8.7% CAGR Anticipated for Wood Pellet Market During 2017-2027

Posted by Shirish Wadaskar on August 18th, 2017

Increasing consumption of wood pellets in North America region fuelling market growth

Wood pellets are manufactured from renewable forest by-products, saw dust and agriculture waste materials. Wood pellets are fast becoming popular in North America owing to the increasing prices of primary fuel. Demand for wood pellets in North America as a bio-mass fuel is increasing significantly, attributed to high demand for industrial as well as commercial purposes. Rising prices of fossil fuels including natural gas and fuel oil is one of the major driving factors for wood pellet heating. Concerns about climate change in North America is also stimulating the growth of the wood pellet market in the region.

Energy and climate change issues in Western Europe driving the growth of the global market

Increasing carbon emission is a major driving force for the wood pellet market in the Western Europe region. There is high demand for wood pellets in this region to reduce carbon emission and raise the contribution of total renewable energy consumption. The use of co-firing and dedicated biomass power plants is a part of the compliance plan, which helps drive the wood pellet market in this region.

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Fulfilling certification criteria may act as a restraint to the wood pellet market in North America

Government certification is a valuable tool to assure customers that wood pellets are made from sustainably managed forests. Increasing certification criteria is a key restraining factor in the North America wood pellet market while exporting to other countries, where various rules mandate renewable energy production. Wood pellets procurement policy is also one of the key restraining factors of the North America wood pellet market. For instance, norms laid down by the Sustainable Forestry Initiative and Forest Stewardship Council (the certification organisations of North America) restrict the growth of the wood pellet market in North America. Approximately 19% of U.S. commercial forestland is certified by major U.S. standards. According to the Wood Pellet Association of Canada, approximately 9% of world forests are certified. Out of these, more than 40% forests are in Canada, which makes these forests an ideal source of wood pellets.

Key players focussing on contracts/agreements in the Western Europe wood pellet market

Western Europe is one of the largest regional wood pellet markets based on consumption and the production is less than consumption in this region. Efforts are being made to increase the production capacity of wood pellets in this region. Swedish softwood lumber supply is estimated to increase over the forecast period, which will help increase the production capacity of wood pellets.

Global Wood Pellet Market Attractiveness Index, by Region

The global wood pallet market is estimated to be valued at nearly US$ 9,205 Mn by 2017 end and is expected to register a CAGR of 8.7% over the forecast period to be valued at nearly US$ 21 Bn by the end of 2027. Amongst all regions, Western Europe is anticipated to account for 72.6% value share in the global wood pellet market by 2017 end, followed by North America with 7.8% value share. Western Europe is anticipated to exhibit a higher incremental value during the forecast period as compared to other regions. Asia Pacific excluding Japan is projected to register a CAGR of 9.9% over the forecast period to account for 8.7% value share by 2027 end. Middle East and Africa is expected to account for 0.7% value share in the global wood pellet market by 2017 end. The market in MEA will register a CAGR of 7.4% over the forecast period.

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Growing demand of wood pellets for electricity generation in Latin America

The production capacity of wood pellets in Chile is growing rapidly, owing to low manufacturing cost. Brazil as well as Argentina are the one of largest producers of wood pellets made of industrial round wood and sawdust. The rapid rate of production of wood pellets across the Latin America region is one of the major driving factors of the global wood pellet market and large amounts of wood pellets are being used to produce electricity in this region. For instance, Alone Chile produces approximately 16 Mn cubic meters of firewood and more than 40 Mn cubic meters of industrial round wood.