Biomass feedstocks available decentrally will be more commodious for localized biorefinery approach than the exhaustive large scale and centralized plants driven by cost intensive technology. Lichen is present in a wide range of habitats in a distributed manner. A maximum hydrolysis of 73%-76% for lichenan from Cetraria islandica, Usnea barbata and Parmelia sp. were obtained in 24 h using lichenase from an alkalothermophilic Thermomonospora sp. wherein the hydrolysis was 100% with commercial enzyme Accellerase (TM) 1000. The synergistic role of beta-glucosidase in lichenan hydrolysis was demonstrated by the exogenous addition of beta-glucosidase to Thermomonospora lichenase which resulted in complete hydrolysis. The hydrolysates of lichenan obtained using Accellerase or a cocktail of Thermomonospora lichenase and beta-glucosidase when fermented with free cells of Saccharomyces at 40 degrees C produced an ethanol yield of 0.45 g/g-0.48 g/g with theoretical conversion efficiencies of 93%-96%. The Ca-alginate immobilized yeast cells were reused eight times at 40 degrees C with 100% fermentation efficiency. (C) 2010 Elsevier B.V. All rights reserved.