Biomass Market Size & Share Analysis - Growth Trends and Forecast (2027 - 2032)

Market Trends and Insights

Renewable Heat, Power, and Sustainable-Fuel Demand

Demand for renewable heat and firm power is supporting the global biomass market as energy systems add more variable wind and solar generation. Global bioenergy capacity reached 155 GW in 2025.^[2] Bioenergy projects commissioned in 2025 delivered electricity at a global average cost of USD 86 per MWh.^[3] The EU Renewable Energy Directive III applies sustainability requirements to solid biomass heat and power installations of 7.5 MW or more. This requirement raises the importance of traceable supply chains for district-heating operators and their fuel suppliers. The global biomass market therefore gives an advantage to suppliers that can maintain recognized certification and consistent documentation across their supply base.

Biomass Conversion Flexibility for Industrial Decarbonization

Industrial users are adopting biomass where direct electrification would take longer or require major changes to high-temperature process equipment. The industrial segment is forecast to grow at a 5.9% CAGR through 2032, supported by demand from cement, steel, pulp, lime, and ceramics facilities. These buyers need consistent calorific value, low ash content, and dependable delivery, rather than only a low spot price. Suppliers that can offer torrefied pellets and gasified fuel to the same industrial site can address different fuel needs within a single customer relationship. UPM’s Lappeenranta Biorefinery has capacity to produce 130,000 tons a year of renewable diesel from crude tall oil, a wood-based feedstock that does not compete with food production.^[4] In the global biomass market, feedstock selection and auditable lifecycle performance are becoming as important as conversion capacity when suppliers compete for premium industrial contracts.

Waste-to-Energy and Methane-Abatement Investment

Waste-to-energy projects use organic municipal waste and agricultural residues to reduce landfill disposal and capture value from material that can release methane. Veolia’s GreenUp program targets 8 GW of bioenergy capacity by 2030 and combines energy recovery with carbon capture in its development plans. Its Le Mans waste-to-energy site began operating an industrial carbon-capture demonstrator in 2026 with capacity to capture 10 metric tons of CO2 a day at a 90% capture rate. This model places waste operators in both energy and carbon-management roles. The global biomass market benefits when municipal service contracts provide predictable feedstock access and regulated gate fees. Waste streams can also improve project economics by combining energy sales, waste services, and potential carbon-credit revenue.

Carbon-Removal Revenue Through BECCS and Biochar

Bioenergy with Carbon Capture and Storage (BECCS) and biochar are creating additional revenue options for suppliers that can meet strict feedstock and monitoring requirements. Research published in 2025 placed sustainable biochar mitigation potential at 2.6 to 10.3 PgCO2-equivalent a year globally. Drax updated its biomass sourcing policy in 2025 to apply Renewable Energy Directive III (RED III) and Sustainable Biomass Program requirements to the biomass it sources. The company also reported that the absence of an appropriate UK framework limited the near-term case for its bioenergy carbon-capture plans. Certification under both energy and carbon-removal frameworks can support higher-value contracts for the global biomass market. The opportunity remains dependent on capital availability, carbon accounting rules, and regulatory support.

Feedstock Scarcity and Cross-Sector Residue Competition

Feedstock pressure is rising as construction, packaging, biochemical, and energy users compete for forestry and agricultural residues. Graanul Invest reported that its production recovered by 15% in 2025, while raw-material availability and energy-cost volatility continued to affect production planning. Japan has excluded imported-fuel biomass power plants of 10 MW or more from new Feed-in Tariff (FIT) and Feed-in Premium (FIP) certification from fiscal year 2026. Renewable Energy Directive III (RED III) also applies a cascading-use principle that gives material uses of wood greater priority than energy uses in Europe. The global biomass market is therefore exposed to tighter availability of compliant material even where physical residue volumes remain high. Vertically integrated suppliers and operators with long-term residue agreements are better placed to manage this pressure.

Sustainability Traceability and Lifecycle-Emission Compliance Costs

Sustainability compliance is an ongoing operating requirement, particularly for suppliers using complex and long-distance supply chains. RED III requires independent verification of greenhouse-gas savings for solid biomass installations at or above 7.5 MW. Drax reported an average biomass supply-chain greenhouse-gas intensity of 93.66 kgCO2e/MWh in 2025, against the 180 kgCO2e/MWh threshold used in the United Kingdom sustainability framework. Smaller suppliers may struggle to build the data systems and assurance processes needed for audited lifecycle assessments. In the global biomass market, this raises the cost of participation and supports consolidation among suppliers with established traceability systems.

*Our forecasts treat driver/restraint impacts as directional, not additive. The impact forecasts reflect baseline growth, mix effects, and variable interactions.

Biomass Market Segment Analysis

Solid biomass held 67.3% of global biomass market share in 2026, supported by wood pellets and agricultural briquettes used in utility co-firing, district heating, and dedicated bioenergy facilities. Deep-water export terminals, rail links, and certified supply chains give solid fuels a well-developed logistics base. These assets connect the US South with Northern Europe and connect Southeast Asian exporters with Japan. Liquid biomass retains a role in transport fuels and industrial processing, including renewable diesel from crude tall oil. Its scale is limited by the availability and sustainability profile of specialized feedstocks, including used cooking oil, agricultural lipids, and forestry co-products. The global biomass market therefore continues to rely on solid fuels for large-volume cross-border trade.

Gaseous biomass is forecast to grow at a 6.1% CAGR through 2032, the fastest rate among product types. Anaerobic digestion, biomethane grid injection, landfill gas recovery, and agricultural biogas are increasing the use of localized gas-based systems. These systems are geographically tied to feedstock sources and can support long-term agreements with gas distributors and municipal utilities. Biomethane producers can use take-or-pay arrangements linked to energy-parity pricing, which reduces direct exposure to pellet spot-price volatility. Graanul Invest reported a sourcing strategy across several Baltic regions, 12 pellet plants, and 4 carrier vessels, showing the scale needed to sustain a resilient solid-fuel supply chain. The biomass industry is thus balancing mature traded solids with faster-growing local gas pathways that use different contracts and operating models.

Direct combustion accounted for 64.7% of the global biomass market size in 2026 because co-firing plants and industrial boilers were built to use solid fuels. This installed base supports demand for utility-grade pellets in Europe, North America, and Asia. Technology remains important for operators that cannot alter existing equipment without significant capital expenditure. Budget limits on biomass subsidies in mature markets such as the United Kingdom and Denmark can restrict incremental capacity. Co-firing remains a transitional option in Japan, South Korea, and Poland, where coal retirement follows a staged path. The global biomass market retains this large combustion base even as newer conversion routes expand.

Anaerobic digestion is forecast to grow at a 6.8% CAGR through 2032, making it the fastest-growing conversion route in the available data. It combines energy production with organic-waste management and supports biomethane use in gas networks. Environmental permits and gas-quality standards, including EN 16723-1 for compressed biogas, affect grid-injection eligibility. Gasification can use agricultural waste and municipal organic matter to produce synthetic gas and liquid fuels for higher-temperature industrial applications. Pyrolysis can generate biochar and energy co-products, while fermentation supports liquid biofuel pathways and fuel development work. UPM is qualifying crude tall oil-derived fuels for sustainable aviation use, showing the role of advanced feedstocks in premium fuel applications.

Utilities held 38.4% of global biomass market share in 2026, supported by long-term supply agreements that guide upstream investment. Utility procurement practices set a high standard for sustainability certification and feedstock documentation. Sustainable Biomass Program certification and RED III requirements influence producers even when their customers are outside the utility sector. Residential demand continues to benefit from pellet stoves and automated heating systems in Central and Eastern Europe. Commercial demand includes district-heating operators, hotels, and food-processing facilities that can use biogas and biomethane without managing solid-fuel storage.

The industrial segment is projected to grow at a 5.9% CAGR through 2032 and is the fastest-growing end-user group. Cement, steel, lime, and ceramics plants are using co-firing to reduce direct combustion emissions without replacing high-temperature equipment in the near term. These customers can pay a premium for fuels with verified lifecycle emissions, stable quality, and dependable logistics. Graanul Invest reported a delivered-pellet carbon intensity of 6.39 gCO2e/MJ in 2025. Such documentation can make suppliers more suitable for customers with science-based emissions targets. The global biomass market creates a distinct opportunity for suppliers that can combine fuel consistency with verified emissions performance.

Geography Analysis

Asia-Pacific Demand and Supply Dynamics

Asia-Pacific held 42.1% of the global biomass market size in 2026 and is forecast to grow at a 5.8% CAGR through 2032. China accounted for 33 GW of bioenergy capacity in 2025. Japan reached 8.1 GW of biomass installed power capacity by 2025, exceeding its 2030 target of 8.0 GW. Japan’s decision to stop new Feed-in Tariff (FIT) and Feed-in Premium (FIP) certification for imported-fuel biomass facilities of 10 MW or more from fiscal year 2026 shifts support toward smaller plants using domestic resources. This change increases the value of local feedstock management and traceability. Japan and South Korea remain established import markets, while India, Indonesia, and Australia have earlier-stage opportunities in residue collection and offtake infrastructure. The global biomass market in the region is shaped by both rapid capacity development and tightening rules for imported fuels.

Europe Policy and Feedstock Conditions

Europe remains central to renewable heat demand, and the region produced 75% of global bioheat output in the available 2025 data. RED III restricts the use of material from primary and old-growth forests, highly biodiverse forests, peatlands, and heathlands. These compliance factors reduce the range of feedstock that can meet European sustainability requirements. Graanul Invest reported a 15% increase in pellet production in 2025 as European demand recovered. UPM also reported improving regulatory conditions for advanced renewable fuels in Germany late in 2025. Europe’s regulatory influence will favor operators that can demonstrate compliant forest sourcing, lifecycle emissions control, and reliable supply to heat users.

North America, South America, Middle East, and Africa

North America combines pellet exports from the US South with domestic and export activity in forest-rich Canadian provinces. The US Environmental Protection Agency proposed total renewable fuel volumes of 24.02 billion Renewable Identification Numbers (RINs) for 2026 and 24.46 billion RINs for 2027, supporting regulatory certainty for liquid biofuels. In South America, research on Brazilian sugarcane ethanol found that integrating bioenergy with carbon capture and storage could reduce the fuel carbon intensity from positive 32.8 gCO2e/MJ to below negative 81.3 gCO2e/MJ. This supports Brazil’s role as a potential location for carbon-removal projects connected to ethanol production. The Middle East and Africa have feedstock from sugarcane bagasse, rice husk, and cotton stalk, while commercial deployment is still limited. Waste-to-energy concessions and rural electrification programs can help convert these residues into local energy supply. Saudi Arabia and the United Arab Emirates are placing biomass within wider renewable-energy diversification efforts, but capacity remains limited compared with available feedstock.