Research data produced within the CARIPLO IMAP and Perform Water 2030 projects were processed using the SimaPro software to carry out the Life Cycle Assessment according to ISO 14040-44 of an innovative process of treated effluents’ polishing. The study aims to evaluate the integration of a microalgae culture as a side-stream process into the baseline layout of a wastewater treatment plant to remove nitrogen from the supernatant of sludge centrifugation from an environmental perspective. In particular, the investigated system focuses on using the algal biomass produced as an organic matrix for encapsulating zero-valent iron nanoparticles to be used for the final refinement of the effluent. Zero-valent iron (ZVI) is a reactive metal and an effective reducing agent. It can be used to remove organic and inorganic pollutants (e.g., chlorinated organics, pharmaceuticals, metals, textile dyestuffs). The encapsulation of ZVI by hydrothermal carbonization (HTC) in a carbonaceous matrix allows for overcoming the problems related to its lack of stability, easy aggregation, and difficulty in separating the ZVI nanoparticles from the treated solution. The case study refers to Bresso wastewater treatment plant (Milan province, Northern Italy). The environmental performances of the study were assessed following the Life Cycle Impact Assessment methods IMPACT 2002+. According to the results, the new process integration does not affect the environmental performance of the WWTP, still implying a significant improvement in the removal of metals and micropollutants. In fact, due to the ability of ZVI nanoparticles to remove organic and inorganic pollutants, the outflowing load will be significantly reduced, which will improve the environmental performance of the entire Bresso wastewater treatment plant.