THE SOUTH’S FORESTPRODUCTS INDUSTRY of the FUTURE

LUMBER-VENEER-POLESCOMPOSITE PRODUCTSPULP AND PAPERENERGYBIO-CHEMICALS

THE GLOBAL ECONOMY BRINGS NEW CHALLENGES TO THE FOREST PRODUCTS INDUSTRY.

HOW WILL WE DEAL WITH THEM?

Humanity’s Top Ten Problemsfor next 50 years* 1. ENERGY2. WATER3. FOOD4. ENVIRONMENT 5. POVERTY6. TERRORISM &

WAR7. DISEASE8. EDUCATION9. DEMOCRACY10. POPULATION

2003 6.5 Billion People2050 8-10 Billion People

*Taken form Dr. Smalley, Rice University

U.S. Dependence on Foreign Oil

Saudi Arabia 26%Iraq 11%Kuwait 10%Iran 9%UAE 8%Venezuela 6%Russia 5%Libya 3%Mexico 3%China 3%Nigeria 2%U.S. 2%

U.S. 26%Japan 7%China 6%Germany 4%Canada 4%Russia 3%Brazil 3%S. Korea 3%France 3%India 3%Mexico 3%Italy 2%

Have OilHave Oil Use OilUse Oil

The U.S. uses more than the next 5 highestconsuming nations combined.

The U.S. uses more than the next 5 highestconsuming nations combined.

Updated March 2003. Source: International Energy Annual 2001 (EIA), Tables 11.4 and 11.10.

ENERGY SHORTAGE – OUR OPPORTUNITY Current worldwide demand for oil

81MM barrels/day Production at 95% capacity

Demand in 20 years 121MM barrels/day

Where will it come from? Unstable countries and alternative sources Source balance will change over time

Natural gas Shortage in 10 years Price high and climbing- up 17% last week

THE WOOD ENERGY andBIO-CHEMICALS MARKET

High volume Non-cyclical Primarily small diameter planted pine Manage forests to include new uses Success will put more acres in trees Failure will take acres out of trees

THE TIMBER RESOURCE Abundant Renewable, Sustainable, Expandable Grow pine trees faster and bigger Harvesting capacity in place and under-

utilized Growing and harvesting more trees

improves the environment Long history of success

TREES CAN BE USED FOR ENERGY AND BIO-CHEMICALS Co-fire with coal

Should be our first priority Proven at up to 10% mix, sawdust size

Georgia utilities use about 30MM tons/yr. Utilities have little incentive to include wood

250 year coal supply, relatively cheap - PRB We need to help with legislation to provide financial

incentive for utilities to use wood as fuel Convert to bio-oil

More dense (higher BTU/lb) MS State got $1.4MM grant – wood preservative

Gasify High capital cost

THE SOUTHERN ALLIANCE FOR THE UTILIZATION OF

BIOMASS RESOURCES(SAUBR)

A Partnership for Rural Development Through the Production of Energy and

Chemicals from Forests and Farms in the Southern United States

Purpose of the Alliance Create a new industry which will use

bio-mass as an energy and chemicals feedstock – new high volume, non-cyclical USES for forest and farm crops – TREES Small diameter trees Logging residue(Limbs, tops, un-merchantable)

Stimulate rural development Restore jobs lost Create new jobs, in the woods and in plants

Decrease dependence on fossil fuels

Why an Alliance is necessary

Conventional market forces too slow and currently in the wrong direction

Get our arms around “IT” Put the pieces together Need combined effort for political power

and efficiency Quicker COMMERCIALIZATION

What SAUBR Will Do

Combine strengths and resources of members

Assist in legislative process Is a center for communications, co-

operation, collaborationConduit for information exchangeEliminate duplicationJoint projects by members

Current Members The Alabama Forestry Association The South Carolina Forestry Commission The Georgia Forestry Commission The Alabama Forestry Commission The Alabama Department of Agriculture and Industries The Alabama Department of Economic & Community Affairs (ADECA) The Alabama Development Office (ADO) Auburn University Department of Agronomy and Soils Auburn University Forest Products Development Center Forest Energy Associates Forest Investment Associates The Gas Technology Institute Mississippi State University Department of Forest Products The South Carolina Forestry Association The South Carolina Department of Commerce The Sugar Processing Research Institute The University of Alabama Center for Economic Development The University of Alabama at Huntsville Alabama Technology Network The University of Alabama Institute for Manufacturing Excellence The University of Georgia Faculty of Engineering

Current Members - continued Green Energy Technologies The Texas Forestry Association The University of Georgia Warnell School of Forest Resources Vinyard Technology Company, Inc. The Alabama Treasure Forest Association Jasper Lumber Company Alliance Biomass Energy Forestry Unlimited Earth Resources Farley Forest Products Taylor-Made Transportation Timberland Harvesters, Inc. Southeastern Lumber Manufacturers Association Cooper T. Smith Timberlands Miller and Company B.A.S. Timber Company The Forest Landowners Association Power Generating, Inc U.S. Forest Service, Forest Products Laboratory General Bio-Energy, Inc. Renewable Oil International, LLC

Current Members - continued Forest Resource Consultants, Inc The Mississippi Forestry Association Eprida Mississippi Alternative Energy Enterprise Santee Cooper Southern Region Extension Forestry Stuckey Timberlands, Inc. Southern U.S. Timber Properties, Inc. Mainstream Business Enterprises, LLC Fulghum FibreFuels, LTD Sterling Planet The Mississippi Biomass Council Southern Company Crain Consulting The University of Alabama Department of Chemical and Biological Engineering

US Forest Service, Southern Research Station University of Tennessee

Leadership Chair – Dr. Liam Leightley, MS State Chair Elect – Mr. Gene Quick, Forest Energy

Associates Secretary – Mr. Freddy Thompson, Jasper

Lumber Company Treasurer, Dr. Scott Spear, Univ. of AL 12 Other Directors

Dr. Dale Threadgill, UGA Faculty of Eng. Fred Allen

Home Base

University of Alabama in Tuscaloosa Alabama Institute for Manufacturing

Excellence(AIME) We owe these people!!

Mode of Operation Not-for-profit(501)(c)(3). UA Capstone Fnd. Maximum effectiveness and efficiency Cost - $200-250M/year for South

With free internal support

Enormous return for taxpayers’ investment Georgia pulpwood, 1999 – 21MM tons South’s pulpwood, 1999 – 135.9MM tons Stumpage price up $0.10/ton, payback is:

- $2.1MM in Georgia, $13.9MM in South

Not a long-term organization ~10 yrs.

Working Groups Legislative Education Public Education/Outreach Technology/Technology Transfer Research Funding Policy Economic/Rural Development Forest Related Industry Agriculture Related Industry Membership

What’s Next? SAUBR now formed – must deliver PUT CONVERSION PLANT IN PLACE Develop and implement Strategic Plan

Well coordinated Southern regional political strategy is first priority

Build congressional, state and local support Get operational funding - $200-250M/yr. Need part-time Director First Conference – October 25-26, 2004 Joint (SFRP) Conference – August, 2005 Spread the word, add votes

WHAT SHOULD WE DO?

Have “industry summit” meeting(s) Areas within Georgia? State Regional(Southeastern US) Build support

Be active in SAUBR Working Groups Sub-group in Georgia

Let industry associations work for us First results will be politically driven

Your Thoughts?

Need your thoughts and suggestions Please give me a note

Whatever we do – Must do it ourselves Must speed up the change process YOU CAN HELP!!