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MARKET INSIGHTS
Global biomass fuel (PKS) market was valued at USD 1404 million in 2023. The market is projected to grow from USD 1510 million in 2025 to USD 2605 million by 2030, exhibiting a CAGR of 9.8% during the forecast period.
Palm kernel shell (PKS) is a byproduct of palm oil production that serves as an efficient biomass fuel for power generation. These carbon-neutral shells offer high calorific value (approximately 4000-5000 kcal/kg) and excellent combustion properties, making them increasingly attractive as renewable energy sources. The product category includes both certified (sustainably sourced) and non-certified variants, with certification gaining importance due to tightening environmental regulations.
The market growth is primarily driven by global decarbonization efforts and renewable energy mandates, particularly in Japan and Europe where PKS imports reached 2.8 million tons in 2023. However, supply chain complexities and certification costs pose challenges. Recent developments include Japanese utilities establishing direct procurement channels in Indonesia, while certification programs like ISCC and RSB gained traction, covering 33.59% of 2023 shipments. Iwatani Corporation and NISSIN BIO ENERGY lead the fragmented market, though local suppliers in Malaysia and Indonesia continue dominating production.
Global Shift Toward Renewable Energy Accelerates PKS Demand
The growing emphasis on renewable energy sources worldwide is driving substantial demand for palm kernel shell (PKS) biomass fuel. With over 38 countries implementing renewable portfolio standards and feed-in tariffs for biomass energy, PKS has emerged as a cost-effective alternative to fossil fuels. Its high calorific value of approximately 4,000-5,000 kcal/kg and carbon-neutral properties align perfectly with global decarbonization goals. Japan's feed-in tariff program, offering up to $0.23 per kWh for biomass-generated electricity, has been particularly influential in creating sustained demand for PKS imports.
Circular Economy Initiatives Boost PKS Utilization
Waste-to-energy initiatives are gaining momentum across Southeast Asia and Europe, with PKS playing a pivotal role in these circular economy models. The palm oil industry generates approximately 8-10 million tons of PKS annually in Indonesia and Malaysia alone. Previously considered agricultural waste, these byproducts now represent valuable energy resources through proper processing and certification. Government policies in Malaysia now mandate at least 20% renewable energy in the national mix by 2025, with PKS contributing significantly to this target. This transformation from waste disposal cost to revenue stream is fundamentally reshaping the industry's economics.
➤ The European Union's revised Renewable Energy Directive (RED II) requires 32% renewable energy by 2030, with strict sustainability criteria that favor certified PKS over conventional biomass sources.
Furthermore, the increasing adoption of co-firing technologies in coal plants, particularly in Japan and Korea where PKS can replace 5-20% of coal consumption without infrastructure modifications, presents substantial growth potential. As more utilities recognize PKS's favorable combustion characteristics and lower ash content compared to other biomass fuels, demand is expected to grow exponentially.
Logistical Complexities and Supply Chain Bottlenecks Limit Market Expansion
While PKS offers significant potential as a renewable fuel, its market growth faces substantial logistical challenges. The material's bulk density of approximately 380-450 kg/m³ makes transportation economically unviable beyond certain distances, limiting exports primarily to Asian markets. Storage and handling difficulties arise from PKS's tendency to absorb moisture (up to 30-40% if unprotected), requiring specialized drying and storage infrastructure that adds 15-20% to delivered costs. These factors make it challenging to establish reliable supply chains to more distant markets like Europe and North America.
Additional Constraints
Seasonal Production Variability
PKS availability fluctuates significantly with palm oil production cycles, creating supply uncertainties. During low production periods from November to February, prices can increase by 25-35%, making long-term supply contracts challenging to maintain at stable prices.
Certification Compliance Costs
Meeting sustainability certification requirements adds substantial costs, with certification expenses representing 8-12% of total production costs for exporters. The complex documentation processes for certifications like ISCC or RED require specialized staff and systems that smaller producers often cannot afford.
Price Volatility and Commodity Competition Create Market Uncertainty
The PKS market faces significant price sensitivity and competition from alternative biomass fuels. PKS prices historically correlate with palm oil market trends, creating volatility when crude palm oil prices fluctuate. Recent years have seen PKS spot prices range from $80-$160 per ton, making long-term planning difficult for both suppliers and buyers. This volatility is exacerbated by competition from wood pellets and agricultural residues, which often have more established supply chains in Western markets.
Industry-Specific Challenges
Quality Consistency Issues
Variations in PKS quality across different mills and regions pose challenges for end-users. Moisture content, impurity levels, and calorific values can vary significantly, requiring additional processing and quality control measures that increase costs by 10-15%.
Regulatory Compliance Burden
Increasingly stringent emissions regulations in key markets like Japan and South Korea require additional investments in combustion technology upgrades. These regulatory changes occur frequently, creating uncertainty for PKS suppliers and consumers alike.
Emerging Technologies and New Applications Create Growth Potential
Technological advancements in biomass processing and utilization present significant opportunities for PKS market expansion. Pyrolysis technologies that convert PKS into bio-oil and biochar are gaining traction, with the global biochar market projected to grow at 14% CAGR through 2030. These high-value applications could command premium pricing and open new revenue streams beyond conventional combustion uses. Several pilot projects in Southeast Asia are already demonstrating the technical and economic viability of PKS-based pyrolysis operations.
Geographic Market Expansion Offers Untapped Potential
While Japan and Korea currently dominate PKS imports, emerging markets in Europe and North America present substantial growth opportunities. Countries like the UK and Netherlands are increasingly incorporating biomass in their energy transition strategies, with biomass accounting for over 60% of renewable energy in some European nations. Developing specialized shipping solutions and storage infrastructure could make PKS more competitive in these distant but high-potential markets.
Additionally, the growing demand for sustainable aviation fuel presents a promising new application area. Several airlines have committed to 10% SAF usage by 2030, creating potential demand for PKS as a feedstock. Strategic partnerships between palm oil producers, biomass processors, and energy companies could establish new value chains to capitalize on this emerging opportunity.
Certified PKS Gains Momentum Due to Stringent Sustainability Standards
The market is segmented based on type into:
Non-Certified PKS
Certified PKS
Industrial Sector Leads Due to High Adoption in Power Generation
The market is segmented based on application into:
Residential
Business
Industry
High Calorific PKS Dominates Due to Superior Energy Efficiency
The market is segmented based on calorific value into:
High (4500-5000 kcal/kg)
Medium (4000-4500 kcal/kg)
Low (Below 4000 kcal/kg)
Bulk Packaging Preferred for Large-Scale Industrial Usage
The market is segmented based on packaging into:
Bulk
Bagged
Containerized
Market Expansion and Sustainability Drive Competition in PKS Sector
The Biomass Fuel (PKS) market exhibits a fragmented but rapidly evolving competitive structure, characterized by a mix of multinational corporations, regional suppliers, and specialized distributors. While the top three players held just 12.42% of global revenue in 2023—emphasizing market saturation from production hubs—Iwatani Corporation and NISSIN BIO ENERGY have emerged as leaders through vertical integration and certified PKS solutions. Their dominance stems from established supply chains linking Southeast Asian producers to Japanese and European energy plants, where demand continues to accelerate.
In Indonesia and Malaysia—where 78% of global PKS originates—local giants like DSNG (PT Dharma Satya Nusantara Tbk) leverage upstream palm oil operations to secure raw materials. Meanwhile, exporters such as PT UNIVERSAL PALM INDONESIA and Arkan Group specialize in bridging regional surpluses to international markets. Their logistical expertise in screening, drying, and bulk transportation provides critical market access.
Recent developments highlight strategic shifts toward sustainability. With certified PKS volumes projected to grow from 33.59% to 45.75% of the market by 2030, leaders are investing in traceability systems and RSPO certification—essential for compliance with Japan’s renewable energy standards. Palmline Bioenergy, for instance, now allocates 40% of its export capacity to certified feedstock, responding to tightening EU sustainability regulations.
While multinationals focus on high-value markets, smaller suppliers compete through regional partnerships. Gombella Integrated Services has expanded its African distribution network, whereas Provident Biofuels targets niche industrial users in South Korea. This dual-tiered landscape—global giants versus agile local players—will intensify as decarbonization policies spur demand.
Iwatani Corporation (Japan)
NISSIN BIO ENERGY (Japan)
DSNG (PT Dharma Satya Nusantara Tbk) (Indonesia)
BIO ENECO (Malaysia)
Palmline Bioenergy (Singapore)
Gombella Integrated Services Limited (Nigeria)
ARGYA ENERGY (India)
Arkan Group (Malaysia)
PT UNIVERSAL PALM INDONESIA (Indonesia)
The global Biomass Fuel (PKS) market is witnessing a significant shift toward sustainability certification, driven by stringent environmental policies and corporate ESG commitments. Certified PKS accounted for 33.59% of market share in 2023, with projections indicating growth to 45.75% by 2030. This surge reflects tightening import regulations in key markets like Japan and the EU, where traceability and carbon neutrality are mandated for biomass feedstock. Notably, the International Sustainability and Carbon Certification (ISCC) system has become a benchmark, enabling suppliers to command premium pricing while aligning with decarbonization goals.
Supply Chain Localization
Major PKS consumers are increasingly establishing direct procurement networks in Southeast Asia to secure stable supplies. Japanese trading houses now operate dedicated processing facilities in Indonesia and Malaysia, reducing reliance on fragmented distributor networks. This vertical integration improved quality control and lowered logistics costs by 18-22% for bulk shipments compared to spot purchases. Simultaneously, producers are investing in pre-processing technologies like torrefaction to enhance energy density, enabling cost-effective long-distance transportation to European markets.
While 83% of PKS currently fuels industrial power generation, emerging applications are gaining traction. The residential heating sector in Northern Europe has seen 27% annual growth in PKS pellet adoption since 2021, driven by coal-to-biomass conversion incentives. Concurrently, innovative co-firing technologies allow cement plants to replace 15-30% of fossil fuels with PKS, creating new demand centers. However, feedstock competition arises as PKS begins displacing wood pellets in some applications due to its higher calorific value (4,500-5,000 kcal/kg) and lower ash content.
Regional policies are reshaping PKS trade flows, with Japan maintaining dominance as the largest importer (41% share in 2023) through long-term offtake agreements. The EU's revised Renewable Energy Directive (RED III) is accelerating demand, requiring 42.5% renewable energy in heating/cooling by 2030. Meanwhile, China's emerging biomass power subsidies are creating a new growth frontier, with PKS imports growing 68% year-over-year in 2023. These dynamics are prompting Indonesian and Malaysian exporters to diversify beyond traditional markets, though logistical bottlenecks limit penetration into inland Chinese provinces.
Asia-Pacific
The Asia-Pacific region dominates the global PKS market, accounting for over 60% of production and consumption due to concentrated palm oil cultivation in Indonesia and Malaysia. These two countries collectively produce approximately 85% of global palm kernel shells, establishing them as the primary supply hubs. While domestic consumption for industrial energy generation remains strong, Japan and South Korea represent key export destinations due to their renewable energy mandates. Japan alone imported over 1.5 million tons of PKS in 2023, leveraging its geographical proximity and established trade networks. However, emerging environmental concerns about palm oil deforestation are gradually pushing suppliers toward certified PKS products, with Indonesia implementing ISCC certification for sustainable exports. Domestic policy frameworks across Southeast Asia increasingly support biomass co-firing in power plants, further stimulating demand.
Europe
Europe’s PKS market is primarily import-driven, with demand concentrated in countries like the Netherlands, Germany, and Italy where biomass plays a critical role in renewable energy portfolios. Strict sustainability requirements under the EU’s Renewable Energy Directive (RED II) mandate certified PKS imports, which accounted for 78% of regional consumption in 2023. While coal phase-out policies in nations such as the UK and Germany create opportunities for biomass alternatives, logistical costs and carbon footprint scrutiny limit widespread adoption. Dutch ports serve as critical entry points, with Rotterdam handling nearly 40% of Europe’s PKS imports. The region’s focus on emission reduction continues to drive interest, though competition from local wood pellets and tightening sustainability standards pose challenges for long-term market penetration.
North America
North America represents a smaller but growing PKS market, characterized by niche applications in industrial co-generation and district heating systems. The U.S. and Canada have seen increased imports via West Coast ports, primarily from Indonesia, though volumes remain modest compared to Asia and Europe—totaling approximately 200,000 tons in 2023. Stringent EPA biomass sustainability guidelines and competition from domestic wood waste limit rapid adoption, but corporate sustainability initiatives (e.g., Amazon’s clean energy commitments) are creating pockets of demand. California’s Low Carbon Fuel Standard (LCFS) provides incentives for carbon-neutral fuels, positioning PKS as a viable option for compliant energy generation. However, high freight costs and limited supply chain infrastructure inhibit large-scale utilization.
South America
South America’s PKS market is in early development, with Brazil being the most active due to its agro-industrial sector. While palm oil production is limited compared to Southeast Asia, local biomass demand from food processing and pulp/paper industries supports gradual PKS adoption. Colombia and Ecuador also contribute to regional supply, though export volumes remain negligible. Economic instability and underdeveloped biomass energy policies hinder market growth, with most PKS being consumed domestically as a low-cost industrial fuel. However, Brazil’s PRODES program for renewable energy diversification presents long-term potential, particularly if logistics networks improve to facilitate cost-effective exports.
Middle East & Africa
The Middle East & Africa region shows fragmented PKS demand, with uptake concentrated in countries like South Africa and the UAE where industrial energy diversification is prioritized. Limited palm oil production constrains supply, though Nigeria and Ghana are emerging as minor exporters. South Africa’s Renewable Energy Independent Power Producer Procurement Program (REIPPPP) has spurred some biomass projects, with PKS being tested as a supplementary fuel. The UAE’s focus on sustainable energy initiatives, including waste-to-energy projects, could drive incremental demand. However, fossil fuel dominance, lack of regulatory incentives, and logistical inefficiencies continue to curb market expansion, leaving growth prospects modest in the near term.
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, covering production, consumption, trade dynamics, and technological advancements in the sector.
✅ Market Overview
Global and regional market size (historical & forecast)
Growth trends and value/volume projections at 9.8% CAGR (2023–2030)
✅ Segmentation Analysis
By product type (Certified PKS vs. Non-Certified PKS)
By application (Residential, Business, Industrial)
By end-user industries (Power Generation, Manufacturing)
By distribution channel (Direct Sales, Distributors/Exporters)
✅ Regional Insights
Production hubs (Indonesia, Malaysia) vs. demand centers (Japan, South Korea, Europe)
Country-level analysis of 15+ key markets
✅ Competitive Landscape
Market share analysis of Iwatani Corporation, NISSIN BIO ENERGY, DSNG and others
Strategic moves in supply chain optimization and certification compliance
Pricing strategies across quality tiers
✅ Technology & Innovation
Advances in PKS processing and quality control
Digital tracking for certified sustainable PKS
Efficiency improvements in combustion technologies
✅ Market Dynamics
Drivers: Renewable energy policies, carbon neutrality goals
Challenges: Supply chain fragmentation, certification costs
Logistics constraints in bulk transportation
✅ Opportunities & Recommendations
High-growth potential in certified PKS segment (projected 45.75% share by 2030)
Strategic partnerships between producers and utilities
Investment in Southeast Asian processing infrastructure
✅ Stakeholder Insights
Critical for palm oil producers, energy companies, logistics providers, and policymakers
-> Key players include Iwatani Corporation, NISSIN BIO ENERGY, DSNG, BIO ENECO, and Palmline Bioenergy, with the top three accounting for 12.42% market share.
-> Primary drivers include renewable energy mandates, the 9,800 kcal/kg calorific value of PKS, and Japan's biomass power generation policies.
-> Asia-Pacific leads both production (Indonesia/Malaysia) and consumption (Japan/South Korea), while European imports are growing rapidly.
-> Key trends include rising certified PKS demand (33.59% market share in 2023), digital supply chain tracking, and co-firing applications.
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