Currently, three precursor materials are used for commercial production of carbon fibers: polyacrylonitrile (PAN), pitch and rayon [1]. Of these, PAN is used almost exclusively to produce high strength carbon fibers. The process involves generation of certain toxic by-products such as hydrogen cyanide (HCN). This environmental problem can potentially be overcome by the use of naturally occurring biomass, including lignin. Unfortunately, most current grades of lignin are intractable, so its chemical modification is needed for further processing.