Progress in the following process development studio is reported: economic evaluation of hydrolysis and ethanol fermentation schemes, economic evaluation of alternative fermentation processes, raw materials evaluation, and evaluation of pretreatment process. Microbiological and enzymatic studies reported are: production of cellulase enzyme from high yielding mutants, hydrolysis reactor development, xylose fermentation, and xylanese production. Fermentation and separation processes include: process development studies on vacuum fermentation and distillation, evaluation of low energy separations processes, large scale hollow fiber reactor development. (MHR)