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Current management of solid waste from pulp and paper activities represents an environmental and economic burden worldwide due to pollution emissions. This study investigates the potential of hydrothermal carbonisation (HTC) treatment as a sustainable alternative for producing cleaner and energy-dense solid fuel from paper mill sludge. The effect of process parameters (temperature, reaction time and solid load) on hydrochar fuel formation from paper sludge was evaluated and, for the first time, the paper sludge-derived hydrochar was optimised to maximise the mass yield and calorific value using response surface methodology (RSM). The physicochemical characteristics, thermal fuel behaviour, energy recycling efficiency and electricity generation potential were assessed by proximate and ultimate analysis, thermogravimetry, bomb calorimeter, scanning electron microscopy and process energy assessment. Results showed that hydrochar fuel formation and properties were mainly influenced by the process temperature and residence time, and governed by dehydration and decarboxylation reactions which reduced the atomic H/C and O/C ratios by 35.5% and 64%, respectively. The produced hydrochars presented low sulphur, nitrogen and ash content with a maximum calorific value (HHV) of 22.9 MJ/kg, equivalent to the HHV of coal for commercial utility in South Africa. The HHV of the hydrochar corresponded to a 49.80% increase over the HHV of the initial feedstock. The optimum operating conditions were 231 ± 1 °C and 1.99 h for a hydrochar yield of 74.4% and calorific value of 18.5 MJ/kg. The energy assessment showed that up to 58.34% of the energy produced by hydrochar fuel combustion may be recycled as heat or power, while the remaining 41.66% of the combustion energy could be utilised to sustain the HTC treatment of paper sludge. The substantial water demand was concluded to be a drawback. Thus, water recirculation and the potential to catalyse the HTC reactions to increase overall process efficiency will constitute a future study to make the process more environmentally friendly for industrial-scale application. [Display omitted] • Dehydration and decarboxylation were predominant. • Optimum energy yield of 18.5 MJ/kg and 74.4% hydrochar was achieved under 231 ± 1 °C and 1.99 h. • Higher HTC reaction severity enhanced the physicochemical properties of the hydrochar. • Hydrochars produced have low nitrogen and sulphur (<1%) content. [ABSTRACT FROM AUTHOR]