There is a strong need to manage low-value forest residues generated from the management practices associated with wildfire, pest, and disease control strategies to improve both the environmental and economic sustainability of forestlands. The conversion of this woody biomass into value-added products provides a great opportunity to benefit both the environment and economy. This study aimed to assess the environmental impacts of converting forest residues into two renewable fuels, cellulosic ethanol and biomethane, by different biochemical conversion pathways. The energy balances and environmental impacts, including acidification, eutrophication, global warming, and photochemical ozone formation, of the two biorefinery approaches were addressed. This work illustrated the advantages of converting forest residues into biomethane from energy and environmental perspectives. The tradeoff between the economic benefits and potential environmental issues need to be carefully considered.