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 24h using lichenase from an alkalothermophilic Thermomonospora sp. wherein the hydrolysis was 100% with commercial enzyme Accellerase™1000. The synergistic role of β-glucosidase in lichenan hydrolysis was demonstrated by the exogenous addition of β-glucosidase to Thermomonospora lichenase which resulted in complete hydrolysis. The hydrolysates of lichenan obtained using Accellerase or a cocktail of Thermomonospora lichenase and β-glucosidase when fermented with free cells of Saccharomyces at 40°C produced an ethanol yield of 0.45g/g–0.48g/g with theoretical conversion efficiencies of 93%–96%. The Ca-alginate immobilized yeast cells were reused eight times at 40°C with 100% fermentation efficiency.