Global decarbonization represents one of the defining challenges of the 21st century. Geothermal energy offers a robust alternative for reducing fossil fuel dependency for both residential and industrial heating and cooling. While shallow geothermal systems are versatile and high-performing, comprehensive Life Cycle Assessments (LCA) remain scarce in the literature. This study evaluates the environmental impact of the manufacturing and installation processes of next-generation coaxial probes featuring a galvanized steel outer tube and an internal polyethylene pipe. The LCA identifies material composition as the primary environmental driver: steel production accounts for 41% of the total impact, while the hot-dip galvanization process contributes 30%, significantly affecting the “climate change” and the “resource use” categories. A comparative LCA with conventional double U-tube installations shows similar overall environmental impacts. A sensitivity analysis on the coaxial probes was conducted to explore potential mitigation strategies aimed at reducing the associated environmental impacts, providing indications for sustainable eco-design. The LCA results demonstrate that optimizing the design, specifically by reducing the steel quantity in the coaxial outer tube and avoiding the zinc coating process, results in a 34% reduction in total environmental impact, confirming that LCA is a fundamental tool for supporting the environmental sustainability of developing technologies.