Pellet fuels are biofuels made from compressed organic matter or biomass. Pellets can be made from any one of the biomass categories: industrial waste and co-products, food waste, agricultural residues, energy crops, and virgin lumber.

Wood pellets are the most common type of pellet fuel and are generally made from compacted sawdust and related industrial wastes from the milling of lumber, manufacture of wood products and furniture, and construction