Volatile organic compound (VOC) sensors and triboelectric nanogenerators (TENGs) are highly significant applications with broad potential across multiple fields, including non-invasive disease biomarker monitoring and sustainable energy harvesting for electronic devices. This study reports the synthesis of α-Fe₂O₃ nanoparticles derived from recycled iron screws using a closed-system nitric acid leaching process, followed by calcination, offering low-cost, eco-friendly, and added-value products that reduce the negative environmental impacts of waste materials. The synthesized material is thoroughly characterized to investigate its phase purity, surface morphology, and suitability for TENG and ethanol-sensing applications. A spray coating technique was employed to deposit the α-Fe₂O₃ ink onto laser-induced graphene interdigitated electrodes (LIG-IDE) fabricated via CO₂ laser engraving of a polyimide flexible substrate. The fabricated α-Fe₂O₃-based sensor exhibits multifunctional capabilities, owing to the material's biocompatibility. The α-Fe₂O₃-based sensor exhibits a high performance for ethanol detection at room temperature, with a sensor response of 47 and response/recovery times of 104/126 s, respectively, at 100 ppm. The TENG device exhibits stable output characteristics of 3 V and a maximum power of 9.5 nW. The electrical output from biomechanical motions confirms its potential for energy harvesting applications, and a further self-powered humidity sensor was demonstrated. These results highlight the excellent potential of α-Fe₂O₃ for both TENG applications and VOCs detection, recommending its use in environmental and industrial monitoring.