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

1. THE SOUTH’S FORESTPRODUCTS INDUSTRY of the FUTURE LUMBER-VENEER-POLESCOMPOSITE PRODUCTSPULP AND PAPERENERGYBIO-CHEMICALS

2. THE GLOBAL ECONOMY BRINGS NEW CHALLENGES TO THE FOREST PRODUCTS INDUSTRY. HOW WILL WE DEAL WITH THEM?

3. Humanity’s Top Ten Problemsfor next 50 years* • ENERGY • WATER • FOOD • ENVIRONMENT • POVERTY • TERRORISM & WAR • DISEASE • EDUCATION • DEMOCRACY • POPULATION *Taken form Dr. Smalley, Rice University 2003 6.5 Billion People 2050 8-10 Billion People

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

12. What SAUBR Will Do • Combine strengths and resources of members • Assist in legislative process • Is a center for communications, co-operation, collaboration • Conduit for information exchange • Eliminate duplication • Joint projects by members

13. 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

14. 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

15. 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

16. 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

17. Home Base • University of Alabama in Tuscaloosa • Alabama Institute for Manufacturing Excellence(AIME) • We owe these people!!

18. 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.

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

20. 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

21. 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

22. 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!!