The hydrothermal (HT) conversion has been proposed to produce nitrogen, chlorine free solid biofuel or liquid fertilizer from high moisture and nitrogen content bio-wastes, such as municipal solid waste (MSW), mycelial waste, sewage sludge and paper sludge. However, the energy and economic efficiency of this process has not been fully investigated yet. This work focuses on energy recycling from sewage sludge by producing solid biofuel with HT carbonization, in order to optimize the operating parameters and evaluate the energy efficiency of this fuel production process. The effect of the HT temperature and holding time on the biofuel recovering ratio, calorific value and energy recovery rate was investigated. This evaluation fully considered the effect of the HT conditions, mechanical dewatering, thermal drying, and biofuel recovery ratio. Moreover, the energy consumption of sludge thermal drying was introduced to illustrate the economic efficiency of the HT biofuel production process more intuitively. The results show that the HT biofuel production process was more cost-effective than the conventional thermal drying. The HT temperature was the most important parameter to affect the biofuel properties. The carbon content of solid biofuel kept increasing both with HT temperature and holding time, resulting in an increase in the calorific value of biofuel; whereas, the biofuel recovering ratio a, defined as the mass ratio of solid biofuel to raw sludge, also dropped causing a reduction in the energy recovery rate. After the HT temperature was above 200 degrees C, the energy recovery rate was around 40%. A moderate condition-HT temperature of 200 degrees C and holding time of 30 min was suggested to produce solid biofuel from sewage sludge with an energy recovery rate of 50%. Practically, it is better to improve the intensity of mechanical dewatering to remove more water from the HT products in order to improve thermal efficiency. (C) 2013 Elsevier Ltd. All rights reserved.