The global wood pellets market is projected to register significant growth by 2027 on account of policy changes pertaining to coal-fired plants. In addition, the sustainable and environmentally friendly characteristics of wood pellets are speculated to augment industry expansion over the forecast period.

Wood pellets are an eco-friendly biofuel that are obtained from recycled and compressed wood waste. They are used in both industrial and domestic settings and are deemed to be a suitable alternative to fossil fuels owing to their clean-burning properties. Notably, mounting demand for sustainable and renewable energy around the world has accelerated product uptake in recent years.

Moreover, industry players are implementing various strategic initiatives to capitalize on emerging trends in the wood pellets market, thereby enhancing overall business dynamics. For instance, in February 2021, Drax Group plc, a leading power generation company, announced the acquisition of Pinnacle Renewable Energy Inc., a major manufacturer of industrial wood pellets. The deal was intended to strengthen Drax's position in the sustainable biomass market to accommodate the soaring demand for renewable energy products by leveraging Pinnacle's technical expertise and financial resources.

To cite a similar instance, in August 2020, Enviva Partners, LP, a global energy company specializing in sustainable wood bioenergy, completed the acquisition of Georgia Biomass and its Waycross production plant, which is an industrial scale wood pellet production plant. The addition of the Waycross factory diversified Enviva's manufacturing footprint and expanded its activities in the region.

The global wood pellets market has been segmented on the basis of application, grade, and region. In terms of grade, the market has further been bifurcated into utility, premium, and standard.

The premium sub-segment is anticipated to garner sizable gains by 2027, growing at around 15.3% CAGR over the review timeframe. Surging product demand for residential heating applications is slated to boost segmental expansion in the coming years.

With respect to application, the global wood pellets market has been categorized into industrial, residential, animal bedding, and commercial. The animal bedding sub-segment is expected to observe optimistic growth at more than 11.7% CAGR through the assessment period. Rising product consumption across European countries is set to propel segmental adoption over 2021-2027.

From the regional point of view, the Middle East & Africa wood pellets market is estimated to progress considerably at a CAGR of around 6.2% through the stipulated timeline to attain a considerable share in the overall industry revenue by the end of 2027. Low inclination towards sustainable energy sources, along with higher dependency on imports of major countries in MEA, is speculated to boost regional market growth over the forecast period.