Market Trends of North America Wood Pellet Industry
This section covers the major market trends shaping the North America Wood Pellet Market according to our research experts:
The heating application is expected to dominate the wood pellet market
- Wood pellets are gaining market share as these pallets have higher energy and density than unprocessed biomass. Furthermore, wood pellets production uses waste wood from agriculture and sawmills, an effective way to reduce waste and generate heat and power.
- Traditionally wood pellets are used for heating applications, primarily in residential and commercial sectors for food, cooking and grilling, and supplying heat to homes. Since the cost of pellets remained cheaper than that of other fuels for a long time, it has become a more economical option, addressing the primary concern of the residential and commercial sectors.
- Moreover, wood pellets are considered a renewable energy source. Thus, they received various subsidies and incentives from the regional governments, and governments have also updated their policies and schemes related to wood pellets for heating applications in recent years.
- For instance, in January 2021, a new Wood and Pellet Heater Investment Tax Credit (ITC) came into effect in the United States, under which consumers buying highly efficient wood, pellet stoves, or larger residential biomass heating systems can claim a 26% tax credit that is uncapped and based on the full cost (purchase and installation) of the unit.
- Furthermore, consumers have a rise in awareness about using coal for power generation. Thus many consumers are shifting from coal to wood pellets for heat generation during the winters in the United States and Canada, which is a major driving factor for the wood pellet market.
- Thus considering all the factors, the wood pellets market is likely to grow with a high CAGR in the North America region during the forecast period.
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United States Dominate the Market
- North America is one of the leading regions in producing wood pellets on a global scale. Further is also one of the world's top regions in exports of wood pellets.
- In 2021 wood pellets production was around 20 million metric tons. Moreover, in 2021, in North America, the wood pellet capacity increased by 12%; this can ascribe to the rise in export-oriented projects in the region, particularly in the United States.
- According to the United States Energy Information Administration, wood pellet production is expected to rise in 2022 and reach 23 million metric tons. This significant rise in wood pellet capacity is due to increased investment in wood pellet production facilities in the South part of the country. The region consisted of
- Furthermore, the United States is the world's leading exporter of wood pellets; in 2021, the total wood pellets export reached a valuation of USD 1 billion for the first time. Between 2012 and 2021, U.S. wood pellet exports increased 296.3% by volume and 310.1 % by value.
- The United States exports the wood pellets to the country from Europe, the United Kingdom, Japan, and South Korea. In the last decade, the Exports of wood pellet in the United Kingdom has increased by 703.1% by volume and 563 % by value.
- With increased investment in wood pellet manufacturing coupled with supportive government policies, the wood pellets market in the country is expected to grow with a high CAGR.
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