The EU is the world's largest wood pellet market and consumed 22.7 million metric tons (MMT) of pellets in 2025. In 2026, EU wood pellet consumption is forecast to increase by another 500,000 MT based on a further expansion of residential use. Although EU wood pellet production is anticipated to expand in 2026, it is not keeping up with the growing demand due to the limited sustainable supply of woody biomass. Because of this, EU imports are projected to partially recover. The EU Deforestation-free Supply Chain Regulation (EUDR) could become a trade barrier in 2026.