Europe Biomass Pellets Market was valued at USD 8.40 Bn in 2024 and The Market size is estimated to grow at a CAGR of 5.5% over the forecast period

Market Estimation & Definition

Biomass pellets are dense, uniformly sized biofuels produced by compressing organic residues such as forestry by-products, agricultural straw, sawdust, energy crops, food scraps and industrial waste. Their low moisture content, high energy density and consistent combustion properties make them an attractive, carbon-lean substitute for coal, oil and gas across residential, commercial and industrial applications.

Europe’s pellet market valuation of US $8.40 billion in 2024 reflects sustained demand in residential stoves and boilers, combined heat-and-power (CHP) plants, large-scale co-firing at former coal stations and niche uses such as animal bedding. The study analyses historical trends from 2019 through 2024 and models market behaviour through 2032, capturing shifts in feedstock availability, subsidy regimes, carbon pricing and technology adoption.

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Market Growth Drivers & Opportunity

1. Aggressive climate policy and renewable-energy targets
The updated Renewable Energy Directive elevates the European Union’s 2030 renewable share to 42.5 percent, with many member states setting even higher national quotas. Solid biomass already supplies nearly half of the EU’s renewable energy, and pellets—thanks to traceability standards and lifecycle-carbon accounting—sit at the core of that mix.

2. Rising carbon prices and compelling cost economics
As the EU Emissions Trading System tightens, coal and natural-gas generation costs climb. Pellets, priced on a per-megawatt-hour basis and often exempt from certain carbon levies, have become cost-competitive or cheaper than fossil alternatives in space heating and power generation.

3. Edge in performance and infrastructure compatibility
Standardised size and calorific value allow pellets to flow through automated feed systems, retrofit seamlessly into existing boilers and achieve combustion efficiencies above 85 percent. That “drop-in” compatibility reduces capital expenditure and accelerates adoption across district-heating networks and industrial steam plants.

4. Domestic supply resilience
Europe hosts an extensive pellet supply chain stretching from Scandinavia and the Baltic states through Central and Western Europe. Countries like Sweden, Germany, Austria, Latvia and Estonia have invested in modern pellet mills that convert forestry residues and sawmill by-products into export-grade fuel. The region’s strategic pivot away from Russian biomass after 2022 further catalysed local capacity expansion.

5. Feedstock diversity and rural economic upside
By valorising agricultural residues—corn stover, wheat straw, sunflower husks—and purpose-grown energy crops alongside forest waste, pellet producers unlock year-round feedstock flow. Rural communities benefit from additional revenue streams, job creation and reduced field-burning practices.

Segmentation Insights

Offering perspective. Equipment manufacturers continue to refine pelleting lines, from hammer mills and dryers through presses and coolers, driving down unit costs and improving energy efficiency. On the demand side, heating-appliance makers are rolling out fully automated pellet boilers and stoves with smart controls and ultra-low particulate emissions, broadening appeal in suburban homes and commercial buildings.

Feedstock mix. Forest and wood waste remains the backbone of pellet production thanks to Europe’s mature sawmill industry. Nevertheless, agricultural residues are rapidly scaling, particularly in Central and Eastern Europe, where straw-based pellets provide an economical, locally sourced option for district-heating plants.

Application split. Residential and commercial heating together still represent the biggest slice of consumption, propelled by incentive schemes that subsidise pellet boilers and stove installations. Power-utility demand remains substantial, with large plants in the UK, Denmark and the Netherlands co-firing or fully converting former coal units to wood pellets. Industrial users—from food processors to chemical sites—are steadily swapping out fossil steam boilers for pellet solutions.

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Country-Level Highlights

Germany
Europe’s largest pellet-heating market continues to accelerate. Production rose from roughly 2.4 million tonnes in 2018 to over 3 million tonnes by 2020, supported by generous incentives for residential boiler retrofits and rigorous building-energy standards. As Germany ramps up heat-pump deployment, hybrid systems that pair a pellet boiler for peak demand with an electric heat pump for baseload are gaining traction, ensuring stable pellet consumption.

United Kingdom
The UK accounts for roughly 40 percent of Europe’s pellet usage, anchored by large-scale power generation at converted coal facilities and a robust residential-heating segment underpinned by the Renewable Heat Incentive. Domestic players are adding capacity, while supply diversification efforts—sourcing from Canada, the Baltics and the US Southeast—hedge against feedstock volatility.

Other notable markets
Sweden, Austria and Italy exhibit high per-capita pellet consumption due to established district-heating networks and cultural acceptance of biomass heating. France’s Energy Transition Law and Poland’s Clean Air Programme are catalysing fresh demand, while the Netherlands and Denmark pursue aggressive coal phase-outs using pellet co-firing as an interim decarbonisation measure.

Competitor Landscape

The European pellet ecosystem features a mix of integrated energy groups, dedicated biomass majors and specialised technology providers.

• Market leaders such as German Pellets and Drax Group leverage end-to-end control—from feedstock procurement through pellet production, logistics and energy conversion—to secure supply and cost advantages.

• Emerging disruptors like AS Granul Invest in the Baltics are scaling capacity rapidly, influencing regional pricing and trade flows.

• Equipment specialists including KAHL and SALMATECH design turnkey pelleting plants that underpin expansion projects across Europe and Asia.

• Regional champions—for example Ulma AB in Sweden or 3F Pellets in the UK—serve local heating markets with retail-grade bagged pellets.

More than 60 significant mergers, acquisitions, partnerships and capacity-increase announcements since 2022 highlight a sector consolidating quickly to meet growing demand and tighter sustainability rules.

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Press-Release Conclusion

With its ambitious climate targets, supportive subsidy frameworks and well-established biomass supply chains, Europe is primed for steady, sustainable growth in biomass pellet consumption. The market’s ascent from US $8.40 billion today to nearly US $13 billion by 2032 underscores pellets’ strategic role in cutting carbon from heating and power while strengthening rural economies and energy security.

Stakeholders across the value chain—policymakers, investors, equipment makers, pellet producers, utilities and building owners—have a unique window to capitalise on this momentum. Companies that can ensure certified feedstock, high-efficiency combustion technologies and competitive logistics will be best placed to seize market share as Europe accelerates toward a net-zero future.

About Stellar Market Research:

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