From an environmental and economic point of view, pellets are a carbon-neutral and energy-efficient alternative to coal and oil. Based on their heating value, ease of use, storage possibilities, transport possibilities, the use of current heating devices in both industry and households, and their environmental properties, pellets are an intermediate form of coal and gas fuel, but they are more mobile and safer. 

The raw material used in the production of pellets is often dry side streams from the mechanical forest industry (sawdust, dust and shavings generated by sawmills and planers). 

Pellets can also be made from fresh biomass (wood chips and tree bark). Wood chips can include, for example, chopped branches, tree trunks unsuitable for further processing and other forest residues.