Reductive catalytic fractionation (RCF) is a promising approach to fractionate lignocellulose and convert lignin to a narrow product slate. To guide research towards commercialization, cost and sustainability must be considered. Here we report a techno-economic analysis (TEA), life cycle assessment (LCA), and air emission analysis of the RCF process, wherein biomass carbohydrates are converted to ethanol and the RCF oil is the lignin-derived product. The base-case process, using a feedstock supply of 2000 dry metric tons per day, methanol as a solvent, and H-2 gas as a hydrogen source, predicts a minimum selling price (MSP) of crude RCF oil of USD 1.13 per kg when ethanol is sold at $2.50 per gallon of gasoline-equivalent (USD 0.66 per liter of gasoline-equivalent). We estimate that the RCF process accounts for 57% of biorefinery installed capital costs, 77% of positive life cycle global warming potential (GWP) (excluding carbon uptake), and 43% of positive cumulative energy demand (CED). Of USD 563.7 MM total installed capital costs, the RCF area accounts for USD 323.5 MM, driven by high-pressure reactors. Solvent recycle and water removal via distillation incur a process heat demand equivalent to 73% of the biomass energy content, and accounts for 35% of total operating costs. In contrast, H-2 cost and catalyst recycle are relatively minor contributors to operating costs and environmental impacts. In the carbohydrate-rich pulps, polysaccharide retention is predicted not to substantially affect the RCF oil MSP. Analysis of cases using different solvents and hemicellulose as an in situ hydrogen donor reveals that reducing reactor pressure and the use of low vapor pressure solvents could reduce both capital costs and environmental impacts. Processes that reduce the energy demand for solvent separation also improve GWP, CED, and air emissions. Additionally, despite requiring natural gas imports, converting lignin as a biorefinery co-product could significantly reduce non-greenhouse gas air emissions compared to burning lignin. Overall, this study suggests that research should prioritize ways to lower RCF operating pressure to reduce capital expenses associated with high-pressure reactors, minimize solvent loading to reduce reactor size and energy required for solvent recovery, implement condensed-phase separations for solvent recovery, and utilize the entirety of RCF oil to maximize value-added product revenues.