Hydrogen production from wood pellets was investigated using a modulus two-stage gasification. The results showed that up to 88 mg H2/g wood pellets, which is 1.3 times higher than the theoretical hydrogen from feedstock (around 65 mg/g), was obtained at temperatures below 1000 °C. Combining CO2 and steam as gasifying agents resulted in a 6% increase in the gas yield and up to 93% reduction in tar content (0.03g/Nm3) compared to steam gasification (0.5–0.7 g/Nm3). Although the hydrogen content in the gas stream was similar in both cases of steam and CO2-steam gasification (88 mg/g pellets), the CO2 content in the gas stream from CO2-steam gasification was reduced by 12%–17% compared with steam gasification. The H2/CO ratio in the gas stream was between 3.2 and 3.8 for steam gasification and 1.6–2.3 for CO2-steam gasification. The cold gas efficiency (a ratio of calorific value of products to that of wood pellets) of CO2-steam gasification was up to 14–16% higher than that of steam-gasification due to higher CO content in the gas. It can be concluded that using CO2- steam two-stage gasification increases the process efficiency and sustainability by utilising carbon source in CO2 emission.