Sweden is one of the largest exporters of pulp and paper products in the world. It follows that huge quantities of sludge rich in carbonaceous organic material and containing heavy metals are generated. This paper carried out a comparative environmental analysis of three different technologies, which can be adopted to produce biochar and recover energy from the biosludge, using landfilling as the reference case. These three thermochemical biosludge management systems—using incineration, pyrolysis, and hydrothermal carbonization (HTC)—were modeled using life cycle assessment (LCA). Heat generated in the incineration process (System A) was considered to be for captive consumption within the kraft pulp mills. It was assumed that the biochars—pyrochar and hydrochar—produced from pyrolysis (System B) and HTC (System C), respectively, were added to the forest soils. The LCA results show that all the alternative systems considerably improve the environmental performance of biosludge management, relative to landfilling. For all systems, there are net reductions in greenhouse gas emissions (–0.89, –1.43, and –1.13 tonnes CO2‐equivalent per tonne dry matter biosludge in Systems A, B, and C, respectively). System B resulted in the lowest potential eutrophication and terrestrial ecotoxicity impacts, whereas System C had the least acidification potential. The results of this analysis show that, from an environmental point of view, biochar soil amendment as an alternative method for handling pulp and paper mill biosludge is preferable to energy recovery. However, an optimal biochar system needs to factor in the social and economic contexts as well.