The energetic utilisation of agricultural residues is considered to be an important element in any strategy to achieve renewable energy targets. In the approximately 80 cane-sugar producing countries there is potential to make better use of the fibrous residue known as bagasse. Subject to improved energy efficiency, sugar producers could supply energy either as "green", co-generated electricity, or as fuel ethanol through cellulose hydrolysis followed by fermentation. This paper compares their projected environmental benefits from a life-cycle perspective, using South African data. Mass and energy analyses were prepared for the two systems and a base case (producing sugar with current methods), relative to the annual sugarcane production on one hectare. In both cases, the environmental burdens avoided by replacing an equivalent amount of fossil energy were included. The results obtained confirm that for all the impact categories considered, both "bioenergy" products result in environmental benefits. The cogeneration option results in lower energy-related emissions (i.e. lower global warming, acidification and eutrophication potentials), whereas the fuel ethanol option is preferred in terms of resource conservation (since it is assumed to replace oil not coal), and also scores better in terms of human and eco-toxicity if assumed to replace lead-bearing oxygenates. (c) 2005 Elsevier Ltd. All rights reserved.