Lignin is a potential sustainable alternative to polyacrylonitrile (PAN) precursor for the production of carbon fibers. The high purity lignin extracted from residual forest biomass via organosolv process undergoes stabilization and carbonization treatment to produce carbon fibers. Recent developments suggest the potential of producing organosolv lignin carbon fibers (OLCF) with competing mechanical properties similar to PAN carbon fibers. This is likely to enable the use of OLCF in structurally demanding applications such as wind turbine blades. In this work, a life cycle assessment (LCA) is performed with a threefold objective. First, the environmental footprint of OLCF is quantified and results are compared with PAN-CF produced in Sweden and elsewhere in Europe i.e., electricity demands met by European average electrical grid (RER). Second, the environmental performance of OLCF reinforced wind turbine blades (referred as BIOMAT) to be installed in 0.8 MW capacity is evaluated against incumbent variants: glass fiber turbine blade (GFTB), PAN-CF based turbine blades manufactured in Sweden (CFTB-SE), and other parts of Europe (CFTB-RER). Finally, the total environmental externality costs (EEC) of these blades and corresponding lifetime electricity generation when they are installed in 0.8 MW capacity wind turbine blade are calculated. Our results indicate that the environmental impacts of OLCF are lower by 71–94% than PAN-CF-RER in nine, and lower by 43–90% than PAN-CF-SE in six out of ten impact categories quantified respectively. BIOMAT blades also have better overall environmental performance than existing blade variants and particularly lucrative because of their negative total climate change impact. The total EEC of BIOMAT blades is 74%, 83% and 88% lower than GFTB, CFTB-SE and CFTB-RER respectively. Correspondingly, the total EEC of lifetime electricity generated by wind turbine equipped with BIOMAT blades is 11%, 17% and 23% lower than the respective blade variants.