This article describes the energy and exergy analysis of the reduction zone in a downdraft biomass gasifier. A simplistic formulation for describing the pyrolysis and oxidation of these products has been presented for initialization. Equilibrium and kinetic models are used to predict the reduction products leaving the reduction zone and thus the 1st law efficiency. In the reduction zone, exergy destruction due to chemical, physical, compositional, internal heat transfer and heat loss to the surrounding has been quantified to describe 2nd law efficiency. The comparison of equilibrium and kinetic models is carried out with experimental data for general validity. Parametric analysis of char bed length and inflow temperature on gas composition, un-converted char, exergy destruction, 1st law and the 2nd law efficiency has also been carried out. Simulation results identified a critical char bed length (where all char gets consumed) for a given feedstock, which depends on residence time and reaction temperature in the reduction zone. Near critical char bed length, predictions show high calorific value of gas with relatively less exergy destruction and thus optimum reactor performance. The accuracy of the prediction depends on the validity of initial input conditions.