Lignin represents a promising source of renewable energy. The development of CLEO (Cold processed Lignin Ethanol Oil) fuel introduces a novel lignin valorization approach, proposing its potential as maritime biofuel. However, its industrial success depends on enhancing fractionation yields and reducing solvent evaporation, which necessitates a detailed analysis of lignin properties, solvent types, and process parameters. By using novel combinations of biobased solvents, yields improved from 34 wt% to 49–53 wt% by using 30 wt% water or 40 wt% glycerol in ethanol, where Hildebrand Solubility Parameters emerged as indicative tool for increasing yields. Experiments on solid-to-liquid (S:L) ratios revealed a good balance between yield and lignin dispersion concentration at an S:L of 1:2.5. Producing CLEO with an improved solvent composition and S:L ratio resulted in 89 wt% yield while eliminating solvent evaporation requirements. This study highlights the potential for enhancing CLEO production efficiency and advancing it to industrial scale.