Dollar-for-dollar, papermaking is an irreplaceable economic force for Maine.

Wood pellet stoves and furnaces offer an enticing option as Mainers try to find ways to lower their heating bills this winter. If oil prices remain high and wood pellet prices stabilize, these stoves and furnaces will offer a lower cost alternative for home heating.

But, while pellets may be a good option for homeowners, the economic impacts of pellet production could not come close to replacing the critical role that paper manufacturing plays in Maine’s economy, or the jobs it provides.

According to 2007 figures from the Maine Department of Labor, pulp and paper production generated 8,520 jobs in with an annual payroll of $511 million. Several thousand more jobs are generated by the industry for logging, trucking, construction, retail and other services.

Three pellet mills have recently been opened or are being developed in Maine – in Corinth, Athens and Strong – with a collective design capacity of 400,000 tons of pellets. Some of these pellets will be sold in Maine, while others are shipped to markets in Europe. At full capacity, these pellet mills will employ approximately 100 people.

The Department of Labor does not provide specific salary information on these jobs, but the average salary in the wood manufacturing industry in 2007 was $33,979. Using this number, the pellet industry would generate an estimated annual payroll of $3.4 million, or 0.7 percent of the pulp and paper industry payroll

What if all the pulp and paper mills in Maine were converted to the manufacture of wood pellets? The Maine Forest Service estimates Maine’s pulp and paper mills processed 3.4 million cords of wood in 2006. That same volume of wood could produce approximately 5 million tons of dried pellets per-year.

If 100 jobs at pellet manufacturing facilities will be created for the production of 400,000 tons of pellets, and assuming there is no economy of scale where larger facilities use fewer workers per-ton of product produced, pellet manufacturing could ultimately provide 1,250 jobs in Maine.

Even after the announced closure of one paper machine at Wausau Papers’ Otis Mill in Jay/Livermore Falls, and the temporary closure of the Katahdin Paper Mill in Millinocket and the Red Shield mill in Old Town, Maine’s paper industry will continue to employ 8,000 workers, with an annual payroll of $480 million. Would we really want to exchange this vital sector of Maine’s economy for 1,250 jobs with a collective payroll of $42.5 million dollars?

The high price of oil and electricity are hurting mills in Maine in the same way they are hurting homeowners and small businesses. In addition, the cost of wood and other raw materials has nearly doubled over the past year. There are many reasons for this, but the push to use more wood for energy is a primary one. We need a diverse energy mix that includes wood, but we should be careful of unintended consequences in promoting wood-to-energy.

Maine remains the second largest paper-making state, behind only Wisconsin. While some mills are struggling, we have the best papermakers in the world, a healthy and sustainable forest to provide fiber to our mills, innovative engineers developing new products on some older equipment and continuously upgrading other world-class facilities, and a strong paper-making heritage.

It make much more sense for Maine policymakers to encourage investment to keep our papermaking facilities competitive, rather than promoting competing alternatives that can never provide the economic benefits of our paper.

John Williams is president of the Maine Pulp and Paper Association.