Developing effective, economical, and environmentally sound approaches for sewage sludge management remains an important global issue. In this paper, we propose a bioethanol-lignin (nonfood biomass)-based sewage sludge upgrading process for enhancing the heating value and reducing air pollutants of hybrid sewage sludge fuel (HSF) for the effective management of sewage sludge. Sewage sludge paste with the lignin-CaO solution implies drying at 105 °C accompanied by torrefaction at 250 °C. During torrefaction, moisture and partly volatile matter begin to evaporate, and are almost vaporized out to the surface. In this study, the proposed process enhances the net caloric value (NCV) to 37%. The lignin-embedded HSF shows a two-in-one combustion peak regardless of the mixing ratio, resulting in a 70% reduction of unburned carbon (UBC) emissions, which is one of the particular matter (PM) sources of combustion flue gas. Other air pollutants, such as CO, hydrocarbon, NOx, and SOx, were also reduced by the proposed process. In particular, SOx emission remained at ~1 ppm (average value) regardless of the sulfur content of the fuel.