Queensland can continue to have a coal industry while also developing renewable energy sources to address climate change and protect the Great Barrier Reef, State Development Minister Anthony Lynham says.

In Gladstone to launch a $16 million pilot plant for producing biofuel, Dr Lynham said renewable energy would help address climate change.

New aerial surveys show 95 per cent of the northern Great Barrier Reef is suffering from severe coral bleaching, and some scientists expect half of the northern reef to die in the next month.

He said while Queensland was committed to slowing the pace of global warming, as set out in the global climate change agreement in Paris last year, it was still possible for coal to co-exist with the reef.

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"The people of Queensland have to realise that you can have both," Dr Lynham said.

"We've had the Paris climate change agreement which proved to the world that we are addressing climate change as a world community and coal is part of that future.

"And we are leading the world in renewable energy here in Queensland as you can see today.

"But we're meeting our obligations under the Paris agreement, and those obligations include coal for Queensland."

200 million litres of fuel possible

If successful, the Gladstone biofuel plant will be expanded to produce 200 million litres of fuel a year for military, marine and aviation use.

Premier Annastacia Palaszczuk said it would be Australia's first commercial-scale advanced biofuels production facility.

She said if it was developed into a large-scale refinery, there was the potential for a new wave of investment and job creation.

"A fully-fledged biofuels industry has the potential to play a key role in our economic future, and this pilot plant is a giant step towards achieving that goal," Ms Palaszczuk said.

Southern Oil Refining Managing Director Tim Rose said his firm chose Gladstone instead of Wagga Wagga in New South Wales.

"The Queensland Government were the guys who wanted it more," he said.

"The Queensland Government is fully behind this whereas the New South Wales Government just wasn't."