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Design for Sustainability (DfS) becomes as an increasing important component in engineering education. One of the most effective educational strategies for sustainability integration is through undergraduate senior capstone courses. Chemical engineering as a main engineering discipline aims to prepare next-generation engineers with adequate knowledge and skills for pursing sustainable engineering in the near future. In this paper, we introduce our approach for introducing sustainability concepts and sustainability assessment methods into our undergraduate capstone design course. In the course, we guided students to conduct a sophisticated team project: Process Design, Modification, and Sustainability Assessment for Distributed Biodiesel Manufacturing. Students in teams developed and evaluated all design options from the sustainability point of view using different sustainability metrics systems and discussed for identification of most desirable solutions. Educational experience with the team-based approach was summarized through classroom evaluation.