As advances in biotechnology have continued at a rapid pace, interest in the biochemical production of so-called "drop-in" fuels has increased as a way to avoid the well-known shortcomings of ethanol as a fuel molecule and to potentially exploit the processing advantages of a water-immiscible fuel to reduce product recovery costs and energy requirements. In the current study, processes to produce either ethanol or a representative fatty acid ethyl ester (FAEE) via the fermentation of sugars liberated from lignocellulosic materials pretreated in acid or alkaline environments are analyzed in terms of economic and environmental metrics. Simplified process models are introduced and employed to estimate fuel production, greenhouse gas emissions, net energy consumption, minimum fuel selling price, and water consumption for both processes. Monte Carlo analyses were carried out to identify key sources of uncertainty and variability, and an analysis of the impact of potential improvements to the FAEE process was performed. We find that the near-term performance of processes to produce FAEE is significantly worse than that of ethanol production processes for all metrics considered, primarily due to poor fermentation yields and higher electricity demands for aerobic fermentation. Even if these issues are addressed in the longer term, the reduced cost and energy requirements of FAEE separation processes will be at least partially offset by inherent limitations in the relevant metabolic pathways that constrain the maximum yield potential of FAEE from biomass-derived sugars. (C) 2012 Elsevier Ltd. All rights reserved.