To achieve a viable forest-based biorefinery, both the carbohydrate and lignin parts of the raw material should be valorized. While lignin-first approaches have successfully been applied to hardwoods, where up to 50% of the lignin –close to the ‘theoretical maximum yield’– has been transformed to valuable monophenols; limited studies have targeted softwoods. Softwood lignin comprises lower amount of beta-ether bonds and this results in lower theoretical and observed yields of monophenols in reductive catalytic fractionation (RCF): below 5 wt% yield of initial biomass has been reported. In this study, we use beetle infected spruce, a softwood, as raw material. A fast fractionation was developed to give a pulp and a lignin fraction in the absence of transition metal catalysts. The carbohydrate matrix was valorized to dissolving grade pulp in 37 wt% from biomass (86% yield), and successfully spun to Lyocell fibers. The lignin fraction was dissolved in furfural –operating as green ‘solubility-enhancing-agent’– to blend lignin in inert carrier liquids to promote controlled hydrotreatment to yield biofuels in 10 wt% (60% carbon yield) from initial biomass. Life cycle assessment (LCA) of the value-chain showed improved sustainability in several footprint categories compared to cotton production. Thus, upgrading of a considered forestry waste to high value textile fibers and biofuels has been achieved: in case of lignin beyond the ‘theoretical maximum yield’. This is an important step to mitigate a future growing demand of textiles without negatively affecting irrigation or land use.