2007 Governor’s Task Force on the Competitiveness of Minnesota’s Primary Forest Products Industry Minnesota Forest Resources Partnership

2 Background Governor convenes Primary Forest Industry Task Force Fall 2006 – Ainsworth lays off 410 workers in Bemidji, Grand Rapids, Cook. Hundreds of loggers, truckers and other businesses affected by layoffs. September 29, 2006 – Governor holds Timber Summit October 2006 – Governor convenes expanded Task Force December 2006 – Report of near-term recommendations delivered to Governor.

Background January 2007 – Governor reconvenes Task Force to develop long-term recommendations. July 2007 – Task Force recommendations presented to Governor. September 2007 – Governor meets with Task Force to discuss recommendations.

4 Reconvened 2007 Task Force Charge Develop long-term recommendations to retain and increase the competitiveness of the primary forest products industry

Task Force Members Public Agencies:Mark Holsten – DNR Commissioner (Co-chair) Sandy Layman - IRR Commissioner (Co-chair) Mike Bull – Assistant Commissioner, Commerce Bob Krepps – St. Louis County Land Commissioner Loggers:Tom McCabe – McCabe Forest Products (TPA) Rich Holm – Holm Logging & Trucking (ACLT) Forest Industry:Kent Jacobson – Ainsworth Pete Aube – Potlatch Joe Maher – UPM Blandin Paper Tom Collins – Saapi Fine Paper Landowner:Craig Halla – Forest Capital Partners University of Minnesota: Dr. Alan Ek – Dept of Forest Resources

6 Task Force Process 4 meetings from February – May –Refined issues from 2006 report (added energy) –Developed vision and opportunities statements –Developed 16 long-term recommendations –Completed draft report to Governor Report sent to Governor’s office in June Report released in July

7 Task Force Vision A healthy, fully integrated forest products industry competing successfully in the dynamic global marketplace. –Continues to attract investment –Utilizes an environmentally sustainable supply of timber resources (state and county forests are critical) –Fosters an efficient synergy between the forest and renewable energy sectors

8 Important Opportunities Governor’s unique influence on forest policy and public awareness Renewable energy as an emerging strategic issue

9 Long-term Recommendations Forest Sector Policy Create forestry economy sub-cabinet consisting of DNR, IRR, DEED, MPCA, DOA, and Commerce which will: –Provide state agency policy coordination and action –Oversee implementation of Task Force recommendations

10 Long-term Recommendations Forest Resources Management Increase statewide annual timber harvest for all ownerships to 5.5 M cords by 2012

11 Long-term Recommendations Maintenance of Working Forestland Base Increase state investments in working forest conservation easements, financed in partnership with other funding sources. Expedite public and private land exchanges in effort to reduce the “checkerboard” forestland ownership pattern and increase management efficiency and access.

12 Long-term Recommendations Renewable Energy Direct NextGen Energy Board to: –Make existing forest product industry facilities a priority for state cellulosic biofuels and bioenergy policies, incentives, and research. –Ensure that current raw material supplies of established forest product firms are sustained and the existing use of biomass is enhanced.

13 Long-term Recommendations Renewable Energy (cont.) –Provide capital incentives for high-value biomass utilization. –Structure incentives to enable partnerships between electric utilities and forest products industry. –Provide state investment in pilot scale projects at existing forest products facilities.

14 Long-term Recommendations Transportation Increase weight limits on local, state, and federal roads while protecting road and bridge infrastructure by adding axles and braking capability.

15 Long-term Recommendations Taxation Improve effectiveness of Sustainable Forestry Incentives Act (SFIA) and make MN forestland property tax policy more effective. Encourage forestland retention by adjusting current property tax classifications/rates to make them comparable to agricultural lands.

16 Iron Range Resources Initiatives Convened the “Seizing Opportunities: Forestry and the BioEconomy” conference in late September. Hosting a Renewable Energy Roundtable discussion to discern opportunities and the best course of action for NE MN. Will aggressively pursue renewable energy pilot project if deemed appropriate.