One important rationale for bio-energy systems is their potential to save fossil energy. Converting a conventional sugar mill into a bio-energy process plant would contribute to fossil energy savings via the extraction of renewable electricity and ethanol substituting for fossil electricity and gasoline, respectively. This paper takes a closer look at the Thai sugar industry and examines two practical approaches that will enhance fossil energy savings. The first one addresses an efficient extraction of energy in the form of electricity from the excess bagasse and cane trash. The second while proposing to convert molasses or sugar cane to ethanol stresses the use of bagasse as well as distillery spent wash to replace coal in meeting ethanol plants' energy needs. The savings potential achieved with extracting ethanol from surplus sugar versus current practice in sugar industry in Thailand amounts to 15 million barrels of oil a year. Whether the saving benefits could be fully realized, however, depends on how well the potential land use change resulting from an expansion of ethanol production is managed. The results presented serve as a useful guidance to formulate strategies that enable optimum utilization of biomass as an energy source. (C) 2009 Elsevier Ltd. All rights reserved.