Biomass energy conversion is split into two families: bio-chemical (digestion, fermentation, driven by microbes) and thermo-chemical (combustion, gasification, pyrolysis, driven by heat).
Efficiency check: microbial routes are slow and only a fraction of the feed's energy ends up as biogas or ethanol, while heat-driven routes convert most of the feedstock's chemical energy into usable fuel or power quickly. So thermo-chemical processes do run at higher overall efficiency, confirming Statement (I).
Lignin check: lignin is a tough, cross-linked aromatic polymer. Microbes and their enzymes cannot break it down effectively, so bio-chemical digesters leave lignin largely untouched in the sludge. Heat does not care about enzyme specificity, it simply cracks the chemical bonds, so thermo-chemical methods decompose lignin far better than bio-chemical ones. This confirms Statement (II).
Both statements hold up, so the correct choice is the one that accepts both as true.
\[\boxed{\text{Both Statement (I) and Statement (II) are correct}}\]