The Potential of CO2-reduction from Household Consumption by Product-service Systems – A Reflection from SusProNet

The potential of CO2-reduction from householdconsumption by product-service systems – Areflection from SusProNet*

Arnold Tukker

TNO Built Environment and Geosciences, Delft, The

Netherlands

Arnold Tukker was Project Manager

of SusProNet, and is Programme

Manager Sustainable Innovation,

TNO, Van Mourik Broekmanweg 6,

2628 XE Delft, PO Box 49, 2600 AA,

Delft, Netherlands.

This paper discusses the potential

of CO2-reduction from household

consumption by fulfiling final

consumer needs by Product-

Service Systems (PSS). A variety

of studies have shown that the

consumption functions Shelter,

Transport, Clothing and Personal

Care plus the indirect energy use

within the functions Feeding and

Transport covers almost 75% of

the direct and indirect energy use

in Dutch (and other Western)

households. The paper reviews

per consumption function a

number of PSS often proposed as

an alternative to traditional

product use to reduce

environmental impacts. It appears

that in some cases such

‘idealistic’ PSS (organic grocery

services, pay-per-wash, car

sharing systems) just reach niche

markets and hence do not

contribute to radical reductions in

environmental impacts related to

household consumption. More

traditional approaches, such as an

Energy performance standard for

houses, appears sometimes to be

more effective. We conclude that

the discussion on sustainable PSS

mixes up two arguments. Of

course, if one uses function

fulfilment as a starting point, one

creates more degrees of freedom

to design in theory a radically new,

eco-efficient system that fulfils

these needs. But if such a system

will be implemented is a different

question altogether. Here,

business rationalities and

consumer demands are decisive if

they are put on the market or are

willing to consume a product, a

PSS, or a sustainable PSS –

implying that often incentive

systems or contexts have to be

adapted before sustainable PSSs

really breaks through.

...............................................................................................................

*Based on a presentation during the Workshop Life cycle Approaches to Sustainable

Consumption, 12–23 December 2003, Organised by AIST and SNTT, Tokyo, Japan.

109The Journal of Sustainable Product Design 3:109–118, 2003

DOI 10.1007/s10970-005-2858-7 � Springer 2006

ANALYSIS

Introduction

A Product-service system

(PSS) can be defined asconsisting of ‘tangible prod-ucts and intangible servicesdesigned and combined so

that they jointly are capableof fulfiling specific customerneeds’ (Tukker and Tischner

2006). Many see PSSs as anexcellent vehicle to enhancecompetitiveness and to foster

sustainability simultaneously.PSSs are inherently clientoriented, and the profit cen-

tre is not anymore the sales ofa product (driving producersto sell ever more material ar-tefacts), but satisfaction

(which in theory drives pro-ducers to deliver this satis-faction with the least costs,

and hence material use). Onthe basis of SusProNet, amajor EU funded network

project on PSS, this paperdiscusses the potential con-tribution of PSS to CO2-reduction from household

consumption. It will firstdiscuss the main direct andindirect impacts of consump-

tion by households. This willresult in a number of priority‘need areas’ or ‘functions’

where changes in consump-tion patterns and ways ofneed fulfilment can have the

highest contributions to im-pact reduction. After that, inpart based on the experiencesin SusProNet, we will analyse

to what extent fulfiling needsvia PSS rather than productsis a promising strategy for

reducing impacts in theseneed areas.

Environmental impactsfrom householdconsumption

Various studies into life cycleimpacts related to household

consumption have beenperformed. Pragmatically, forgetting insight into energy usewe will base ourselves here on

data of Moll and Noorman(2002), work done within theframework of the EU Tool-

sust project. They basicallyused an input–output ap-proach to calculate the en-

ergy intensity of goods andservices used in households infive European cities. Making

use of some additional datafor the Dutch situation ofa.o. Slob et al. (1996) weregrouped Moll and

Noordmans’ data to Needareas/functions.1 The resultsof this calculation are given

in Table 2.

The table discerns directenergy use (fossil fuels and

electricity for heating, light-ing, etc.) and indirect energyuse (used in the life cycle of

the products and servicesbought by the household).Table 2 suggests some verystraightforward priorities.

One has to concentrate onthe functions Shelter,Transport and Feeding, and

the direct energy use withinthe functions Clothing andPersonal Care. Or, stated

differently: a focus on thedirect energy use for Shelter,Transport, Clothing andPersonal Care plus the

indirect energy use within the

functions Feeding and

Transport covers some 70%of the direct and indirectenergy use

• Feeding, indirect: 13%;• Shelter, direct: 30% (heat-ing and lighting)

• Clothing, direct: 4%

(washing)• Personal care, direct: 7%(hot tap water)

• Transport, direct: 10% plusindirect: 8%

Though there are certainly

uncertainties in these data,many other studies recentlyconfirmed these activities asthe ones causing the highest

environmental pressure, cal-culated over the full life cycler(e.g. Nijdam and Wilting

2003; Tukker et al. 2005;Weidema et al. 2005).2

The prospects of some PSSper type of householdconsumption function

Introduction

In SusProNet, three maingroups of PSS have beendiscerned, notably product-oriented services, use-ori-

ented services, and result-ori-ented services (Tukker 2004;Tukker and Tischner 2006).

With product oriented ser-vices, a service is ‘added on’to the product (such as a

maintenance contract). Sub-categories include product-related services and advice

and consultancy on productuse. Use oriented servicesprovide the user access to amaterial artefact, rather than

110

ANALYSIS

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ANALYSIS


selling the user the product.

Examples are product lease,renting and sharing, pooling,and other forms of ‘pay per

unit of use’. Result-orientedservices in principle promisethe user a result. Examplesare activity management (e.g.

an offer of catering services)or the offer of a functional

result (e.g. selling a farmer

‘crop protection’ related to amaximum crop loss due toplague animals, rather than

chemicals).

Each of these PSS hasquite different economic andenvironmental characteris-

tics. We summarise here the

findings presented in Tukker

(2004). The economic poten-tial of each type is evaluatedin terms of: (a) tangible and

intangible value for the user;(b) tangible costs and riskpremium for the provider; (c)capital/investment needs and

(d) issues like the providers’position in the value chain

Need area or function Direct and indirect energy use,

Groningen average, per person

Per need area (%) Per sub-category

per need area (%)

Feeding 18

# Feeding, indirect 13

# Feeding, fossil (cooking c.a.) 1

# Feeding, el. (fridge c.a.) 4

Shelter 39

# House 4

# Household goods/services 6

# Shelter, fossil (heating c.a.) 26

# Shelter, el. (light c.a.) 4

Clothing 6

# Clothing, indirect 2

# Clothing, el. (wash c.a.) 4

Personal care 8

# Personal care, indirect 2

# Personal care, fossil (hot water) 7

Leisure, education 10

# Education 2

# Leisure 8

Transport 18

# Transport, indirect 8

# Transport, direct fuel 10

Other

Total 100 100

Total direct + indirect

(GJ/person)

116

Persons per household 1,84

Total per household

(GJ)

214

Table 2: Indicative data on direct/indirect energy use per Need area (adapted from Moll and Noorman 2002)

112

ANALYSIS


and client relations. The

environmental potential canbe evaluated by checking ifcertain impact reduction

mechanisms (e.g. more inten-sive use of capital goods,inherent incentives for sus-tainable user and provider

behaviour, etc.) are present.Per PSS type (numbersbetween brackets), this gives

the following view:• Product related service (1),Advice and consultancy

(2), and Product lease (3)are relatively easy toimplement but are alsoproduct-related that they

will at best have marginalenvironmental benefits.

• Product renting and shar-

ing (4) or pooling (5) canhave major environmentalbenefits since the same

product is shared by sev-eral users. However, userstend to give such systems a

low tangible and intangiblevalue. They often spendmore time getting access tothe product, and they value

the ‘experience’ of havingprivileged access and own-ership in most cases higher.

• Activity management (6) isa well-known PSS that hasproven its economic viabil-

ity. It will lead to lowerenvironmental impacts if(monetary) efficiency gains

are particularly related tomaterials and artefacts, andnot time input of humans.

• Pay per unit use systems

(e.g. copiers; 7) overcomethe split incentive betweenproduction costs and costs

made in the use phase. Thispotentially leads to botheconomic and environmen-

tal gains. Since the techno-

logical system in principledoes not change radically

no radical improvementscan be expected.

• Functional result offers (8)

have in theory the highestpotential. The providerpromises a result closer to afinal client need and hence

has more degrees offreedom to design a low-impact delivery system.

However, there are threeproblems with this PSS.First, the provider prom-

ises a result which puts allliabilities at his side.Second, the provider might

not be in control of allelements needed to providethe result. Finally, oftenabstract functional de-

mands are difficult totranslate into concrete(quality performance)

indicators, essential forsound agreements betweenprovider and user.

In sum, this theoretical anal-ysis indicates already that theclaim that PSS development

automatically will result in anenvironmental–economicalwin–win may be somewhatsimplistic. We will now ana-

lyse in more detail for eachenvironmental priority fromSection 2 (energy use, food

and mobility) the potential ofpromising PSSs to penetratethe market and to contribute

to the reduction of energyuse. The examples have beentaken from literature such asGoedkoop et al. (1999),

Charter and Tischner (2001),Zaring (2001), Kazazian(2002), Tukker and van

Halen (2003), UNEP (2002),and Tukker and Tischner(2006).

Direct energy use for shelter,

clothing and personal care

The direct energy use relatedto shelter, clothing and per-sonal care basically concern

heating of a house, electricityuse for home appliances andlighting, production of warm(tap) water, and heating

water in washing machines.In literature (and withinSusProNet), various PSS

have been proposed oridentified that fulfil therelated need in an alternative

way. It concerns:1. Heating and generation of

warm tap water

a. Some energy suppliers of-fer to their (corporate)clients a form of activitymanagement/result ori-

ented PSS (type 6/8),where they promise tomaintain a specific cli-

mate, light intensity, etc.The supplier receives a feefor realising this result

(say maintaining an officeat a certain temperature)that generally is lower

than the expenses made bythe user in the originalsituation (when he boughtheating apparatus and

energy carriers on hisown). Yet, since theprovider usually knows

better how to heat a build-ing efficiently he still makesa profit (e.g. Zaring 2001).

Within one of the SusPr-oNet workshops, this ideawas suggested for energymanagement in households

as well. The idea wasstrongly criticised sincethen the energy supplier

would have an importantrole in choosing which

113

ANALYSIS


energy-consuming house-hold appliances to use, and

this was not seen asacceptable for final con-sumers.

b. Other energy suppliersgive advice and consul-tancy with regard toenergy saving measures.

By this, they hope thattheir clients save energy,and that hence as an

energy supplier they canserve more clients withoutthe need for building more

expensive power plants(PSS type 2; see e.g.Goedkoop et al. 1999)

c. Alternative energy sources(solar boilers, PV cells),can be made more attrac-tive by offering them as a

lease, with a servicepackage included. A mainadvantage is that there is

no more high upfrontpayment needed forbuying the equipment

(PSS type 1/3).2. Electricity usea. The PSS business models

are in part similar to thosementioned under Heating.

b. Various schemes for rent-ing, leasing or sharing all

kind of home appliancesor hobby apparatus havebeen proposed (PSS type

3–3; e.g. Mont 2004).Provided that they willequally intensively be used

as apparatus in ownership,the impact of this type ofPSS on direct energy usewill be small. The envi-

ronmental benefit is amore intensive use ofmaterials used in the

product; as a side effect

the product can bereplaced faster by a newer

and – hopefully – by amoreenergy efficient model.

3. Heating water in washing

machinesa. Outsourcing washing to a

laundry is by some prop-agated as a good means to

reduce the impacts relatedto washing (PSS type 6).The laundry service would

better be able to use gas-heated water (rather thanelectricity heated, as is the

case with most washingmachines sold in the EU),and avoid inefficiencies

due to low loads.b. A specific form of this PSS

is a napkin cleaning ser-vice that supplies a

household with cleanwashed napkins forbabies.

c. Electrolux has experi-mented with a ‘pay perwash’ model for providing

washing machines tohouseholds (PSS type 7).Only if this model provides

incentives for washingwith fuller loads and atlower temperatures, majorbenefits in terms of lower

direct energy use can beexpected.

Overseeing these options, it

is clear that PSS can in somecases facilitate a lower directenergy use in the household.

However, one could alsowonder if this role is impor-tant or essential. Sustainablebuilding regulations and

energy performance criteriawere instrumental in reduc-ing the gas used for heating

per house in the Netherlands

by 50% or more. Better

washing powders and wash-ing machines (stimulated byan EU label) allowed for

washing at low temperaturesand with low water usage,making any additionalimprovements to be made via

a laundry service systemrelatively small. It is certainlyinteresting to investigate how

a non-traditional contractrelation between energy sup-plier and household could

stimulate the introduction ofall kinds of energy-savingfeatures in the household.However, in many cases

there is an important conve-nience and privacy factor tobe taken into account. Con-

sumers want to control howthey organise their house-hold, have it furnished

according to their taste, anddo not want to have all kindof practical problems in

getting access to services thatare not 24 h available, arenot offered around thecorner (let alone on the spot

in the home) etc. This couldvery well frustrate the(essentially market based)

introduction of measures viaPSS that have a high reduc-tion potential for energy use

(e.g. low-energy lamps thatare still too big and cannotprovide ‘spheric’ lighting;

low-water use shower headsthat are not perceived aspleasant as normal showers,outsourcing washing to a

laundry is often perceived asexpensive, inconvenient –one has to plan to bring it

to the laundry, rather thanput it in the machine at home

114

ANALYSIS


– and sometimes less hy-

gienic than washing athome).

Indirect energy use for

Feeding

As indicated in Table 2, theindirect energy use related tofood is much more important

than that of the cookingprocess at home. This largelycan be tracked back to the

way how our modern agri-cultural system is set up. Theagricultural system depends

on a high degree of mecha-nisation, use of fertilisers andpesticides (energy-intensiveproducts); a lot of vegetables

are grown in greenhouses;transport distances are ingeneral large (particularly for

highly ‘prefabricated’ food);and a lot of food is held for along time in cooling or freez-

ing chains.

Various PSS have beenidentified that have made or

might make their way intothe market.1. In various countries, firms

have set up a ‘vegetable

subscription service’ (PSStype 6/8, see e.g. Kazazian2002) The firm provides a

household with fruit andvegetables for about aweek to come, including

recipes and preparationsuggestions. The fruit andvegetables are generally

of the season, organic,and from local suppliers.This avoids many of theenergy-intensive steps in

the life cycle of the tra-ditional chain. The systemis successful, though

mainly in niche markets.After all, for many

traditional consumers thissystem would implyimportant sacrifices. They

would forego the year-round broad food choicesthat the current systemoffers.

2. The trends to smallerfamilies, one personhouseholds, and less

available time have driventhe demand for conve-nience food (PSS type 6/

8). This can be supplied ina service context. How-ever, it is not clear if

convenience food supplynecessarily is less energyintensive than own pre-pared food (actually the

contrary seems true);3. The same drivers have

lead to an important

demand for high qualitycatering in offices (PSStype 6). There are caterers

who offer organic or sus-tainable food, but this isnot the rule and certainly

not inherent to the PSSthey offer.

In sum, though also here aspecific elaboration of the

PSS might help to reduceenergy use, this comes notautomatically with the PSS

(compare Tempelman et al.2004).

Direct and indirect energy use

related to transport

In the field of transport, anumber of well-known PSSexist. First and foremost, it

concerns the traditional carleasing and renting systems(PSS type 3). It is doubtful if

these systems to have posi-

tive environmental conse-quences. Leased cars tend tobe treated more roughly by

their users than owned carsand might even lead tohigher energy use.

Furthermore, there are of

course the public transportsystems available in mostparts of Europe and Japan

(PSS type 7/8). However,generally they loose competi-tion from individual car

transport. And finally, inquite some EU countries nowexperiments are going onwith car sharing systems (PSS

type 5; see Meijkamp 2000).Households that rely on theirtransport needs on this mix of

car sharing and public trans-port in general can count onimportant reductions of en-

ergy use related to transport.At the same time, however, itis also clear that these PSS

currently still deal with nichemarkets. The market volumeis just a fraction of thetransport with cars. It is

likely, hence, that here for themajority a car sharing systemis not attractive enough and

invokes too high consumersacrifices (in terms of accessto transport, convenience,

esteem, etc.). And in this dis-cussion, we have not yet in-cluded using airlines or

buying holiday packages (inthemselves PSS’s, type 6).With the higher wealth,longer holidays and frequent

foreign travel this is nowprobably the fastest growingcategory of energy use related

to household consumption inthe Western world.

115

ANALYSIS


Conclusions

From the above, it becomesclear that PSS have anenvironmental improvement

potential. However, one alsogets the impression thatimplementing PSS on its own

is not the panacea for realis-ing Factor 4 or 10 improve-ments related to household

consumption. This, in a way,should be no surprise. PSS isnothing more, nothing less,

than an innovation of abusiness model. It is a differ-ent way of shaping the rela-tion between producer and

consumer than in the case oftraditional product sales –but it is still shaped in the

same market context, andwithin the same boundaryconditions.

Truly radical improve-ments require the innovationof whole systems (e.g. thefood system or the transport

system) – whereas the systemhas to be defined broadly. Inthe case of transport, it

should not encompass onlythe transport system innarrow sense, but also the

factors that determine ourneed to make use of trans-port. Once the transport

problem is framed in thisway, one can find solutions interms of spatial planning,

new forms of organisingwork that allows e.g. peopleto work in part at home or atlocal ‘neighbourhood offices’,

etc. Normally such new sys-tems will only be realisedwhen they form an answer to

a pressing problem felt by themarket, or when the rules ofthe market game are changed

by authorities (e.g. introduc-tion of road pricing). In suchnew systems, in specific pro-

vider–user interactions PSScould turn out to be the bestbusiness model to shape therelation. But it can also be

that a traditional productsales model works well oreven better (e.g. selling a

house that, thanks to strin-gent regulations, consumesvery low amounts of energy).

In sum, the belief that PSS isan instrument to reach theFactors 4 and 10 seems to

mix up cause and effect:1. Thinking from the per-

spective of the function

that has to be fulfiled,certainly helps to design a(provider) system that uses

radically less energy. Thenext step, then, is to ana-lyse which measures, newincentive structures, ap-

proaches and businessmodels can help to stimu-late implementation of this

design.2. But implementing a func-

tion-oriented business

model like PSS in theexisting incentive structureas a start will not auto-

matically create a sustain-able system per se.

We would even like to goone step further and argue

that the types of PSS thatprobably are easiest toimplement, will contribute

least to environmentalimprovement. It is relativelysimple for a firm to keep on

PSS type Advantages Disadvantages

1. Product oriented services Easy to implement

close to core business

In general only incremental

environmental benefits achievable

2. Use oriented services

(particularly renting,

sharing and pooling)

Medium environmental benefits

(Factor 2) more conscious use

since per use full costs are charged

Low tangible added value: getting

access takes time and effort low

intangible added value: product

ownership is often valued higher

by consumers (less relevant for

B2B)

3. Result oriented services

(particularly functional results)

Imply often radical new ways of

function fulfilment

(Factor · potential)

Risks/liabilities for reaching the

result are taken over by the

provider results cannot always be

agreed upon or measured in

operational terms customer loses

power over means

Table 3: Contradictions in the economic–environmental win–win of PSS

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ANALYSIS


selling products and adding a

service to it – but since theways of doing things in thesystem does not change fun-

damentally, environmentalgains are limited. Use ori-ented services have a higherpotential, typically a factor of

2 (Mont 2004; Meijkamp2000), but particularly in aB2C context are not well ac-

cepted by users. They findthem too inconvenient, asshown in various examples in

Section 3. And result ori-ented services may in theoryhave a high potential forenvironmental improvement,

but they form a rather radicalchange in business model forfirms and are hence difficult

to implement. We refer toTable 3 that shows some ofthe most important con-

tradictions (see also Tukkerand Tischner 2006)

Looking how a Factor 4 or

10 future will look like, thendetermining the policy mea-sures, experiments, etc. thatare needed as support, and

after that analysing wherePSS could facilitate thistransition is probably a bet-

ter approach Yet, manyscholars have argued, thatthe radical system innova-

tions needed to reach Factor4 or a Factor 10 improve-ments in eco-efficiency, usu-

ally cannot be reachedwithout embarking on amuch broader system change

than just within the client–

producer interface. It goesfar too far for this paper toreview the ideas and theories

now under development inthis community of scholarsin ‘system innovation’ or‘transition management’.

The key problem in suchchanges is that the system inbroad sense must change –

and that since elements ofthe system are inherentlyinterrelated (such as the

need for car transport is re-lated to our organisation ofwork), they cannot changeindependently, but must co-

evolve. This requires rathernovel governance ap-proaches, which requires

other papers (in probablyother journals), or maybeeven books (see e.g. Elzen

et al. 2004; Tukker andButter 2005).

Notes

1 It concerns particularlythe division of direct electric-ity use, given as a total by

Moll and Noorman, overFeeding, Shelter and Cloth-ing. Since we used Dutch data

to subdivide certain energyuse categories of Moll andNoordman, we show in

Table 2 data for the Dutchcity (Groningen) only. Yet,data for the other cities more

or less have the same patternSome deviations have logicalexplanations, such as a rather

high electricity use in one cityin a country where hydro-

power is abundantly available– and where heating hence isbased on electricity rather

than fossil fuels.

2 For instance, the Dutchexample city household has arelatively high direct energy

use compared to other citiesanalysed in the Toolsuststudy. More in general, the

rather important role ofdirect energy use is a bitsurprising. In theory, all

production in the worldultimately contributes to finalhousehold consumption.

Time-lags between produc-tion and consumption andstructural economic differ-ences between countries

apart, hence one shouldexpect that the ration directand total household energy

use in Table 2 reflects theratio between direct energyuse by households and the

total energy use in a country.In Western Europe, this con-tribution is typically 20–25%,

and not the c.a. 40–50%found in Toolsust. Thissuggests that the contributionof some final consumer func-

tions in Table 2 could beunder-estimated. Forinstance, Slob et al. (1996)

attributed 5% of the totalhousehold energy use tomedical care, a category

apparently not included inTable 2 under ‘Personal care’.

117

ANALYSIS


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The Potential of CO2-reduction from Household Consumption by Product-service Systems – A Reflection from SusProNet