Biomass Fuel (PKS) Market size, Share, Growth, and Industry Analysis, By Type (Palm Kernel Shells (PKS), Wood Chips, Bagasse) By Application (Power Plants, Industrial Boilers, Residential Heating) and Regional Forecast to 2034

BIOMASS FUEL (PKS) MARKET OVERVIEW

The global biomass fuel (pks) market size is predicted to reach USD 7.18 billion by 2034 from USD 4.28 billion in 2025, registering a CAGR of 5.91%.

The Biomass Fuel (PKS) market has started to change after industries and governments started to do more with sustainable energy options. Biomass derived fuels (PKS, wood chips, bagasse, etc.) represent the next sustainable source to replace conventional fossil fuels (non-renewable). Biomass sources make an excellent alternative for power generation, industrial heat, and residential heating. The growth awareness of an industrial sector changing to biomass fuel is driven by increased awareness of the environment, stricter emissions, and the desire for clean energy. Regional specific to Southeast Asia has an abundance of agricultural waste and therefore an abundance of PKS make biomass fuel as a feasible, viable, cost-effective, and accessible biomass/biofuel renewable energy option. Furthermore, there is increasing support for its policies associated with energy security with incentives for biomass.

GLOBAL CRISES IMPACTING BIOMASS FUEL (PKS) MARKET

COVID-19 IMPACT

Biomass Fuel (PKS) Market Had a Positive Effect Due to Shift to Renewable and Cleaner Energy During COVID-19 Pandemic

The global COVID-19 pandemic has been unprecedented and staggering, with the market experiencing

higher-than-anticipated demand across all regions compared to pre-pandemic levels. The sudden market growth reflected by the rise in CAGR is attributable to the market’s growth and demand returning to pre-pandemic levels.

The COVID-19 pandemic had undeniable effects on the Biomass Fuel (PKS) market. Initially, supply chains that provided biomass feedstocks including PKS, wood chips and bagasse, essentially ceased to function due to lockdowns and restrictions on movement. There was less availability of these feedstocks for biomass fuel production. The depletion of biomass feedstock and the shutdown of industrial processes and reduction of energy demanding processes resulted in a short-term decline in biomass fuel consumption (i.e. power generation to heat) in all sectors. Nonetheless, once economy’s recovery began, there was a marked shift to renewable and cleaner energy options, to help rebuild a more sustainable infrastructure. Governments began to formulate green recovery plans that included biomass as a key energy source. Added to this was a renewed focus on domestic energy security, that gave biomass markets a boost in regions that had available raw materials. The COVID-19 pandemic was ultimately disruptive but eventually acted as a catalyst for long-term growth and resilience.

LATEST TREND

Growing Integration of Biomass Co-Firing in Power Generation to Drive Market Growth

A trending aspect in the Biomass fuel (PKS) market is the growing utilization of co-firing technology in traditional coal power plants by several biomass processors. This is done to replace coal with biomass fuels like palm kernel shells (PKS) the significantly lower greenhouse gas emissions by utilizing existing infrastructure. Various European and Asian governments have encouraged this advancement by - Policy incentives and emissions targets. Co-firing increases energy efficiency while enabling a cost-effective transition into decarbonization. Continuing advances in combustion systems and feedstock handling will make it much easier for energy producers to integrate biomass by blending it with coal in the future. Allowing for more widespread use of biofuels in regions with excess agricultural residues as feedstock.

BIOMASS FUEL (PKS) MARKET SEGMENTATION

BY TYPE

Based on Type, the global market can be categorized into Palm Kernel Shells (PKS), Wood Chips, Bagasse:

Palm Kernel Shells (PKS): Palm kernel shells (PKS) are biomass fuel that is deemed a byproduct of palm oil production. PKS is known to have high calorific value and low ash, and is therefore well-suited for industrial use, particularly in power plants and boilers. Southeast Asia is the primary area of production, and PKS is salvageable, inexpensive, and abundant everywhere in Southeast Asia. PKS is very accepted for benefits to the environment for reducing carbon emissions; moreover, PKS is easy to transport and store. With sustainability becoming very important, PKS is more frequently being assessed in applications of alternative fuels from coal and fossil-based fuels.

Wood Chips: Wood chips are also a very significant part of the biomass fuel market; wood chips are often made from forestry residuals and wood processing waste. They offer similar efficiencies when consumed in industrial boilers and are the most common form of biomass used for residential heating as they burn consistently, at recommended moisture content, and potentially with negative emissions and renewable options. Countries with large forestry industries are the largest contributors to this market area, such as the U.S., Canada, and Scandinavian countries. The increase in decentralized energy systems, either by adoption of bioenergy heating units, has stimulated the demand for wood chips, with new chipping techniques and drying technologies improving both overall efficiency of use, and overall marketability.

Bagasse: Bagasse is the fibrous byproduct from sugarcane juice extraction, and it can be a biomass fuel type. Bagasse is mostly found in contexts with significant sugar production industries mostly in Brazil, India, or Thailand. Bagasse is mainly utilized by sugar mills for cogeneration of heat and power and makes the entire process energy self-sufficient. Also, in certain instances, it contributes to grid power generation. It has the properties of low-cost and is renewable, which makes it attractive in sustainable energy planning. Due to the seasonality of sugarcane production, the seasonality, and the moisture content in bagasse are compounding challenges that alternative methods and better storage and drying methods are being developed to address.

BY APPLICATION

Based on application, the global market can be categorized into Power Plants, Industrial Boilers, Residential Heating:

Power Plants: Biomass fuels, specifically Palm Kernel Shells (PKS), are an increasingly popular option for power plants moving away from fossil fuels. PKS has a consistent calorific value which makes it an ideal biomass when co-firing with coal in thermal power stations. This reduces emissions and prolongs the life of combustion infra-structure. Power plants in Japan, South Korea, and various European countries are looking at importing large amounts of PKS and other biomass to meet upcoming emissions reduction targets. Provincial use of biomass fuels will assist in meeting the increased integration of renewable energy at local levels within national/ provincial goals for renewable energy, as well as facilitates energy security through diversification.

Industrial Boilers: Renewable biomass fuels have multiple application sectors, one of the largest being industrial boilers. Manufacturing industries particularly in the food processing, chemical, and paper manufacturing industries are increasingly finding a renewable energy source in biomass represented as wood chips or bagasse, which will supply steam to boiler systems. Industry is looking to employ biomass fuels in steam boilers to take advantage of indirect reductions in carbon impact, as well as displace reliance on fossil fuels/volatile fossil fuel markets. With biomass combusting relatively steady, industry can incorporate biomass options into new boiler systems or existing boiler systems with emission reductions systems. Biomass is also aligning with corporate sustainability and can help industry demonstrate compliance with increasingly strict environmental compliance requirements.

Residential Heating: Residential heating is seeing a rise in biomass fuel use, especially in colder parts of Europe and North America. Wood chips and compressed biomass pellets are used in residential heating equipment such as small-scale boilers or stoves. Biomass is often less expensive than traditional heating oil or natural gas and is renewable and less polluting. Programs sponsored by government or NGOs are being developed to persuade homeowners to shift to using biomass-based heating systems. Better pellet stoves or heating systems using biomass are also improving consumer comfort and efficiency, and biomass is therefore becoming an attractive home heating option for environmentally conscience consumers.

MARKET DYNAMICS

Market dynamics include driving and restraining factors, opportunities and challenges stating the market conditions.                          

DRIVING FACTORS

Rising Demand for Renewable Energy Sources to Boost the Market

One of the main motivators of the Biomass Fuel (PKS) Market growth is the increasing global demand for renewable energy. Government and industry are actively seeking ways to replace fossil fuels to address climate change and non-renewable resource dependency. Biomass fuels made from PKS, wood chips, and bags are safe and sustainable. The increasing number of clean energy related policies like renewable energy subsidies, renewable energy targets, etc., is helping biomass fuels to grow faster. Furthermore, biomass fuel-specific energy policy is increasing investment in infrastructure necessary for production, processing, and logistical solutions with adaptable market share and stability across geographies.

Abundant Availability of Agricultural Waste to Expand the Market

One of the major influences on the biomass fuels sector is the abundance of agricultural by-products, especially in tropical and agricultural economies. There are likely to be many agricultural by-products from palm oil productions, such as Palm Kernel Shells, PKS, that will be plentiful in Malaysia and Indonesia. Similarly, bagasse from sugar cane and wood chips from forestry operations are available for low-cost, renewable fuel. Burning agricultural residues is a means of making use of by-products while reducing waste, and it can easily be considered enhanced contributions to circular economy approach. The plant availability ensures a consistent supply chain with lower costs, and, at the same time, new industrial uses promote retention and lesser reliance on imported fuels. After the tropical economies, the natural ecological and resources advantages to biomass resources remain large.

RESTRAINING FACTOR

High Transportation and Storage Costs to Potentially Impede Market Growth

One of the biggest barriers to entry into the Biomass Fuel (PKS) market is the high costs of transportation and storage. Biomass fuels (PKS and woodchips), in general, are bulky fuels that have a lower energy density than fossil fuels, which increases transportation costs over long distances. Second, biomass fuels can absorb water that can degrade the biomass fuel quality which can cause further costs in storage if, in fact a required storage scheme to keep biomass fuels is necessary. Transportation costs are especially relevant to buyers who are in areas with little infrastructure and far away from the biomass fuel end-use; limits on transportation may affect the entire economic picture for biomass fuels, especially for fuels they intend to move internationally.

OPPORTUNITY

Growing Investment in Biomass Power Infrastructure to Create Opportunity for The Product in The Market

The Biomass Fuel (PKS) market represents a huge opportunity due to the increasing global investment into biomass-based power infrastructure. Governments and private investors are investing to develop and enhance biomass power generation capability or invest, especially in regions with rich resources and resources dependent economies, typically Southeast Asia and Latin America, where agriculture is a dominant sector in the economy. Money is being spent for multiple reasons all connected to renewable energy sustainability targets, job creation and energy portfolio diversification, through enhanced and new applications of combustion (burning) technology, better raw material (feedstock) handling systems and supportive policy and regulations. As the capital invested in infrastructure development starts to ramp up and spread, meanwhile establishing new agricultural / feedstock-paid biomass fuels readily available markets for PKS and other biomass fuels, it also creates new opportunities for PKS to grow long term.

CHALLENGE

Inconsistent Supply Chain and Feedstock Quality Could Be a Potential Challenge for Consumers

A significant challenge in the Biomass Fuel (PKS) industry is the unpredictability of supply chain logistics and feedstock quality. Biomass fuels like PKS, bagasse, and wood are sourced from many suppliers; in fact, most suppliers will be local or decentralized in nature. These suppliers can have variances in the quality of biomass, variations in moisture content, in calorific value, etc. Accordingly, biomass fuels will combust with different efficiencies and will produce different emissions with all these variances. This means that end-users become more challenged when trying to use the fuel in industrial mechanisms. The supply chain can be unpredictable as well, based on local and seasonal harvest cycles, Mother Nature, and geopolitical events, etc. All these challenges increase the variability of biomass fuels and typically make the supply channel unacceptable for end-users, unless they standardize the process and accept the variance in performance associated with the biomass fuels. As such very few companies have adopted biomass fuels in their broader sustainability strategies, yet they have positive environmental attributes.

BIOMASS FUEL (PKS) MARKET REGIONAL INSIGHTS

NORTH AMERICA

The Biomass Fuel (PKS) market is building momentum in North America, particularly in the United States Biomass Fuel (PKS) Market in response to a growing focus on renewable energy alternatives. An increase in federal and state level incentives is pushing industries and households to consider the option of cleaner fuels, such as wood chips and biomass pellets. The U.S. has a solid forestry infrastructure already providing significant feedstock for biomass production. Biomass is being increasingly used in combined heat and power (CHP) systems, and decentralized energy systems were already in place before COVID-19 hit. Co-firing in coal-fired plants is being considered to meet emissions reductions targets, which is creating a further appetite for sustainable feedstocks like PKS.

EUROPE

Even with the recent decrease in national biomass consumption due to rising energy prices from Russia's invasion of Ukraine, Europe remains a world leader in biomass utilization. In our European example, several powerful factors that will influence the drop in domestic biomass consumption and promote the import of biomass have emerged. Increased imports are being driven largely by stronger environmental rules, aggressive renewable energy targets, and increased fossil fuel costs. Also, historically large energy prices in Europe affect the wood pellet production of some countries through the increase in importance of proportionate energy efficiency. For example, PKS consumption is accelerating and outpacing wood residue utilization to phase out coal use going forward. Lastly, the EU’s Renewable Energy Directive with its supports for biomass heating and industrial heating systems continues to reward contractors for the use of biomass heating while additional, supporting funding programs are also influencing the manufacturers of industrial boilers to increasingly utilize biomass. With a continuing focus on climate neutrality in one form or another than will support opportunities for continued growth of the biomass fuels sector.

ASIA

Asia, and in particular Southeast Asia, is both a significant producer and soon to be a consumer of Biomass Fuel (i.e., PKS). Countries like Malaysia and Indonesia excel in PKS production with their prominent palm oil sectors. Countries such as Japan and South Korea are now key importers of PKS, as it has been introduced to co-firing in thermal power plants as one part of their low carbon energy strategies. Likewise, there is the growing awareness of greater sustainable practices domestically, with electricity needs stimulating biomass investments. Biomass is also being examined in countries like India and China for rural electrification and smokestack industry energy needs, creating an attractive intra-regional cycle of production and consumption.

 KEY INDUSTRY PLAYERS

Key Industry Players Shaping the Market Through Innovation and Market Expansion

Leading companies in the Biomass Fuel (PKS) market are focused on innovation, sustainability and regional expansion. Companies like Wilmar International and Sime Darby Plantation introduce vertical supply chains to provide PKS with increasing accuracy, quality and supplies. Companies like Golden Agri-Resources and IOI Corporation are investing in cleaner processing technologies and improved logistics to increase fuel efficiency and export quality. The companies are forming strategic partnerships to expand their footprint in energy hungry regions, like Europe and East Asia. Companies are committed to sustainability and operational excellence that is leading the industry in responsible biomass fuel development.

LIST OF TOP BIOMASS FUEL (PKS) MARKET COMPANIES

Wilmar International Ltd (Singapore)

Sime Darby Plantation Berhad (Malaysia)

IOI Corporation Berhad (Malaysia)

Kuala Lumpur Kepong Berhad (Malaysia)

Musim Mas Holdings (Singapore)

Golden Agri-Resources Ltd (Singapore)

Bumitama Agri Ltd (Singapore)

TSH Resources Berhad (Malaysia)

First Resources Limited (Singapore)

Genting Plantations Berhad (Malaysia)

KEY INDUSTRY DEVELOPMENT

May 2025: Golden Biomass Energy (GBE), a subsidiary of Golden Agri-Resources, announced a major expansion of its Palm Kernel Shell (PKS) business line to establish a strong foothold in the global biomass supply chain. The expansion is looking at new logistics routes, identified in Central and Eastern Kalimantan Indonesia, along with upgrades to Grove's existing logistics in Sumatra. The announcement comes after international markets for sustainable biomass fuel have significantly elevated as the demand for energy intensive economies has accelerated, particularly Japan. GBE has planned the expansion to capitalize on the occasion and GBE's sourcing commitments around PKS, from sourcing responsibly and sustainably from GBE's PKS supply for GBE in Indonesia, to GBE pursuing certification through GGL (Green Gold Label) certification for PKS from Indonesia, illustrating traceability and responsible sourcing. The anticipated scale growth profile of the GBE PKS operations is demonstrative of a strong growth path for Indonesia's role in international markets for biomass fuels.

REPORT COVERAGE       

The study encompasses a comprehensive SWOT analysis and provides insights into future developments within the market. It examines various factors that contribute to the growth of the market, exploring a wide range of market categories and potential applications that may impact its trajectory in the coming years. The analysis considers both current trends and historical turning points, providing a holistic understanding of the market's components and identifying potential areas for growth. The research report delves into market segmentation, utilizing both qualitative and quantitative research methods to provide a thorough analysis. It also evaluates the impact of financial and strategic perspectives on the market. Furthermore, the report presents national and regional assessments, considering the dominant forces of supply and demand that influence market growth. The competitive landscape is meticulously detailed, including market shares of significant competitors. The report incorporates novel research methodologies and player strategies tailored for the anticipated timeframe. Overall, it offers valuable and comprehensive insights into the market dynamics in a formal and easily understandable manner.