Cellulosic ethanol, generated from lignocellulosic biomass sources such as grasses and trees, is a promising alternative to conventional starch- and sugar-based ethanol production in terms of potential production quantities, CO{sub 2} impact, and economic competitiveness. In addition, cellulosic ethanol can be generated (at least in principle) without competing with food production. However, approximately 1/3 of the lignocellulosic biomass material (including all of the lignin) cannot be converted to ethanol through biochemical means and must be extracted at some point in the biochemical process. In this project we gathered basic information on the prospects for utilizing this lignin residue material in thermochemical conversion processes to improve the overall energy efficiency or liquid fuel production capacity of cellulosic biorefineries. Two existing pretreatment approaches, soaking in aqueous ammonia (SAA) and the Arkenol (strong sulfuric acid) process, were implemented at Sandia and used to generated suitable quantities of residue material from corn stover and eucalyptus feedstocks for subsequent thermochemical research. A third, novel technique, using ionic liquids (IL) was investigated by Sandia researchers at the Joint Bioenergy Institute (JBEI), but was not successful in isolating sufficient lignin residue. Additional residue material for thermochemical research was supplied from the dilute-acid simultaneous saccharification/fermentation (SSF) pilot-scale process at the National Renewable Energy Laboratory (NREL). The high-temperature volatiles yields of the different residues were measured, as were the char combustion reactivities. The residue chars showed slightly lower reactivity than raw biomass char, except for the SSF residue, which had substantially lower reactivity. Exergy analysis was applied to the NREL standard process design model for thermochemical ethanol production and from a prototypical dedicated biochemical process, with process data supplied by a recent report from the National Research Council (NRC). The thermochemical system analysis revealed that most of the system inefficiency is associated with the gasification process and subsequent tar reforming step. For the biochemical process, the steam generation from residue combustion, providing the requisite heating for the conventional pretreatment and alcohol distillation processes, was shown to dominate the exergy loss. An overall energy balance with different potential distillation energy requirements shows that as much as 30% of the biomass energy content may be available in the future as a feedstock for thermochemical production of liquid fuels.