The alarming output of waste activated sludge (WAS) from industries requires proper management routes to minimize its impact on the environment during disposal. Pyrolysis is a feasible way of processing and valorizing WAS into higher-value products of alternate use. Despite extensive research into the potential of WAS through pyrolysis, the technology's long-term viability and environmental impact have yet to be fully revealed. In addition, the environmental effects of utilizing different pyrolysis atmosphere (N₂ or CO₂) has not been studied before, although benefits of CO₂ reactivity during pyrolysis have been discovered. This study evaluates the process's environmental impact, carbon footprint, and bioenergy yield when different pyrolysis atmospheres are used. The global warming potential (GWP) for a functional unit of 1 t of dried WAS is 203.81 kg CO_{2 eq}. The heat required during pyrolysis contributes the most (63.7%) towards GWP due to high energy usage, followed by the drying process (23.6%). Transportation contributes the most towards toxicity impact (59.3%) through dust, NO_x, NH₃ and SO₂ emissions. The initial moisture content of raw WAS (65%) greatly impacts overall energy consumption and environmental impact. Pyrolysis in an N₂ atmosphere will result in a higher overall bioenergy yield (833 kWh/tonne) and a lower carbon footprint (−1.09 kg CO₂/tonne). However, when CO₂ was used, the specific energy value within the biochar is higher (22.26 MJ/kg) due to enhanced carbonization. The carbon content of gas derived increased due to higher CO yield. From an energy perspective, the current setup will achieve a net positive bioenergy yield of 561 kW (CO₂) and 833 kW (N₂), where end products like biochar, bio-oil and gas can be used for power production. Despite the energy-intensive process, microwave pyrolysis has excellent potential to achieve a negative carbon footprint. The biochar used for soil amendment served as a good carbon sink. The utilization of CO₂ as carrier gases provides a pathway to utilize anthropogenic CO₂, which helps reduce global warming. This work demonstrates microwave pyrolysis as a negative emission, bioenergy-producing approach for WAS disposal and valorization.