Biomass Fuel (PKS) Market, Global Outlook and Forecast 2025-2032

MARKET INSIGHTS

Global Biomass Fuel (PKS) market size was valued at USD 1.49 billion in 2024 and is projected to grow from USD 1.64 billion in 2025 to USD 2.82 billion by 2032, exhibiting a CAGR of 9.8% during the forecast period.

Palm kernel shells (PKS) are a byproduct of palm oil production, widely utilized as a sustainable biomass fuel due to their high calorific value (approximately 4,000–5,000 kcal/kg), carbon-neutral properties, and ease of storage. Unlike conventional fossil fuels, PKS aligns with circular economy principles by converting agricultural waste into renewable energy, thereby reducing environmental impact while enhancing resource efficiency. The market primarily focuses on commercially processed PKS, excluding non-commercial or discarded portions.

Rising adoption is driven by stringent decarbonization policies, particularly in Japan and the EU, where PKS imports surged by 18% in 2023. Certified PKS, meeting sustainability criteria like ISCC or SBP certification, accounted for 33.6% of the market in 2023 and is projected to dominate 45.8% by 2030. Leading producers, including Indonesia and Malaysia, leverage abundant supply chains, while key players like Iwatani Corporation and NISSIN BIO ENERGY drive innovation in processing and logistics to meet global demand.

MARKET DYNAMICS

MARKET DRIVERS

Surging Demand for Renewable Energy to Accelerate PKS Market Growth

The global shift toward renewable energy sources is significantly driving the biomass fuel (PKS) market, with governments worldwide implementing policies to reduce fossil fuel dependency. With coal consumption expected to decline by 15% in power generation by 2030 across developed economies, biomass alternatives like PKS are gaining traction. Industrial consumers are particularly adopting PKS due to its high calorific value (4,000-5,000 kcal/kg), which makes it comparable to low-grade coal while being carbon neutral. Japan's feed-in-tariff program, which offers premium rates for biomass-derived electricity, has turned PKS into a strategic fuel source, with imports growing at 12% annually since 2020.

Circular Economy Initiatives Enhancing PKS Commercialization

Palm oil producing nations are actively promoting circular economy models where PKS transitions from waste to valuable commodity. Indonesia, generating over 10 million tons of PKS annually, has implemented policies requiring palm oil mills to allocate at least 20% of byproducts for energy use. This regulatory push, combined with private sector innovation in processing technologies, is transforming PKS into a standardized fuel commodity. The development of certification systems (ISCC, SBP) has increased international trade volumes by 28% between 2021-2023, as buyers demand verifiable sustainable sourcing.

➤ Leading energy firms now view PKS as bridge fuel in decarbonization strategies, with European utilities blending 15-20% PKS with coal to reduce emissions while maintaining boiler efficiency.

MARKET RESTRAINTS

Logistical Complexities Constrain Market Expansion

While PKS availability is abundant in Southeast Asia, its bulk density (300-400 kg/m³) creates transportation inefficiencies that inflate delivered costs. Shipping unprocessed PKS long-distance is economically marginal, leading to 35-40% of production being consumed locally. The fragmented nature of collection networks across thousands of small palm oil mills further complicates supply chain optimization. Recent spot price volatility (USD 80-140/ton CIF Japan) reflects these structural challenges, deterring some potential buyers from making long-term commitments.

Other Restraints

Moisture Sensitivity
PKS requires careful drying to maintain optimal 12-15% moisture content for combustion. Improper handling can lead to biological degradation during transit, with moisture absorption potentially reducing calorific value by up to 20%.

Competition from Alternative Biomass
Wood pellets and agricultural residues are increasingly competing with PKS in key markets like Japan and South Korea, where pellet import infrastructure is more established.

MARKET CHALLENGES

Sustainability Certification Requirements Create Market Barriers

The rising demand for certified sustainable PKS (currently 33.5% of market) imposes compliance costs that smaller producers struggle to absorb. Certification expenses ranging from USD 15,000-50,000 per facility represent a significant hurdle for mills producing under 50,000 tons annually. This is creating a two-tier market where only large conglomerates can afford the documentation systems and chain-of-custody requirements demanded by Japanese and European buyers, potentially squeezing out smaller players.

Other Challenges

Quality Consistency
Varying shell-to-fiber ratios in PKS (35-65% across regions) lead to combustion performance inconsistencies that complicate power plant operations and emissions control.

Trade Policy Uncertainties
Potential EU reclassification of PKS from waste to fuel could trigger import tariffs, while Japan's evolving biomass subsidy framework creates demand volatility.

MARKET OPPORTUNITIES

Technological Advancements in Processing Create Value-Addition Potential

Emerging preprocessing technologies present significant opportunities to enhance PKS market value. Torrefaction techniques that increase energy density by 25-30% are gaining attention, with pilot plants in Malaysia demonstrating improved grindability and hydrophobic properties. Meanwhile, innovative pelleting methods that combine PKS with other biomass streams are creating customized fuel blends. Japanese energy firms are particularly investing in these upstream technologies to secure higher-quality supply, with R&D spending on biomass processing growing at 18% CAGR since 2021.

Emerging Market Demand Expansion Beyond Traditional Buyers

While Japan currently dominates PKS imports (68% share), new demand centers are emerging. South Korean co-firing regulations will double biomass consumption by 2030, with PKS well-positioned due to established trade routes. Notably, coal-dependent emerging economies like India and Vietnam are beginning pilot PKS co-firing projects, potentially opening markets currently worth USD 120-150 million annually. The development of regional biomass trading hubs in Singapore and Malaysia is further facilitating this geographic diversification.

➤ Market leaders are establishing vertically integrated supply chains, with companies like Iwatani securing 15-year offtake agreements directly with palm oil conglomerates to ensure quality and volume consistency.

Segment Analysis:

By Type

Certified PKS Gains Traction Due to Growing Demand for Sustainable Fuel Sources

The market is segmented based on type into:

• Non-Certified PKS

• Certified PKS

By Application

Industrial Segment Leads Due to High Consumption in Power Generation

The market is segmented based on application into:

• Residential

• Business

• Industrial

By Certification Standard

ISCC Certification Dominates Due to International Recognition in Sustainability Compliance

The market is segmented based on certification standard into:

• ISCC Certified

• SBP Certified

• Other Certifications

By Form Factor

Granular PKS Preferred for Ease of Handling and Combustion Efficiency

The market is segmented based on form factor into:

• Powdered

• Granular

• Briquettes

COMPETITIVE LANDSCAPE

Key Industry Players

Market Leaders Invest in Sustainability and Supply Chain Expansion

The global Biomass Fuel (PKS) market remains highly fragmented, with a mix of multinational corporations, regional suppliers, and local distributors competing for market share. Iwatani Corporation and NISSIN BIO ENERGY emerged as dominant players in 2024, collectively accounting for over 12% of global revenue. Their leadership stems from vertically integrated operations spanning palm kernel shell procurement, processing, and international distribution networks across Asia and Europe.

Indonesia-based DSNG (PT Dharma Satya Nusantara Tbk) and BIO ENECO have strengthened their positions through strategic partnerships with Japanese and European energy companies. These collaborations enable direct long-term supply agreements, ensuring stable demand for their certified PKS products. The companies have particularly benefited from Japan's Feed-in Tariff system for biomass energy, which drove a 23% increase in PKS imports from Southeast Asia between 2022-2023.

Meanwhile, European energy firms are establishing local procurement offices in Malaysia and Indonesia to secure supply chains. This trend has intensified competition among mid-tier suppliers like Palmline Bioenergy and PT UNIVERSAL PALM INDONESIA, who are expanding processing capacity to meet stringent quality requirements. The shift toward certified PKS, expected to comprise 46% of the market by 2030, is prompting suppliers to invest in traceability systems and sustainability certifications such as ISCC and SBP.

Distributors play a critical role in bridging supply-demand gaps. Companies including Gombella Integrated Services Limited and Arkan Group have developed specialized logistics networks to overcome the market's geographical fragmentation. Their ability to aggregate supply from multiple smallholder plantations gives them a competitive edge in serving export markets where bulk shipments are preferred.

List of Key Biomass Fuel (PKS) Companies Profiled

• Iwatani Corporation (Japan)

• NISSIN BIO ENERGY (Japan)

• DSNG (PT Dharma Satya Nusantara Tbk) (Indonesia)

• BIO ENECO (Malaysia)

• Palmline Bioenergy (Singapore)

• Gombella Integrated Services Limited (Malaysia)

• ARGYA ENERGY (India)

• Provident Biofuels (UK)

• Arkan Group (UAE)

• PT UNIVERSAL PALM INDONESIA (Indonesia)

BIOMASS FUEL (PKS) MARKET TRENDS

Increasing Demand for Sustainable Energy Sources to Emerge as a Key Trend in the Market

The global biomass fuel market is witnessing transformative growth, driven by the escalating demand for sustainable energy solutions. Palm kernel shell (PKS), as a byproduct of the palm oil industry, has gained prominence due to its high calorific value (approximately 4,000-5,000 kcal/kg) and carbon-neutral properties. Countries with stringent renewable energy policies, such as Japan and South Korea, are increasingly adopting PKS to replace fossil fuels in power generation. Additionally, the expansion of biomass co-firing projects in Europe and Asia supports market growth, with the certified PKS segment expected to grow at a compound annual growth rate (CAGR) of 7.6% from 2024 to 2030. The shift toward circular economy models further amplifies demand, as industries seek eco-friendly alternatives to minimize waste and carbon footprints.

Other Trends

Certification and Sustainability Standards

The rising emphasis on sustainability certifications is reshaping the PKS market, with buyers prioritizing traceability and compliance with international standards. Certified PKS accounted for 33.59% of global supply in 2023, but its share is projected to reach 45.75% by 2030 due to tightening regulations in importing nations. The EU’s Renewable Energy Directive (RED II) and Japan’s Feed-in Tariff system mandate rigorous documentation for biomass sourcing, prompting suppliers in Indonesia and Malaysia to invest in certification programs. This trend not only enhances market credibility but also creates differentiation opportunities for exporters who meet stringent environmental criteria.

Supply Chain Optimization and Localized Procurement

To mitigate logistical challenges and ensure consistent supply, major PKS consumers are establishing localized procurement networks in Southeast Asia. Japanese energy firms, for instance, have set up dedicated offices in Indonesia to secure long-term contracts and oversee quality control. Meanwhile, advancements in pre-processing technologies, such as drying and pelletizing, are streamlining the export process by reducing moisture content and improving combustion efficiency. The expansion of regional distribution hubs in key markets like Vietnam and Thailand further strengthens supply chain resilience, catering to the growing demand from industrial and utility-scale biomass plants.

Regional Analysis: Biomass Fuel (PKS) Market

Asia-Pacific
The Asia-Pacific region dominates the global PKS market, accounting for over 60% of production and consumption. Indonesia and Malaysia are the key producers due to their massive palm oil industries, generating approximately 12 million tons of palm kernel shells annually. Japan leads imports, driven by stringent renewable energy targets requiring 22-24% of electricity from clean sources by 2030. While South Korea and China are emerging buyers, intra-regional trade faces challenges such as inconsistent quality standards and logistical bottlenecks. The growth of certified PKS across industrial applications is accelerating, though price sensitivity remains a barrier for smaller enterprises.

Europe
European demand for PKS is primarily concentrated in countries with active co-firing policies, such as the Netherlands and the UK. The EU's Renewable Energy Directive II mandates 32% renewable energy by 2030, creating steady demand for sustainable biomass fuels. However, strict sustainability certification requirements (like SBP certification) raise compliance costs. Geopolitical tensions and shipping disruptions from Southeast Asia have prompted some utilities to diversify supply chains. While industrial applications drive most consumption, residential pellet blends incorporating PKS are gaining traction in Nordic markets.

North America
The North American market remains niche but shows growth potential. The U.S. imported 450,000 tons of PKS in 2023, mainly for co-firing in coal plants under renewable energy credit programs. California's Low Carbon Fuel Standard provides incentives, though competition from local wood pellets limits market penetration. Canada's emerging bioeconomy strategy includes test deployments of PKS in district heating systems. Cross-border trade with Mexico is increasing as manufacturers seek cost-effective alternatives to conventional biomass. Regulatory uncertainty around foreign-sourced biofuels and port capacity constraints currently hinder faster adoption.

Middle East & Africa
This region presents a paradox - while GCC countries import PKS for cement plants and water heating, African producers struggle with underutilization. The UAE leads consumption through large-scale biomass projects like the 30MW waste-to-energy plant in Sharjah. However, weak sustainability frameworks and high transportation costs prevent broader adoption in sub-Saharan Africa. Some palm oil-producing nations like Nigeria are developing domestic PKS utilization strategies. The market shows long-term promise but requires infrastructure investments and policy alignment across the value chain.

South America
Brazil represents the most developed PKS market in the region, leveraging its palm oil production in Pará state. Industrial boilers account for 80% of consumption, though recent droughts have increased demand from hydropower-dependent regions. Colombia and Ecuador are emerging markets but face competition from sugarcane bagasse. Economic volatility and inconsistent feedstock availability limit market maturity. Some countries are exploring PKS co-firing to meet Paris Agreement commitments, though implementation lags behind policy ambitions. Regional trade remains underdeveloped due to inadequate processing facilities.

Report Scope

This market research report offers a holistic overview of global and regional Biomass Fuel (PKS) markets for the forecast period 2025–2032. It presents accurate and actionable insights based on a blend of primary and secondary research.

Key Coverage Areas:

• ✅ Market Overview

  • Global Biomass Fuel (PKS) market was valued at USD 1,485 million in 2024 and is projected to reach USD 2,818 million by 2032, growing at a CAGR of 9.8%

  • Growth trends driven by renewable energy demand, carbon neutrality advantages, and high calorific value (4,000-5,000 kcal/kg)

• ✅ Segmentation Analysis

  • By Type: Non-Certified PKS (66.41% share in 2023) vs Certified PKS (33.59% share, projected to reach 45.75% by 2030)

  • By Application: Industrial (78% share), Business (15%), Residential (7%)

  • By Distribution: Direct procurement (42%), Export channels (58%)

• ✅ Regional Insights

  • Asia-Pacific: Production hubs (Indonesia, Malaysia) consuming 60% locally; Japan leading importer (38% of global imports)

  • Europe: Second-largest market with strict sustainability certification requirements

  • Americas: Emerging demand from US and Brazilian power plants

• ✅ Competitive Landscape

  • Top 3 players (Iwatani, NISSIN BIO ENERGY, DSNG) hold 12.42% market share

  • Fragmented market with 200+ distributors including Provident Biofuels and PT UNIVERSAL PALM INDONESIA

  • Japanese utilities establishing direct procurement offices in Southeast Asia

• ✅ Technology & Innovation

  • Advanced screening/drying technologies improving fuel quality

  • Blockchain solutions for certified PKS traceability

  • Co-firing technologies maximizing energy efficiency

• ✅ Market Dynamics

  • Drivers: Renewable energy policies, waste-to-energy initiatives, carbon credit systems

  • Restraints: Supply chain bottlenecks, certification costs, palm oil industry fluctuations

  • Challenges: Quality standardization, transportation logistics, geopolitical factors

• ✅ Opportunities & Recommendations

  • Investment in certified PKS production facilities

  • Strategic partnerships between Southeast Asian producers and global utilities

  • Diversification into emerging markets with renewable energy targets

• ✅ Stakeholder Insights

  • Target audience includes palm oil producers, biomass traders, power plant operators, sustainability certifiers, and government energy agencies

FREQUENTLY ASKED QUESTIONS:

What is the current market size of Global Biomass Fuel (PKS) Market?

-> Global Biomass Fuel (PKS) market was valued at USD 1,485 million in 2024 and is projected to reach USD 2,818 million by 2032.

Which key companies operate in Global Biomass Fuel (PKS) Market?

-> Key players include Iwatani Corporation, NISSIN BIO ENERGY, DSNG, BIO ENECO, and Palmline Bioenergy, with the top three holding 12.42% market share.

What are the key growth drivers?

-> Key growth drivers include renewable energy mandates, carbon neutrality goals, and PKS's high calorific value (4,000-5,000 kcal/kg).

Which region dominates the market?

-> Asia-Pacific dominates as both the production hub (Indonesia/Malaysia) and largest consumption market (Japan).

What are the emerging trends?

-> Emerging trends include certified sustainable PKS, blockchain traceability, and co-firing technologies.