Wood Chips Market: Biomass Demand, Renewable Energy Use & Sustainable Production Trends

According to IMARC Group's latest research publication, the global wood chips market size reached USD 10.3 Billion in 2024. Looking forward, IMARC Group expects the market to reach USD 16.9 Billion by 2033, exhibiting a growth rate of 5.39% during 2025-2033.

How AI is Reshaping the Future of Wood Chips Market

• Intelligent Sorting and Quality Control Systems: AI-powered grading solutions now inspect wood chips at 300 boards per minute, identifying defects and optimizing quality with 95% accuracy. Machine learning reduces processing waste by 18% while ensuring consistent moisture content for biomass power plants.
• Automated Production Line Optimization: Robotic systems with AI algorithms map optimal material paths between processing stations, reducing bottlenecks by 20%. Real-time anomaly detection automatically recalibrates machines, maintaining quality standards and minimizing production downtime across sawmills and plywood facilities.
• Predictive Demand Forecasting and Supply Chain Intelligence: AI analyzes historical data and market trends to predict biomass demand with exceptional precision. Automated systems track wood chip inventory in real-time, optimize transportation routes, and improve forecast accuracy by 10%, ensuring steady supply to power plants.
• Smart Processing and Energy Management: AI-driven sensors monitor cooking times for wood chips converting to pulp, detect bark beetle traces, and control processing parameters. These intelligent systems reduce energy consumption and material waste while improving operational efficiency in biomass conversion facilities.

• 3D Volume Measurement and Load Optimization: Advanced 3D camera systems automatically calculate wood chip and sawdust load volumes in cubic meters. AI eliminates manual measurement errors, streamlines logistics operations, and provides accurate data for inventory management and export documentation across global supply chains.

Access the Sample Report for Current Insights and Forecasts

Wood Chips Industry Overview

The wood chips sector is experiencing a transformation driven by renewable energy commitments and sustainable forestry practices. The U.S. Forest Service Wood Innovations Program has supported over 200 projects since 2009, processing more than 850,000 green tons of biomass annually while supporting 2,686 jobs and adding USD 34 million to local economies. Government incentives are accelerating market adoption, with biomass accounting for 55% of renewable energy consumption in the solid bioenergy segment. Major infrastructure investments include River City Fibre's USD 600,000 facility upgrade in Canada featuring de-wrapping stations and electric log loaders, improving efficiency while reducing emissions. In Europe, the Renewable Energy Directive mandates increased renewable heat usage, with Austria's biomass systems powering 80% of rural community heating. These developments reflect strong policy support for wood chips as a strategic renewable fuel, though markets face challenges from fluctuating timber availability and competition from alternative energy sources.

Wood Chips Market Trends & Drivers

• The global shift toward renewable energy is the primary catalyst propelling wood chips demand, with biomass power plants expanding rapidly across Europe and North America. In the United States, densified biomass fuel manufacturers collectively purchased 1.6 million tons of raw feedstock in August 2025, with domestic sales averaging USD 239.56 per ton. Europe's district heating networks demonstrate exceptional adoption, with Sweden utilizing wood chips for nearly 85% of biomass fuel in heating systems according to the Swedish Forest Industries Federation. Finland's CHP plants consume over 6 million cubic meters of forest chips annually, supported by government subsidies under the KELA program that incentivizes forest owners to participate in energy wood harvesting. Austria showcases the model's effectiveness, with forest-based biomass fueling 80% of community heating in rural municipalities. The European Commission's renewable energy mandates are institutionalizing wood chips as essential infrastructure, while technological improvements in biomass boilers achieve energy efficiencies exceeding 85%, far surpassing conventional power plants.
• The pulp and paper industry's sustained demand for wood chips as primary raw material continues driving market growth globally. Industrial wood chip consumption for pulp and paper manufacturing exceeded 1.8 billion cubic meters of roundwood equivalents, with softwood species preferred for their long cellulose fibers that enhance paper strength. Natural Resources Canada reports that over 78% of the country's roundwood harvest for industrial processing consists of softwood, much of which is chipped for export or domestic mill supply. The expanding packaging industry and rising demand for recycled paper further boost consumption, with global building construction valued at USD 6.8 Trillion creating sustained demand for wood-based panels. Manufacturers are adopting advanced processing technologies including automated guided vehicles in Asian plywood facilities, achieving 20% productivity increases. West Fraser Timber's April 2024 expansion of port storage capacity at Vancouver enables year-round dried wood chip exports to Southeast Asia, demonstrating the export market's strategic importance.
• Growing environmental consciousness and sustainable forestry initiatives are reshaping supply chain dynamics and creating new market opportunities. Eternali's December 2024 acquisition of 3.3 hectares in Moju, Brazil for a new wood chip production facility exemplifies geographic expansion to meet biomass demand. The circular economy trend drives recycled chips segment growth at 6.2%, with materials sourced from post-consumer wood waste, demolition debris, and discarded pallets. Sustainable packaging innovations include multilayer films made from 60% bio-renewable sources, reducing carbon footprints by 30% while maintaining quality. Consumer preferences for eco-friendly engineered wood furniture and biodegradable packaging are expanding applications beyond traditional energy and pulp sectors. Government certification programs like FSC and PEFC create standardized market conditions, while the EU Deforestation-free Supply Chain Regulation sets strict sourcing requirements effective December 2025. Great Northern Timber's conservation partnerships launching reforestation initiatives in harvested areas demonstrate industry commitment to long-term sustainability, ensuring reliable supply while addressing environmental concerns.

Leading Companies Operating in the Global Wood Chips Industry

• American Wood Resources LLC

• Axpo Holding AG

• Bio Eneco Sdn Bhd

• Cogent Forest Products Inc.

• Great Northern Timber Inc.

• LA.SO.LE. EST S.P.A.

• Mitsui & Co. Ltd.

• Verdo Holding A/S

Wood Chips Market Report Segmentation

By Product:

• Softwood
• Hardwood

Softwood represents the largest segment, holding 47.6% market share due to widespread availability of coniferous forests in boreal and temperate regions, particularly across Canada, Scandinavia, and Russia, with preferred applications in pulp and paper manufacturing.

By Variety Type:

• Forest Chips
• Recycled Chips
• Wood Residue Chips
• Others

Forest chips dominate the market with 48.2% share, produced directly from roundwood or whole trees harvested specifically for energy or industrial use, particularly in regions with dedicated short-rotation coppice plantations.

By Application:

• Combined Heat and Power (CHP)
• Household Furnishing
• Residential Heating
• Others

Residential heating holds the largest segment with 38.6% share due to the growing shift toward renewable and cost-effective energy sources, with wood chips widely used in biomass heating systems particularly in colder regions of North America and Europe.

Regional Insights:

• North America (United States, Canada)
• Asia Pacific (China, Japan, India, South Korea, Australia, Indonesia, Others)
• Europe (Germany, France, United Kingdom, Italy, Spain, Russia, Others)
• Latin America (Brazil, Mexico, Others)
• Middle East and Africa

Asia Pacific exhibits clear dominance in the wood chips market with 39.0% share due to strong demand from pulp & paper, biomass energy, and wood-based panel industries, with China leading in paper production and panel manufacturing.

Recent News and Developments in Wood Chips Market

• January 2025: River City Fibre LP, a joint venture between Arrow Transportation Systems Inc. and Simpcw Resources Group, received up to USD 600,000 to purchase a de-wrapping station and electric log loader for processing low-value pulp logs into wood chips, hog fuel, and sawdust for the Kamloops Kruger pulp mill, creating four new jobs while improving environmental sustainability.
• December 2024: Eternali expanded its operations in Brazil, acquiring 3.3 hectares of land in Moju, Pará, to build its next wood chip production facility. This new plant will help fulfill the region's growing biomass demand following the successful launch of their first production site in Moju, which received strong customer feedback.
• November 2024: Great Northern Timber Inc. implemented AI-powered sorting technology in its wood chip production lines, improving quality control and reducing processing waste by 18% across its North American facilities through advanced machine learning algorithms that optimize chip sorting and moisture content management.
• April 2024: West Fraser Timber expanded its port storage capacity at the Port of Vancouver, enabling year-round export of dried wood chips to Southeast Asian markets, reducing shipping delays and improving moisture control to strengthen reliability as a key supplier in the Asia Pacific region.
• March 2024: Orsted announced plans to expand its biomass power generation capacity across Europe, significantly increasing demand for wood chips as a primary fuel source. This expansion demonstrates the growing role of wood chips in renewable energy transition strategies and institutional commitment to sustainable power generation infrastructure.
• March 2024: Great Northern Timber partnered with local conservation organizations to launch reforestation initiatives in harvested areas, demonstrating commitment to sustainable forestry practices while ensuring long-term wood chip supply. The project plants new trees in previously cut regions to restore forest ecosystems and maintain biodiversity.

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