Despite being a relatively young industry—developing for less than a decade—Vietnam has risen to become the world’s second-largest exporter of wood pellets, only behind the United States.
Rapid Growth in Wood Pellet Exports
Table of Contents
According to data from the General Department of Vietnam Customs, in 2013, Vietnam exported just 175,000 tons of wood pellets worth USD 22 million. By 2020, exports had surged to 3.2 million tons, generating USD 352 million.
Thanks to this rapid expansion in both volume and value, Vietnam has become the second-largest wood pellet exporter globally.
Dr. To Xuan Phuc, policy analyst at Forest Trends, noted that Vietnam’s wood pellet production and export industry has expanded mainly over the past decade to meet growing biomass energy demand in Japan and South Korea following the Fukushima earthquake and tsunami. As a result, nearly 100% of Vietnam’s wood pellets are exported to these two markets, serving as a key fuel source for biomass power plants.
Demand for wood pellets in Japan and South Korea continues to rise, driving Vietnam’s production and export growth. Globally, pellet consumption is also increasing, supported by climate commitments and renewable energy transitions.
According to the Vietnam Timber and Forest Products Association (VIFOREST) and the International Trade Center (ITC), global wood pellet consumption value grew from USD 2.5 billion in 2016 to USD 4.35 billion in 2020, equivalent to a volume increase from 16.8 million tons to 28.7 million tons.
With the U.S. rejoining the Paris Climate Agreement, global demand for sustainable bioenergy fuels such as wood pellets is expected to continue rising—creating long-term growth opportunities for Vietnam’s pellet industry.
The Need to Diversify Export Markets
Despite strong export growth, Vietnam’s wood pellet industry still faces structural and sustainability challenges, Dr. Phuc warned.
A key issue lies in uncontrolled input materials, leading to inconsistent product quality and lower export prices. The main raw materials used for pellet production are by-products such as sawdust, wood shavings, branches, and offcuts from plantation timber (acacia, eucalyptus, rubber, etc.).
Some small-scale producers reportedly source wood from any available supplier without traceability systems, while larger companies rely on FSC-certified sustainable plantations. However, there are concerns that mixing between certified and non-certified materials may occur, even in shipments labeled as sustainable.
Without proper monitoring, this could threaten forest resources and undermine Vietnam’s reputation in global green supply chains.
Fragmented Production and Unfair Competition
Although wood pellets have become one of Vietnam’s key forestry exports, the industry remains largely unregulated and fragmented.
Most producers operate independently without coordination or representation through associations. As a result, unfair competition has emerged—especially among small factories—competing fiercely for raw materials, buyers, and prices.
This competition also extends to other wood product manufacturers such as chipboard and plywood producers, driving up input costs and increasing pressure on forest resources.
In addition, many small exporters lack access to market intelligence about import demand, quality standards, or sustainability regulations. This knowledge gap prevents them from proactively adapting to shifting export requirements in Japan, Korea, and Europe, leaving them vulnerable to compliance risks.
Outlook: Towards Sustainable Development
To sustain growth, Vietnam’s pellet industry must:
-
Establish stronger supply chain traceability and ensure the use of certified raw materials;
-
Build industry associations or clusters to enhance collaboration and policy advocacy;
-
Diversify export markets beyond Japan and Korea;
-
Improve product quality and align with international sustainability standards.
As global demand for renewable energy increases, Vietnam has a strong opportunity to position itself as a leading supplier of sustainable biomass fuel, provided the industry adopts transparent, responsible, and coordinated production practices.