A method and system are provided for producing biofuel from cellulosic feedstock. In the method, the cellulosic feedstock is pretreated to separate cellulose, hemicellulose, and lignin. Thereafter, the cellulose and hemicellulose are converted into sugars through enzymatic hydrolysis. Then, the sugars are converted into lipids, e.g. triglycerides, through a microbial process. Specifically, heterotrophic microalgae is grown on the triglycerides and forms triglycerides. While triglycerides are formed from the cellulose and hemicellulose, the lignin is converted into ringed hydrocarbons, such as aromatic hydrocarbons and cycloalkanes, e.g., cycloparaffins. To form the biofuel, the triglycerides and ringed hydrocarbons are processed together. During this step, the triglycerides are converted into straight chain paraffins and esters. Preferably, the biofuel is a surrogate for jet quality JP-8 fuel.