Whenever you sacrifice another permanent, you may pay {2}. If you do, Furnace Celebration deals 2 damage to any target.
Furnace Celebration itself doesn't allow you to sacrifice any permanents. Its ability triggers whenever you sacrifice a permanent because something else instructed you to.
You can't pay {2} more than once each time Furnace Celebration's ability resolves.
You choose whether to pay {2} as the ability resolves, if that target is still legal. No player may take actions between the time you pay {2} and the time damage is dealt.