Among the various forms of renewable energy, the utilization of surplus wood poses a possible alternative energy supplement for the state of Michigan. Surplus wood is available from unutilized industrial wood wastes, logging residues, underutilized species, and cull trees. It has been conservatively estimated that during the next 30 years, 450 million t of surplus wood fiber in the state will be available for energy usage, capable of supplying approximately 1300 MW of installed electric generating capacity or around 4000 million 1/year of methanol. This paper examines the potential of producing liquid fuels and fuel wood for electric generation from surplus wood. The need to carefully remove surplus wood from forests has long been recognized by forest management experts. Proper removal of these materials will make the forests healthier, more productive and will simultaneously add to Michigan's energy supply. Until now, the lack of a market for this wood and the high cost of harvesting it, has resulted in over-exploitation of high quality trees, followed by a lack of forest management to regenerate high productivity stands. The growing and future opportunities of wood for energy can open markets which will allow for the intensive forest management practices that have been relatively ignored in the past. This paper discusses the expanding wood market and how it will directly and indirectly influence other economic markets. The paper concludes that the use of wood by-products from all wood related industries, and the utilization of more trees with improved forest management, can not only supplement the present energy sources, but can actually improve the state's forest productivity, thereby contributing to the overall economic viability of the concept.