To reduce the dependence on fossil fuel, empty fruit bunch (EFB) lignin residue, a waste material generated from second-generation lignocellulosic biomass was used for the production of biopolyol and biopolyurethanes. The acid–base-catalyzed two-step liquefaction process was carried out to drive residual lignin into value-added products. The reaction condition for the second step (base-catalyzed liquefaction) was optimized to reduce molecular weight and lower the acid number below 5 mg KOH/g for preparing more suitable biopolyol. The optimal condition was determined at 2 wt% of catalyst loading and 130 °C reaction temperature for a reaction time of 60 min. By employing the upgraded two-step liquefaction process, biopolyol with a molecular weight of 4724 g/mol, a viscosity of 1.14 Pa s and a hydroxyl number of 816 mg KOH/g was obtained from low-grade lignin. The resulting biopolyol was converted to biopolyurethane elastomer and biopolyurethane foam with p-TDI and p-MDI as isocyanate, respectively. The biopolyurethane elastomer exhibited a high temperature at 10% weight loss Td10 of 318 °C and temperature at 50% weight loss Td50 of 386 °C. Besides, the biopolyurethane foam possesses a compressive strength and density of 99 kPa and 24.8 kg/m3, which are properties comparable with petroleum-derived polyurethane.