In this paper, the importance of innovation is conveyed through the prism of the theoretical framework. Issues related to the wood industry in Croatia have been addressed, the industry which has great potential for further progress through the implementation of new raw materials in the form of processing used coffee grounds. A research was conducted across Croatia that provided answers to the types of heating used by citizens, the prices of heating were then compared in the form of annual costs, positive attitudes were identified towards renewable energy sources as well as correlation between lower incomes and use of heat logs. Further research revealed that pellets are the cheapest form of heating in Croatia. The importance and benefit of pellets, as well as their production process, have been clarified. A more detailed study has identified the possibility of implementing a coffee ground pellet into existing plants, machinery and equipment. Such pellets are easier to produce than the wooden ones. Some of the benefits for pellet factories are lower cost of production and great savings due to less machinery required in the processing of coffee ground pellets. Coffee ground pellets reach higher temperatures, burn for a longer period of time, are cheaper for citizens as a product and form of heating, and have almost a zero CO2 level. Further research on the process of converting coffee ground to biodiesel fuel is recommended, as it is a quite new and revolutionary form of technology that has already been implemented by the world's largest companies such as Nestle, Shell and Starbucks.