A comprehensive decarbonization approach is reported, involving Direct Separation Reactors (DSRs) and eco-efficient energy sources in the production of hydrated lime. Environmental and economic impacts are calculated through an in-depth life-cycle cradle-to-grave assessment. Integrating a DSR kiln with carbon capture technologies (CCTs) attained a remarkable 65% reduction of CO₂ emissions during hydrated lime production, with a minimum environmental impact from the CCT itself. Fully electrified DSR kilns, powered by renewable energy sources, achieve an astonishing 94% decrease in CO₂ emissions when compared to conventional reference scenarios, all without adverse environmental effects. In lime-based plasters, combining DSR kilns, natural carbonation, and eco-efficient energy sources, particularly with the inclusion of natural gas, leads to carbon negativity. This efficiently offsets all production emissions and even cuts back an additional 30%. In the case of fully electrified DSR kilns, the results are a remarkable 149% CO₂ emission reduction throughout the entire cradle-to-grave lifecycle. Carbon capture technologies reduce carbon tax costs by up to 26%, thereby enhancing the economic sustainability of these endeavours. To realize a swift and effective decarbonization of the lime industry, a harmonized effort is imperative and involves balancing the interests of the private sector, environmental protection, and promoting societal well-being, all within a supportive regulatory framework.