2 North America
• 3.3 APAC
• 3.4 Middle East and Africa
• 3.5 South America

1.1 Residential- The residential sector accounts for a significant portion of energy consumption for space heating and water heating. Fossil fuels are commonly used to meet these needs, contributing to carbon emissions. However, bioenergy, particularly wood pellets, offers a viable alternative. Wood pellets have the highest bulk density among wood fuels, reducing storage requirements. This factor is crucial in urban areas with limited space. The growth of the global wood pellets market is driven by their increasing use in various sectors, including residential, due to their environmental benefits and space efficiency. The market is expected to expand positively during the forecast period, considering the need to reduce carbon emissions and the advantages of using wood pellets as a fuel source. Proximity to biomass sources and efficient transportation and storage solutions are essential to keep costs economical.

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Research Analysis

The wood pellets market is a growing sector in the renewable energy industry, driven by the shift towards carbon neutral energy sources and the depletion of fossil fuels. Wood pellets are made from compressed wood biomass, primarily sourced from lumber production, private landowners, loggers, and mill residuals. Wood dealers play a crucial role in the supply chain, transporting the pellets to power and heating industries, paper and sawmills, and the renewable energy sector. Transportation costs are a significant factor in the market, as wood pellets are often transported long distances. Renewable energy, particularly power boilers, is the largest consumer of wood pellets, accounting for over 70% of global demand. Co-firing with natural gas and coal is a common practice in the power industry, providing a viable transition towards renewable energy. Feedstock sources include agricultural residue, wood waste, sawmill residues, and woody feedstock. Eucalyptus wood pellets are gaining popularity due to their high energy density. However, the market faces challenges such as the Mountain Pine Beetle infestation and fire-damaged trees, which can impact the availability and quality of feedstock. Chlorine is used in the production process but must be removed to meet pellet quality standards. The market also faces competition from biomass and other renewable energy sources.

Market Research Overview

The wood pellets market is a significant sector in the renewable energy industry, driven by the shift towards sustainable and carbon-neutral energy sources. Wood pellets are made from compressed wood biomass, including lumber production residuals, mill residuals, sawmill shavings, and agricultural residue. Wood dealers and private landowners supply the raw material to pellet manufacturers, while loggers and paper and sawmills provide mill residuals. Transportation costs and shipping firms play a crucial role in the market, as pellets are often transported long distances to reach consumers. Heating application is a major use case for wood pellets, particularly in the residential and commercial segments. Power generation application, specifically biomass power generation, is another significant market for wood pellets. CO2 emissions from wood pellets are generally lower than those from fossil fuels, making them an attractive alternative. Drax power station in the UK is a major consumer of wood pellets, with its subsidiary Drax Biomass supplying the fuel. Brand recognition and law enforcement agencies' involvement are essential factors in ensuring the sustainability and legality of wood pellets. Renewable energy sources, including solar photovoltaic and wind energy, are complementary to the wood pellets market. The implementation of compliances and energy policies is crucial in driving market growth. Feedstock sources include natural gas alternatives like woody feedstock, eucalyptus wood pellets, and even chlorine-treated wood. The renewable energy sector's growth and the increasing focus on reducing greenhouse gas emissions are expected to boost the wood pellets market. Wood pellet boilers, with self-cleaning systems and biomass boiler grants, are becoming increasingly popular. The market is expected to reach metric tons in volume by [year], with key players like Enviva Pellets Waycross and Cell Line Development leading the charge in innovation and production.

Table of Contents:

1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation

• End-user
• Residential
• Commercial And Industrial
• Application
• Power Generation
• Combined Heat And Power
• Heating
• Geography
• Europe
• North America
• APAC
• Middle East And Africa
• South America

7 Customer Landscape
8 Geographic Landscape
9 Drivers, Challenges, and Trends
10 Company Landscape
11 Company Analysis
12 Appendix

About Technavio

Technavio is a leading global technology research and advisory company. Their research and analysis focuses on emerging market trends and provides actionable insights to help businesses identify market opportunities and develop effective strategies to optimize their market positions.

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SOURCE Technavio