Energy Implications of Product Leasing

A growing number of advocates have argued that leasing is a "greener" form of business transactions than selling. Leasing internalizes the costs of process wastes and product disposal, placing the burden on the OEMs, who gain from reducing these costs. Product leasing results in closed material loops, promotes remanufacturing or recycling, and sometimes leads to shorter life cycles. This paper provides two case studies to quantitatively test these claims for two distinct product categories. Life cycle optimization and scenario analysis are applied, respectively, to the household appliance and computer industries to determine the effect that life spans have on energy usage and to what extent leasing the product versus selling it may influence the usage life span. The results show that products with high use impacts and improving technology can benefit from reduced life cycles (achieved through product leases), whereas products with high manufacturing impacts and no improving technology do not.