Exergy is defined as the maximum amount of work that can be obtained from a mate­rial stream, heat stream, or work interaction by bringing this stream to environmen­tal conditions. When the surroundings are the reservoir, exergy is the potential of a system to cause a change as it achieves equilibrium with its environment. Exergy is then the energy that is available to be used. After the system and surroundings reach equilibrium, the exergy is zero. Energy is never destroyed during a process; it changes from one form to another.

Exergy analysis is a relatively new method of thermodynamic analysis that has recently been applied in power and heat technology, chemical technology, and other fields of engineering and science. The exergy method takes into account not only the quantity of materials and energy flows but also the quality of materials and energy flows. The exergy concept is based on both the first and second laws of thermody­namics. The main reason for exergy analysis is to detect and evaluate quantitatively the losses that occur in thermal and chemical processes (Ptasinski 2008).

The development of efficient technologies for biomass gasification and synthesis of biofuels requires the correct use of thermodynamics. Among the different forms of exergy, three forms are the major contributors to total exergy: thermal exergy, work exergy, and exergy of material, which contains chemical and physical exergy components.

Exergy analysis is a convenient tool for the development and optimization of future biomass processes. Biomass gasification followed by synthesis of biofuels seems to be more promising for the medium and longer terms. The conversion effi­ciency of all investigated biomass-to-biofuel routes can be increased by improving the operation of biomass gasifiers, which show the highest exergy losses in all con­sidered processes. The exergetic efficiency of biomass-to-biofuel processes depends not only on the feedstock quality but also on the degree of energy integration in these processes (Ptasinski 2008).