Life‐cycle inventory (LCI) is a fundamental phase in the quantification of the environmental performance of products. However, when it comes to the LCI of a multi‐product system, discussions about the choice of the appropriate methodology to allocate environmental impacts still continue. A further system subdivision and the implementation of a mechanism allowing environmental burdens to be tracked would help to improve model accuracy. This study focuses on the LCI modeling of a lignocellulosic biorefinery producing ethanol, lignin oligomers, and electricity, and demonstrates the application of the matrix‐based approach for detailed system subdivision and environmental burden tracking. Forty scenarios utilizing process‐specific allocation methods were tested to account for the global warming potential of outputs. The main findings of the paper are: (i) the importance of specific allocation methods applied to combined heat and power plants that stress the key role of internal energy supply in carrying environmental burdens; (ii) a negligible effect of allocation methods applied to wastewater treatment facilities; (iii) the inconsistency of results obtained via two allocation methods, one based on the total mass and the second based on the dry mass allocation, which raises questions about the validity of water accounting in the allocation procedure of related products; (iv) the role of upstream greenhouse gas (GHG) emissions in lignin‐derived outputs, which emphasizes the importance of a proper allocation methodology to be applied to this residue; and (v) an important role of the biomass pretreatment and lignin solvolysis processes in the accumulation of emissions, which highlights the importance of decreasing the amount of solids and methanol content in the processes discussed here.