Background: Ethanol production from lignocellulosic feedstocks (also known as 2nd generation or 2G ethanol process) presents a great potential for reducing both ethanol production costs and climate change impacts since agricultural residues and dedicated energy crops are used as feedstock. This study aimed at the quantification of the economic and environmental impacts considering the current and future scenarios of sugarcane biorefineries taking into account not only the improvements of the industrial process but also of biomass production systems. Technology assumptions and scenarios setup were supported by main companies and stakeholders, involved in the lignocellulosic ethanol production chain from Brazil and abroad. For instance, scenarios considered higher efficiencies and lower residence times for pretreatment, enzymatic hydrolysis, and fermentation (including pentoses fermentation); higher sugarcane yields; and introduction of energy cane (a high fiber variety of cane). Results: Ethanol production costs were estimated for different time horizons. In the short term, 2G ethanol presents higher costs compared to 1st generation (1G) ethanol. However, in the long term, 2G ethanol is more competitive, presenting remarkable lower production cost than 1G ethanol, even considering some uncertainties regarding technology and market aspects. In addition, environmental assessment showed that both 1G (in the medium and long term) and 2G ethanol can reduce climate change impacts by more than 80\% when compared to gasoline. Conclusions: This work showed the great potential of 2G ethanol production in terms of economic and environmental aspects. These results can support new research programs and public policies designed to stimulate both production and consumption of 2G ethanol in Brazil, accelerating the path along the learning curve. Some examples of mechanisms include: incentives to the establishment of local equipment and enzyme suppliers; and specific funding programs for the development and use of energy cane.