The history of Queensland sugarcane is, in one sense, the history of a single product. Raw sugar — crystallised, bulked and shipped to refineries in Asia and elsewhere — has defined the coastal cane belt from the Tweed hinterland to the wet tropics for nearly a century and a half. It shaped towns, determined political allegiances, and gave communities from Bundaberg to Ingham their economic reason for being. But sugarcane is not a single-product plant. It never was. Every tonne of cane crushed in a Queensland mill yields not only sucrose but also fibrous residue, dense syrupy molasses, and the potential for considerably more. The industry has always known this, even when the economics did not demand that it act on it. Now, with a combination of energy policy pressure, climate commitments, and emerging scientific capacity, that latent potential has become the subject of a formal and urgent reckoning.

The question being asked across the industry, in parliamentary committees and university research centres alike, is no longer whether cane can produce things beyond sugar. That question was answered long ago. The question is whether Queensland can build the policy frameworks, infrastructure, and investment conditions that would allow those other products — ethanol, renewable electricity, sustainable aviation fuel, bioplastics, and more — to reach commercial viability at the scale the state’s cane belt makes possible. The answer will have consequences not just for an agricultural industry, but for regional employment, energy security, and Queensland’s place in what is increasingly described as a global bioeconomy.

Within the civic and institutional record of this industry — the kind that a project like sugar.queensland is designed to anchor permanently — the diversification story is as foundational as the sugar story itself. The byproducts have always been part of the system. They are now, potentially, its future.

WHAT BAGASSE IS, AND WHAT IT HAS ALWAYS DONE.

Bagasse is the fibrous pulp that remains after sugarcane stalks are crushed and their juice extracted. It is not an incidental byproduct; it is a substantial fraction of everything the mill takes in. For as long as Queensland’s sugar mills have operated, they have burned bagasse in their boilers to generate the steam and electricity needed to run milling operations. This is not a recent innovation — it is, in a sense, the oldest form of biomass energy in the state. The mill and the boiler have always been co-located, and the bagasse has always fed the boiler.

While sugar mills already burn bagasse — the fibrous residue that remains after juice is extracted from sugarcane stalks — to produce the energy for their milling operations, scientists are taking things further. The incremental step is not the concept but the scale of ambition: from running the mill itself to exporting surplus electricity to the Queensland grid, and from there to the prospect of using bagasse as a feedstock for liquid fuels.

As of 2025, Queensland has bagasse cogeneration facilities at 18 mills with a total installed capacity of about 448 megawatts, ranging in size from 5 MW to 69 MW. The power is used on site to run the mill, and some mills also have capacity to export to the grid. This is a meaningful industrial base. Cogeneration of electricity from bagasse currently provides about 1.6% of the total electricity generated in Queensland. That figure is modest in proportional terms, but it represents baseload renewable power generated from an agricultural residue — a form of generation that is synchronous, dispatchable, and embedded in existing industrial infrastructure along the coast.

Wilmar Sugar’s eight mills have a total generation capacity of 202 megawatts, producing about 620,000 megawatt hours of electricity each year — enough to power the mills and export significant quantities to the Queensland power grid. Each year, Wilmar converts the energy in more than five million tonnes of bagasse into renewable energy, burning it in large boilers to generate steam and power for factory processes. The scale is real. The infrastructure is there. The question that now occupies the industry is whether that infrastructure can be modernised, expanded, and leveraged toward a larger contribution to Queensland’s energy system.

THE SARINA DISTILLERY AND THE ETHANOL LINEAGE.

Alongside cogeneration, the production of ethanol from sugarcane byproducts has a longer commercial history in Queensland than is widely appreciated. The Sarina Distillery started operating in 1927. While the primary purpose was initially industrial alcohol, this focus shifted over time to fuel, and after several upgrades to the facility, a variety of products are produced from the distillery. This is not a pilot project or an experiment. It is a century-old industrial facility that has evolved continuously with the surrounding industry and its markets.

Wilmar’s Sarina distillery produces about 60 million litres of bioethanol a year from molasses — a by-product of the raw sugar manufacturing process. The molasses is sourced from the Burdekin south to Sarina. The distillery produces about 60 million litres of bioethanol per year from sugarcane molasses, and about two-thirds of this is used in Australian E10 and E85 fuels. The remainder supplies industrial and pharmaceutical markets — pharmaceuticals, cosmetics, cleaning products, aerosols, and personal care ingredients. From the distillery, ethanol is upgraded to 100% strength or blended with other solvents to make ingredients for products like nail polish remover, personal care and cosmetics, printing solvents, aerosols, household cleaners, refrigeration brine and pharmaceuticals.

The Sarina operation also illustrates the circular economy logic that characterises the more ambitious visions for cane diversification. During the ethanol manufacturing process, a co-product called dunder is produced, which is used to make a range of liquid fertiliser and stockfeed products. The liquid fertilisers are applied to a variety of crops throughout North and Central Queensland, including sugarcane, horticulture and orchards, representing a full renewable cycle as they originate from the production of Queensland raw sugar.

In Queensland, all commercially produced biofuel is currently produced from easily fermentable sugars from grain sorghum, used cooking oil and molasses from sugarcane processing. The Sarina distillery sits at the heart of this, as Wilmar Sugar Australia is Queensland’s only producer of bioethanol and one of Australia’s largest generators of renewable electricity from biomass. The production is proven, mature and integrated. What the industry now argues, with growing urgency, is that this first-generation ethanol capacity is a foundation — not a ceiling.

FIRST GENERATION AND SECOND GENERATION: THE TECHNICAL FRONTIER.

The distinction between first-generation and second-generation biofuels is central to understanding where Queensland’s cane industry sits in the global picture. First-generation ethanol is derived from sugarcane molasses, while second-generation ethanol is produced from the lignocellulose material in bagasse in a biorefinery process. The first generation is commercial; the second remains, largely, at pilot and demonstration scale — but research activity in Queensland is substantial and accelerating.

The concept of a lignocellulose biorefinery focuses on the conversion of biomass, such as sugarcane bagasse, into a range of value-added products, including biofuels like second-generation ethanol. This biorefinery approach is integral to the sustainable utilisation of sugarcane residues, promoting a circular economy by transforming agricultural waste into energy and chemicals.

The technical challenge is real. A key problem in making biofuels from bagasse is the presence of lignin, a stubborn component that makes it harder to access the fermentable sugars in bagasse. Conventional ethanol production involves soaking the bagasse to remove the lignin and isolate the cellulose, which requires toxic and expensive acids plus a lot of water. Researchers at the University of Queensland have been working on alternatives. PhD candidate Neethu Joshikumar has successfully tested a process to simplify the preparation of bagasse, noting that as most countries begin the transition to sustainable fuel, the focus has turned to creating biofuels from agricultural waste, though significant challenges remain. Analysis of different sugarcane varieties found that higher cellulose and lower lignin content gave the best ethanol yield, and modelling shows that when integrated with a sugar mill, the DES-based one-pot bioethanol production process is both economically competitive and environmentally sustainable.

In Mackay, research and demonstration infrastructure has been established directly at an operating sugar mill site. A pilot biorefinery plant has been built by Mercurius Australia in Mackay, making use of waste from sugarcane — specifically bagasse — and turning it into renewable diesel and sustainable aviation fuel. The plant is based at Queensland University of Technology’s Renewable Biocommodities Pilot Plant. Mercurius successfully completed its pilot at the QUT Biocommodities Facility in Mackay using its patented REACH technology to produce chemicals, diesel and sustainable aviation fuel from sugarcane waste.

Sugarcane is ideal for the production of renewables because it is fast-growing with abundant biomass and has sophisticated processing systems already built around it. “We grow a very large amount of sugarcane per hectare and producing that much biomass and capturing that much carbon from the atmosphere and turning it into plant material is done very efficiently by the sugarcane plant,” according to QAAFI researchers.

THE BIOFUTURES FRAMEWORK: POLICY CONTEXT FOR DIVERSIFICATION.

Queensland’s government engagement with the biofutures concept has developed over nearly a decade. The Queensland Biofutures 10-Year Roadmap and Action Plan was launched in June 2022, updating Queensland’s vision for the sector as well as providing industry insights and achievements and building on the original version released in 2016. The industrial biotechnology and bioproducts sector, known collectively as “biofutures,” focuses on the development and manufacturing of products from sustainable organic and/or waste resources, rather than fossil fuels.

Queensland’s biofutures sector is estimated to receive $20 million in direct industry investment leading to a $1.8 billion contribution to the Queensland economy by 2035. The vision is for a $1 billion sustainable and export-oriented industrial biotechnology and bioproducts sector attracting significant international investment, and creating regional, high-value and knowledge-intensive jobs.

The Mackay region is central to this vision, partly because of its sugar industry footprint and partly because of the research infrastructure that has been co-located with it. Based on the site of an operating sugar mill, the QUT Mackay Renewable Biocommodities Pilot Plant is a research and development facility that converts biomass into biofuels, green chemicals and other bioproducts. The Mackay region has been identified as a key location for the biofutures industry, known around the world for its sugarcane, and the expansion of this facility — located on a sugar mill site — has a strong appeal to companies looking to use sugar feedstocks for their products.

The ambition extends to sustainable aviation fuel, which has become one of the more intensely discussed applications for cane-derived biofuels. Sustainable aviation fuel can be used as a replacement fuel in existing aircraft engines and airport refuelling infrastructure to cut carbon emissions by up to 80 percent. It is almost chemically identical to traditional jet fuel; however, where conventional fuel is fossil-based, SAF is generated from feedstocks that absorb carbon dioxide, providing a net reduction in emissions. Airlines worldwide are publicly committing to achieving net zero emissions by 2050, and SAF is one of the strongest tools available to reduce emissions.

According to the Australian Sugar Manufacturers, the sugar industry could supply over 30% of Australia’s domestic aviation fuel needs using sugar-derived biofuels, provide affordable biogas to regional manufacturers, and replace coal to make steel production green with renewable pellets made from sugar byproducts.

THE PARLIAMENTARY INQUIRY OF 2025: AN INDUSTRY AT A CROSSROADS.

The formal political engagement with sugarcane bioenergy reached a new level of seriousness in 2025. On 11 June 2025, the Primary Industries and Resources Committee resolved to self-refer an inquiry into sugarcane bioenergy opportunities in Queensland, examining the role and benefits of sugar cogeneration in Queensland’s electricity generation mix, including existing capacity and potential for expansion. The terms of reference were broad and deliberately forward-looking, encompassing market, regulatory, and infrastructure barriers to increased bioenergy production from sugar; opportunities to align sugar biofuel production with national security and defence liquid fuel needs; policy and funding mechanisms to de-risk investment in cogeneration and biofuels by manufacturers and growers; the R&D agenda to underpin a world-leading sugar-led bioenergy industry; and strategic land use and regional development considerations affecting cane growing and sugar manufacturing capacity.

The inquiry drew extensive submissions. The Australian Sugar Manufacturers used the parliamentary forum to make the scale of the opportunity explicit. A report from Licella found that the sugarcane biofuel sector alone could create 8,000 new full-time jobs and 1,000 construction jobs, deliver $10 billion in new investment, add $5 billion to Queensland’s Gross Domestic Product, and meet more than 10% of Australia’s aviation fuel needs through Sustainable Aviation Fuel.

The inquiry also surfaced the obstacles that have prevented diversification from moving faster. Many mills operate ageing, low-pressure systems primarily for internal use. Mill modernisation would improve efficiency and export potential but requires significant capital investment. The seasonal profile of bagasse generation limits the ability of bagasse cogeneration to contribute meaningfully during Queensland’s summer peak demand period. Larger mills are better placed to modernise as they can leverage more consistent bagasse supply and economies of scale, while smaller mill cogeneration may struggle to be commercially viable, particularly where internal steam demand limits electricity export potential.

With an energy and boiler efficiency upgrade agenda, installed cogeneration capacity could be increased to close to 1 gigawatt. Initial modelling suggests that the expansion of cogeneration capacity is likely to reduce wholesale electricity prices in Queensland by 10–15% from the base case in the next 5–10 years.

The replacement value of the sugar manufacturing sector is $20 billion — a figure the industry has cited to argue that its existing infrastructure represents a sunk investment that should be leveraged toward its maximum potential before it becomes obsolete. This is not simply a commercial argument. It is a regional development argument, a sovereignty argument about domestic fuel supply, and a climate argument about what baseload renewable generation looks like in a state transitioning away from coal.

BIOPLASTICS, BIOCHEMICALS, AND THE BROADER BIOECONOMY.

The cogeneration and ethanol pathways are the most mature of the diversification options, but they are not the only ones under serious development. Queensland’s researchers have been exploring the potential of sugarcane as a feedstock for bioplastics and biochemicals — a prospect that would fundamentally alter the industry’s relationship to global petrochemical supply chains.

In collaboration with the Indian Institute of Technology in Delhi, researchers are investigating processes to break down lignin — a complex part of the fibre in sugarcane bagasse — into an aromatic chemical compound used in the production of plastics. Drink bottles made from sugarcane bioplastic are among the products on the agenda from this QAAFI collaboration.

Scientists are unlocking the potential for sugarcane as a 100 per cent recyclable bioplastic — a substitute for petroleum in the production of countless items from cosmetics to carpets to car parts. “It’s about reinventing sugarcane as a crop with a wider range of end uses,” says QAAFI director Robert Henry, noting that the sugarcane industry can produce sugar but also other things like electricity, biofuels for transportation and oils to replace traditional plastics.

Several target genes have been identified, and the first gene-editing experiments planned aim to tailor sugarcane to more effectively produce biofuels and bioplastics. For biofuels, this includes producing a higher yield of fermentable material from the bagasse; for bioplastics, it requires altering the composition of lignin so it breaks down more easily.

Sugar manufacturing is evolving into a high-tech, 21st-century industry that must optimise limited feedstock to produce not only sugar but also a diverse range of products, including fertilisers, molasses, bioplastics, biofuels, biomethane, and electricity. This reframing — from a commodity crop producing one main product to a biomass platform generating multiple value streams — is not merely rhetorical. It describes the technical direction that research in Queensland, Brazil, the United States, and Europe is all independently converging upon.

The Brazilian example is instructive, even if the comparison requires care. Brazil is the world’s largest producer of both biofuels and bioenergy from cogeneration. Its sugarcane industry reached this position through decades of deliberate policy support, including mandatory blending requirements, subsidised capital for mill upgrades, and long-term offtake certainty for cogenerated power. Queensland’s industry points to Brazil not as a direct model to replicate but as evidence that the pathway from sugar-dominant to diversified biorefinery is commercially achievable at scale, given the right conditions. The conditions in Queensland — the agronomic capability, the milling infrastructure, the research base — are present. The policy scaffolding remains incomplete.

REGIONAL CONSEQUENCE AND THE SHAPE OF CHANGE.

None of this discussion is abstract for the communities that grow and process the cane. Other articles in this series on the Queensland Sugarcane Industry examine in detail the sugar towns — Mackay, Bundaberg, Ingham, Proserpine, and others — and the way their economies are structured around the crushing season. Diversification into bioenergy and biochemicals would alter the structure of employment and investment in these places in ways that matter well beyond the industry balance sheets.

Australian Sugar Manufacturers estimates that the sector in total supported around 22,000 jobs directly and indirectly in 2024. The prospect of significant cogeneration expansion and a nascent biofuels industry carries with it the possibility of year-round employment at mill sites that currently operate for only part of the year — a structural change that regional economies would feel immediately. Replacing ageing coal-fired capacity with co-generation from bagasse that is both renewable and baseload offers a strong economic and environmental solution for the state. Growing the cogeneration could lead to potential new investment that will stimulate regional Queensland economies.

There is also a national security dimension that the 2025 inquiry took seriously. Among the terms of reference was the question of opportunities to align sugar biofuel production with national security and Defence liquid fuel needs. Australia’s dependence on imported liquid fuels is a documented vulnerability, and northern Queensland — which hosts both significant Defence infrastructure and the country’s largest concentration of sugarcane production — is an obvious location in which to develop domestic fuel manufacturing capacity.

The Federal Government’s new ten-year Cleaner Fuels Program commits $1.1 billion “to help unlock the vast economic opportunities on offer from low carbon liquid fuels” such as biodiesel and sustainable aviation fuel, which signals a national policy environment increasingly aligned with the direction the Queensland industry has been arguing for. Whether this alignment produces the specific investment instruments — contracts for difference, co-investment in infrastructure, long-term offtake arrangements — that the industry says it needs remains to be seen.

What is clear from the submissions, the research outputs, and the parliamentary record of 2025 is that the cane industry is no longer content to frame its future solely in terms of raw sugar production. The conversation has moved. The technical capability is demonstrable. The economic case, with appropriate policy support, is increasingly compelling. The question is one of institutional will and investment sequencing — the kind of question that tends, in Queensland, to take longer to answer than the underlying urgency warrants.

PERMANENCE, IDENTITY, AND THE CIVIC RECORD OF AN INDUSTRY IN TRANSITION.

An industry undergoing the kind of transition now underway in Queensland’s cane sector has a particular need for civic anchoring. The diversification story — ethanol distilled in Sarina since 1927, bagasse burned in boilers for more than a century, and now the frontier work on sustainable aviation fuel, bioplastics, and second-generation ethanol — is not well captured by the commodity reporting that tracks weekly sugar prices and annual crush volumes. It is a longer story, requiring a longer frame.

The Queensland Foundation’s namespace project establishes sugar.queensland as the permanent onchain civic address for the Queensland Sugarcane Industry — a stable identifier that encompasses not just the commodity and its markets but the full institutional and historical record of the industry: its milling infrastructure, its diversification agenda, its research institutions, its regional communities, and the scientific and policy work now underway to reimagine what cane can produce.

That kind of permanence matters when an industry is in the middle of redefining itself. The identity layer does not shift with commodity cycles or policy changes. It holds the record of what the industry has been, what it is becoming, and what the communities that depend on it have built over a century and a half of cultivation along Queensland’s coastal plain. The bagasse still burns in the boilers. The ethanol still flows from Sarina. The question of what comes next — what second-generation ethanol, sustainable aviation fuel, and sugarcane bioplastics mean for the towns and the growers — is a civic question as much as a commercial one. That question deserves a permanent address.