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State and local officials are seeking a $5 million annual state subsidy to continue burning much of the metro area's tree waste as the region faces rapidly growing piles of emerald ash borer-infested wood.

"We're at the point where the [ash borer] infestation is expanding greatly and we're getting more trees," said Rep. Rick Hansen, DFL-South St. Paul. "It's hard to comprehend the volume."

St. Paul Cogeneration burns the wood infected by the invasive beetles and converts it to energy that helps heat and cool buildings in St. Paul. The energy is also sold to Xcel for electricity.

The problem is that other ways of generating power are becoming more cost effective, so elected leaders are pushing for a state subsidy to make the tree-burning process competitive with lower-cost power generating methods.

Officials are concerned that Xcel is unlikely to continue buying electricity from St. Paul Cogeneration when the contract expires in three years, as solar and wind energy now are less expensive options, partly due to their own tax subsidies.

Randy Fordice, an Xcel spokesman, said the Minneapolis-based utility has been discussing its contract with District Energy of St. Paul since 2017 but declined to share details of those talks. The company is committed to reducing carbon emissions, he said, and renewable energy sources like wind are cheaper than ever.

"As we evaluate energy contracts, the law requires us to look at price, as those costs are passed on directly to our customers," he said.

Losing that contract would jeopardize the future of St. Paul Cogeneration, said Ken Smith, CEO and president of District Energy, a nonprofit that uses biomass energy to heat and cool buildings in downtown St. Paul. If the plant shutters, wood refuse from across the state — much of it diseased ash trees — will stack up. Almost all the brush and wood chips at the St. Paul site are ash trees, he said.

And downtown St. Paul would have to rely more on natural gas, Smith said.

"If we don't continue to do this, then this material has to go someplace else," he said. "There's no place else for it to go."

About 260,000 tons of wood waste annually goes to Environmental Wood Supply in St. Paul to be ground up and processed into fuel. The wood, which comes from trees in 22 Minnesota counties, 171 cities and 750 organizations, is taken to the St. Paul Cogeneration facility, where it is burned to produce energy for District Energy and Xcel. Both St. Paul Cogeneration and Environmental Wood Supply are affiliates of District Energy.

The emerald ash borer is an invasive species native to Asia. First discovered in Minnesota in 2009, the iridescent green beetle typically kills trees in one to three years by creating S-shaped tunnels that prevent the tree from getting the nutrients and water it needs. The state is expected to lose about 1 billion ash trees, and cities have struggled to keep up with the cost of managing the scourge.

At an event Wednesday in downtown St. Paul, state, county and city leaders gathered for tours of Environmental Wood Supply's wood yard and to discuss the need for state assistance.

Rep. Betty McCollum, D-Minn., who represents St. Paul in Congress, told the crowd that the work of St. Paul Cogeneration represents "a win-win for everybody."

Smith, who stood at a podium of cardboard boxes filled with thousands of forms documenting wood drop-offs, said he hoped the funding would help extend the contract with Xcel for seven years.

"Time is running out," Smith said. "If we're not going to do this any longer, we need to put other plans in place."

He noted that other waste streams receive state assistance, including refuse-derived fuel, or garbage incinerated to produce energy.

There seemed to be widespread agreement on the need for District Energy's services, because there's so much tree waste. But some said burning isn't the only solution.

Karen Zumach, president of the Minnesota Shade Tree Advisory Committee, said it was OK with her if St. Paul Cogeneration gets the money it needs. But she said she also wants other ideas considered to reduce the wood piles, such as trying to save more ash trees and reusing discarded wood. Burning trees "has climate impacts that I don't think people are really focusing on," she said.

Minneapolis Park and Recreation workers take their wood waste to a city-owned site on Washington Avenue, where Precision Landscape and Tree turns it into wood chips. The company sells the chips as mulch or biofuel, said Ralph Sievert, forestry director for Minneapolis parks.

Fewer than 5% of Minneapolis' discarded trees go to Wood From the Hood, a local company that transforms urban wood into furniture for Life Time fitness and Caribou Coffee, said vice president of production Rick Siewert. He said that about six years ago, he met with District Energy and St. Paul officials to negotiate the sale of about 10% of their wood refuse. But there were roadblocks, he said.

"Basically, what we got out of it is, District Energy doesn't want to lose any of the trees," he said.

Smith said he wasn't part of that conversation, but he's not opposed to discussing such collaboration. However, much of what they receive is "a mangled mess" and not suitable for repurposing, he said. Making it into mulch isn't an option because that market is saturated. And finding other uses for wood isn't his job, he said.

"We're not out here trying to market this stuff," he said. "Our role in this overall hierarchy is managing the wood waste when it comes to us."

Smith said that he and lawmakers are still deciding how to ask for the money they need. Hansen said one possibility is taxing the purchase of new trees, similar to the fees paid on tires or oil that go toward their disposal.

Rep. Pat Garofalo, R-Farmington, who sits on the House Energy Policy Committee, said burning wood is costlier than comparable options like nuclear and natural gas, and someone will have to pay more for it. He supports using money in the state's Renewable Development Account to assist District Energy rather than a new tax, though he said he'd eventually like to eliminate the tax on nuclear power that funds renewable development.

"The money is already there," he said. "Nobody pays any more … and we solve the problem."

Erin Adler • 612-673-1781