An innovative process layout for sludge waste management based on chemical looping combustion and flue gas methanation is analyzed in this work. The technical performance of the system was assessed by considering that the flue gas is first purified and then mixed with a pure hydrogen stream sourced from an array of electrolysis cells to produce methane. The life cycle assessment (LCA) and life cycle cost (LCC) methodologies were applied to quantify the environmental and economic performances of the proposed process, and a hotspot analysis was carried out to recognize its most critical steps. The proposed system was then compared with a reference system that includes both the conventional waste management pathways for the Italian context and methane production. Finally, to account for the variability in the future economic climate, the effects of changes in landfill storage costs on sewage end-of-life costs for both the proposed and reference systems were evaluated. With respect to 1 kg/h of sewage sludge with 10%wt of humidity, the analysis shows that the proposed system (i) reduces landfill wastes by about 68%, (ii) has an end-of-life cost of 1.75 EUR × kg−1, and (iii) is environmentally preferable to conventional sewage sludge treatment technologies with respect to several impact categories.