Weather and Power Plants Drive Wood Fuel Prices Up

• Over the past 20 years, both households and power generators across Europe have increasingly replaced coal with wood pellets for heating and electricity, responding to environmental regulations and rising natural gas and EU CO2 permit costs.
• Cold weather and higher demand for wood pellets have pushed EU import values up to €253/mt in November 2025, a notable increase from a year earlier, with Poland experiencing a particularly sharp price rise.
• Poland’s reliance on Ukrainian wood pellet imports exposes it to risks from the ongoing conflict in Ukraine, which has previously caused EU-wide price spikes and could lead to further increases.
• The US is the largest global exporter of wood pellets, mainly supplying the UK, EU, and Japan, while intra-Asia trade is dominated by ASEAN countries supplying Japan and South Korea. Poland faces stiff competition for supplies from both EU neighbors and major global buyers like the UK.

Cold weather and higher natural gas costs have had a knock-on effect on other fuel sources as households boost use of locally used fuels including wood pellets.

Buyers across Europe replaced coal for home heating with wood pellets over the past 20 years in response to environmental policies. Similarly, power generators in Denmark, the Netherlands and the UK have swapped coal for wood pellets in 3,980 MW of capacity using 7.1 million mt of pellets to reduce their carbon emissions in response to higher EU CO2 emissions permit costs.

The increased demand from cold weather in homes and power generation can be seen in the cost of wood pellets. EU member states’ import values per metric ton in November 2025 including intra-EU trade reached €253/mt, compared with €210/mt in the same month a year earlier, S&P Global Market Intelligence data shows.

The situation has been particularly acute for Poland, where prices rose by 50.7% year over year, resulting in the historic discount to EU prices falling to 6.0% in November from an average 19.1% since 2021. Import values could rise further, given they reached €350/mt in the summer of 2022 in the wake of Russia’s extended invasion of Ukraine, which is not expected to be resolved on the six-to-12-month view.

Again, that is a particular challenge for Poland given 66.7% of its imports of wood pellets in the 12 months to Nov. 30, 2025, came from Ukraine, while Ukraine only accounted for 1.2% of global supplies. Other EU states accounted for 23.7% of Polish imports.

Poland is not just competing with other EU countries for global supplies, but also significant purchasers elsewhere in the world, including the UK, which accounted for 31.5% of global imports compared with Poland’s 1.2%.

The largest suppliers globally are based in the US, which accounted for 33.6% of global exports targeted predominantly at the UK as well as sales to the EU and Japan. Intra-Asia trade was led by supplies from Association of Southeast Asian Nations, including Vietnam, to Japan and South Korea.

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.