This study focuses on an innovative green propellant based on paraffin, stearic acid, and coal, used in hybrid rocket engines. Additionally, lab-scale firing tests were conducted using a hybrid rocket motor with gaseous oxygen as the oxidizer, utilizing paraffin-based fuels containing stearic acid and coal. The mechanical performance results revealed that the addition of stearic acid and coal improved the mechanical properties of paraffin-based fuel, including tensile, compression, and flexural strength, under both ambient and sub-zero temperatures (−21 °C). Macrostructural and microstructural examinations, conducted through optical and scanning electron microscopy (SEM), highlighted its resilience, despite minimal imperfections such as impurities and micro-voids. These characteristics could be attributed to factors such as raw material composition and the manufacturing process. Following the mechanical tests, the second stage involved conducting a firing test on a hybrid rocket motor using the new propellant and gaseous oxygen. A numerical simulation was carried out using ProPEP software to identify the optimal oxidant-to-fuel ratio for the maximum specific impulse. Following simulations, it was observed that the specific impulse for the paraffin and for the new propellant differs very little at each oxidant-to-fuel (O/F) ratio. It is noticeable that the maximum specific impulse is achieved for both propellants around the O/F value of 2.2. It was observed that no hazardous substances were present, unlike in traditional solid propellants based on ammonium perchlorate or aluminum. Consequently, there are no traces of chlorine, ammonia, or aluminum-based compounds after combustion. The resulting components for the simulated motor include H2, H2O, O2, CO2, CO, and other combinations in insignificant percentages. It is worth noting that the CO concentration decreases with an increase in the O/F ratio for both propellants, and the differences between concentrations are negligible. Additionally, the CO2 concentration peaks at an O/F ratio of around 4.7. The test proceeded under normal conditions, without compromising the integrity of the test stand and the motor. These findings position the developed propellant as a promising candidate for applications in low-temperature hybrid rocket technology and pave the way for future advancements.