To increase the overall ethanol yield from softwood, the steam pretreatment stage can be carried out in two steps. The two-step pretreatment process was evaluated from a techno-economic standpoint and compared with the one-step pretreatment process. The production plants considered were designed to utilize spruce as raw material and have a capacity of 200,000 tons/year. The two-step process resulted in a higher ethanol yield and a lower requirement for enzymes. However, the two-step process is more capital-intensive and has a higher energy requirement. The estimated ethanol production cost was the same, 4.13 SEK/L (55.1 cent /L) for both alternatives. For the two-step process different energy-saving options were considered, such as a higher concentration of water-insoluble solids in the filter cake before the second step, and the possibility of excluding the pressure reduction between the steps. The most optimistic configuration, with 50% water-insoluble solids in the filter cake in the feed to the second pretreatment step, no pressure reduction between the pretreatment steps, and 77% overall ethanol yield (0.25 kg EtOH/kg dry wood), resulted in a production cost of 3.90 SEK/L (52.0 cent /L). This shows the potential for the two-step pretreatment process, which, however, remains to be verified in pilot trials.