Before the industrial revolution, the global economy was largely based on living carbon from plants. Now the economy is mainly dependent on fossil fuels (dead carbon). Biomass is the only sustainable bioresource that can provide sufficient transportation fuels and renewable materials at the same time. Cellulosic ethanol production from less costly and most abundant lignocellulose is confronted with three main obstacles: (1) high processing costs (dollars /gallon of ethanol), (2) huge capital investment (dollars approximately 4-10/gallon of annual ethanol production capacity), and (3) a narrow margin between feedstock and product prices. Both lignocellulose fractionation technology and effective co-utilization of acetic acid, lignin and hemicellulose will be vital to the realization of profitable lignocellulose biorefineries, since co-product revenues would increase the margin up to 6.2-fold, where all purified lignocellulose co-components have higher selling prices (> approximately 1.0/kg) than ethanol ( approximately 0.5/kg of ethanol). Isolation of large amounts of lignocellulose components through lignocellulose fractionation would stimulate R&D in lignin and hemicellulose applications, as well as promote new markets for lignin- and hemicellulose-derivative products. Lignocellulose resource would be sufficient to replace significant fractionations (e.g., 30%) of transportation fuels through liquid biofuels, internal combustion engines in the short term, and would provide 100% transportation fuels by sugar-hydrogen-fuel cell systems in the long term.