In this study, hydrothermal carbonization is used to recover energy from sludge. This hydrothermal carbonization is a feasible sustainable energy conversion technology to produce biofuel for renewable energy. The experiments were conducted at 170oC up to 220oC for a 30-min holding period to determine the optimum conditions for hydrothermal carbonization in a lab-scale reactor to apply to a scale-up reactor (1 ton/day). The biochars from sludge were assessed in terms of dewaterability characteristics and fuel properties. The results showed that the optimum temperature of labscale hydrothermal carbonization was 190oC. The 1 ton/day hydrothermal carbonization pilot plant operated at 190oC. The biochar had higher energy content but the char yield sharply decreased. Therefore, an energy of about 49% could effectively be converted from sludge biomass. This sludge from municipal wastewater treatment is a potential energy resource because sludge is composed of organic substances.