In standard district cooling (DC) plants, central chillers produce cold energy for space cooling throughout the district network. In recent times, the integration of the vapor compression system, which includes the functionalities of vapor compression chillers (VCC), and thermal energy storage (TES) tanks in the DC setup, has gained more implementation across the globe. This is due to the possibility of load shifting by using the VCC to produce chilled water for charging the TES tanks during off peak periods. Since the environmental implications of various energy intensive systems are largely determined by the amount of material and energy consumed throughout their life cycle, it is critical to conduct a sustainability assessment of these systems in terms of environmental contributions, and suggest design options to reduce these impacts. A cradle to grave life cycle assessment (LCA) model is created in response to these issues and in order to meet the project’s objectives. The life cycle impact assessment (LCIA) results of the analysis reveal that the carbon footprint per 1 RTh of the produced chilled water is estimated at 0.72 kg CO₂ eq/RTh. The operation phase of the system’s life cycle accounted for the most impact, about 98%, with other life cycle phases having negligible contributions. In substantiating the study’s investigation, the environmental performance based on several design options were discussed and compared to the case study. Among the several scenarios considered, incorporating the Sweden mix technology provided the case study with the most significant environmental savings, of about 94%.