If Maine is going to sprout new and successful business ventures, it's likely that more than a few of them will be based on local resources and local traditions.

The new will have its roots in the old.

So it's no surprise that Maine's third wood- pellet mill began operation a couple of weeks ago on the edge of the northern forest in Athens.

That's where Maine Woods Pellet Co. is making small slugs of compacted pulp wood and sawdust to be burned as fuel. In what's called a vertically integrated operation, the pellets are made from the leftovers -- tree limbs and tops, for example -- of the logging operations run by two of the project partners. As long as those logging operations continue, there will be a guaranteed source of material to manufacture the pellets.

Maine Woods Pellet Co. plans to expand production to 100,000 tons of pellets per year. Now, they're making 120 tons daily and, so far, they have one large industrial customer, Sappi Fine Paper of Skowhegan.

Two other mills in the state, in Corinth and Ashland, together produce 95,000 tons of wood pellets. Another mill is slated to begin operation this fall in Strong, on the site of the former Forster Manufacturing toothpick mill, which closed in 2003.

And at a recent meeting of the Maine Pulp and Paper Association, state Conservation Commissioner Pat McGowan said the state has the capacity to annually produce 900,000 tons of pellets based on the wood fiber that's left in the woods after harvesting.

All these pellets need a market, and that's the good news. With oil prices rising almost daily, the production of an alternative, indigenous, sustainably grown and cheaper fuel source has strong market potential.

And, according to our colleague, reporter Tux Turkel at the Portland Press Herald, there's a growing market for wood pellets in in Europe, where measures adopted to combat climate change promote the use of renewable resources by power companies. Pellet manufacturers in Maine and elsewhere in the country, where production facilities have sprung up from Florida to Pennsylvania, are eyeing Europe as a potentially lucrative market -- if they can figure out how to ship pellets there cheaply.

Shipping to a faraway market isn't the only challenge facing the nascent wood-pellet industry. There are frustrated murmurs from the forest products industry that pellet manufacturing will diminish the supply of fiber to the state's paper mills. There's a shortage of qualified technicians to install wood-pellet stoves. There's no system for distributing the pellets within the state.

While both the state and federal government have been helpful with grants and loans to get the pellet operations up and running, there's more room for assistance by the state's economic development arm in helping the industry address these challenges.

Which is just what the governor is doing by making the expansion of the wood-to-energy industry and market a state priority. By concentrating on homegrown raw materials and an industry that has its roots deep in the Maine forest, he's placing his bets on an emerging sector that can be built on the foundation of a prosperous past.