But the two share a certain chemistry that makes it possible for paper manufacturing mills to be converted to produce ethanol.

Among those playing matchmaker for the two industries is Steve Kelley, head of the wood and paper science department at N.C. State University.

"There are important differences, but you start with the same material -- namely wood -- and you can work with a lot of the same equipment," Kelley said. "It makes a lot of sense."

Production so far is confined mostly to test projects throughout the country, and it's too early to know whether any North Carolina plants might be converted. But interest is high in a state that has more than two dozen pulp and paper mills.

The reason is simple, Kelley said: Pulp and paper companies need to improve their bottom lines.

"The whole industry is getting beat up because it doesn't have the returns on capital that other companies do," he said. "This gives them another product."

The idea is realistic enough that last week, Kelley joined an international group of investors wanting to know more.

This year, Weyerhaeuser and Chevron agreed to a joint research project to convert wood into biofuels for large-scale distribution. "There is a lot of urgency to do this," said Denny Hunter, vice president of technology at Weyerhaeuser's international offices north of Tacoma, Wash. "We and other companies are spending a lot of money to find a good technology for this."

Stripping it down

Making ethanol in a paper mill is possible because of the makeup of wood.

In a traditional paper mill, bark is peeled from logs, and wood is chipped to a uniform size.

A chemical bath reduces chips to a pulp that can be spread, formed and dried into huge rolls of paper.

To make pulp, the chemical bath strips out lignin -- the sticky material that makes wood stiff -- and hemicellulose sugars.

Sugar is a primary building block in the production of ethanol.

Stripping wood sugars for ethanol requires different chemicals than those used to make pulp.

But once those sugars are isolated, the solution can be fermented and distilled into ethanol. That makes it possible to convert an entire plant to allow ethanol production while burning chips as fuel.

It's possible, at least in theory, to still use the chips for pulp. That means a single plant could make ethanol and paper.

In addition to its own research, NCSU is working with eight companies, two other universities and two government labs to refine that process.

Turning a profit

But given the needed economies of scale, it's nearly impossible, at current market rates, to make a plant profitable if it produces ethanol and paper, said Richard Phillips, a retired vice president at International Paper who works at NCSU.

However, converting an entire plant, especially an older site that is no longer competitive, could be a moneymaker, he said.

Paper mills are typically in areas where it's easy to deliver lumber, and they have the equipment to chip and treat the wood.

A company would be spared the cost of closing the site -- an expensive task, given environmental regulations involving permanent removal of chemicals and equipment, Phillips said.

Many small mills in the United States fit that profile. The capital cost of converting them works out to less than $3.50 per gallon of ethanol.

At that cost, a government subsidy to encourage ethanol production could make it financially attractive, Phillips said.

But regardless of profits, converting mills wouldn't put much of a dent in meeting ethanol demand. If every plant in the country were converted -- which isn't going to happen -- the industry might produce about 2 billion gallons a year, Kelley said.

By comparison, the Midwest produces about 5.5 billion gallons a year. That's only a fraction of the nation's fuel needs.

Reason to pursue it

But Hunter, Phillips and Kelley say mill conversions are a goal worth pursuing.

Given the demonstration projects planned or operating, it's inevitable that the industry will discover more efficient ways to turn wood into biofuels.

"We're optimistic it can and will be done," Hunter said. "What we don't have yet is the time frame."