Case study: Sharing economy & product-as-a-service — a city or utility pilot and the results so far

The City of Amsterdam launched its Circular Innovation Programme in 2020, embedding product-as-a-service (PaaS) and sharing economy models directly into municipal procurement, infrastructure planning, and resident-facing services. By late 2025, the programme had diverted an estimated 22,000 metric tons of material from landfill annually, reduced city-owned asset procurement spending by 18%, and attracted over 140 circular economy startups to the Amsterdam metropolitan area (City of Amsterdam, 2025). The pilot spans lighting-as-a-service in public buildings, tool and equipment libraries in 12 neighborhoods, shared municipal fleet vehicles, and furniture-as-a-service contracts for city offices. This case study examines how Amsterdam evolved from a policy ambition into a functioning city-scale sharing and PaaS ecosystem, what the measured outcomes reveal, and which lessons transfer to other jurisdictions.

Why It Matters

Global material extraction has tripled since 1970 and reached 100 billion metric tons per year in 2023, yet only 7.2% of extracted materials cycle back into productive use according to the Circularity Gap Report (Circle Economy, 2024). The linear model of buy, use, and discard drives roughly 45% of global greenhouse gas emissions when upstream extraction, manufacturing, and disposal are included. Product-as-a-service and sharing economy models attack this problem at the demand layer: instead of transferring ownership of physical goods, they deliver the function those goods provide while keeping material stewardship with the manufacturer or service provider.

For municipal and institutional procurement officers, the financial case is becoming harder to ignore. The European Commission estimates that circular procurement practices can reduce total cost of ownership by 10 to 30% across categories including lighting, furniture, ICT equipment, and fleet vehicles (European Commission, 2023). Amsterdam's pilot demonstrates that these savings are achievable at scale, not just in isolated contracts. The city's experience also matters because it operates under the EU Green Deal and the forthcoming Ecodesign for Sustainable Products Regulation (ESPR), which will require digital product passports and durability standards that structurally favor PaaS over outright purchase models.

The regulatory trajectory is clear across multiple jurisdictions. France's AGEC Law (Anti-Waste for a Circular Economy) already mandates repairability scores and bans the destruction of unsold goods. The Netherlands' own national Circular Economy Programme targets a 50% reduction in primary raw material use by 2030. Cities that build sharing and PaaS infrastructure now will have competitive advantages in compliance readiness and cost management.

Key Concepts

Understanding Amsterdam's approach requires familiarity with several models that underpin the programme's structure.

Product-as-a-service (PaaS) is a business model where the customer pays for the function or output of a product rather than purchasing the product itself. In Amsterdam's lighting-as-a-service contracts, for example, the city pays per lux-hour of illumination delivered. The manufacturer retains ownership of the fixtures and is contractually responsible for maintenance, upgrades, and end-of-life material recovery. This structure aligns incentives: manufacturers profit from durability and energy efficiency rather than from selling replacement units.

Tool libraries operate on a membership-based lending model, similar to a book library but for physical tools, equipment, and household items. Amsterdam's neighborhood tool libraries stock items ranging from power drills and carpet cleaners to party supplies and camping gear. Members borrow items for periods of one to seven days, eliminating the need for individual ownership of products that are used on average fewer than 15 minutes per year across their lifetime.

Circular procurement refers to public purchasing practices that specify performance outcomes rather than product specifications, include take-back requirements, and evaluate total cost of ownership over a product's full lifecycle rather than lowest upfront purchase price.

Material passports are digital records attached to products and components that document material composition, origin, repair history, and recyclability. Amsterdam requires material passports for all PaaS contracts above 50,000 euros, enabling accurate end-of-life material recovery and secondary market valuation.

What's Working

Amsterdam's pilot has generated measurable results across environmental, financial, and social dimensions that are attracting attention from procurement teams and policymakers in other cities.

Lighting-as-a-Service Delivers Verified Savings

Signify (formerly Philips Lighting) operates the city's largest PaaS contract, providing lighting services to 42 municipal buildings including schools, community centers, and administrative offices. Under the 10-year contract signed in 2020, Signify installed 28,000 connected LED luminaires and maintains full ownership of all hardware. The city pays a monthly service fee pegged to verified light output and energy consumption. By Q3 2025, the programme had reduced energy consumption for lighting in covered buildings by 52% compared to the 2019 baseline, saving approximately 3.8 GWh annually. The financial impact: the city's annual lighting expenditure across these buildings dropped from 4.2 million euros to 2.9 million euros, a 31% reduction inclusive of service fees (Signify, 2025). Signify has recovered and remanufactured over 6,200 luminaires from the programme, diverting 18 metric tons of electronic waste from disposal.

Tool Libraries Reduce Household Consumption

The city's 12 neighborhood tool libraries, operated through a partnership with the nonprofit Peerby and the municipal waste authority, served 34,000 unique members by the end of 2025. Usage data shows that each active member borrows an average of 8.3 items per year, with power tools, cleaning equipment, and garden tools as the most popular categories. A lifecycle analysis commissioned by the city estimated that tool library usage displaced the purchase of approximately 112,000 individual products in 2025, avoiding 1,400 metric tons of CO2 equivalent from manufacturing and an estimated 580 metric tons of material waste (City of Amsterdam, 2025). Member satisfaction surveys show a 91% approval rating, with convenience and cost savings cited as the primary motivators.

Furniture-as-a-Service Reshapes Office Procurement

Amsterdam contracted with Ahrend, a Dutch office furniture manufacturer, to supply desks, chairs, and storage systems to city offices under a PaaS arrangement covering 3,200 workstations. Ahrend retains ownership and is responsible for maintenance, reconfiguration, and end-of-life recovery. Over five years, the programme has reduced the city's furniture procurement budget by 24% compared to the previous purchase-and-replace model. Ahrend reports that 94% of returned furniture components are refurbished and redeployed rather than recycled or discarded, extending average product life from 8 years under the old model to a projected 15 years under the PaaS arrangement (Ahrend, 2025).

Shared Municipal Fleet Reduces Vehicle Count

The city replaced 180 dedicated departmental vehicles with a pool of 120 shared electric vehicles managed through a centralized booking platform developed by Amber Mobility. The 33% reduction in fleet size saved approximately 1.8 million euros in annual vehicle ownership costs while maintaining 97% booking availability. GPS and telematics data show that average vehicle utilization increased from 22% under the dedicated model to 61% under shared management, and total fleet kilometers driven declined by 14% as departments optimized trip planning (City of Amsterdam, 2025).

What's Not Working

Despite strong headline results, the programme faces structural challenges that limit scaling and replication.

PaaS Procurement Requires New Competencies

Traditional procurement teams are trained to evaluate capital purchases on unit price. PaaS contracts require lifecycle cost modeling, service-level agreement negotiation, and ongoing performance monitoring. Amsterdam invested 2.4 million euros in procurement staff training and hired 8 dedicated circular procurement specialists between 2020 and 2025. Smaller municipalities that lack these resources struggle to replicate the model. A 2025 survey by ICLEI (Local Governments for Sustainability) found that only 12% of European municipalities with populations under 200,000 have staff trained in circular procurement methods.

Accounting Standards Create Friction

Under current public accounting rules in the Netherlands, PaaS payments are classified as operational expenditure rather than capital expenditure. While this can improve balance sheet metrics, it complicates budget planning because operational budgets face different approval processes and annual caps than capital budgets. Several Amsterdam departments reported that PaaS contracts were delayed by 6 to 12 months due to budget classification disputes with the city's finance office.

Tool Library Logistics Are Cost-Intensive

Operating 12 physical locations with staffing, inventory management, cleaning, and repair services costs approximately 2.1 million euros annually. Membership fees and municipal subsidies cover roughly 75% of this cost, leaving a structural funding gap. Inventory loss and damage rates average 4.2% per year, higher than the 2% target, driven primarily by items returned in poor condition. The programme has not yet found a financially self-sustaining model without ongoing municipal subsidy.

Manufacturer Resistance to PaaS Transitions

While large manufacturers like Signify and Ahrend have embraced PaaS, mid-tier suppliers have been slower to adopt. PaaS models require manufacturers to carry inventory on their balance sheets, invest in reverse logistics capabilities, and redesign products for durability and modularity. Amsterdam's procurement office reports that for 30% of product categories where PaaS was explored, no qualifying suppliers submitted bids, forcing the city to revert to traditional purchase contracts.

Key Players

Established Companies

• Signify: Operates the city's largest lighting-as-a-service contract covering 42 municipal buildings with 28,000 connected LED luminaires.
• Ahrend: Supplies furniture-as-a-service to 3,200 city workstations with a 94% component refurbishment rate.
• Bosch: Provides power tool sharing inventory and maintenance support to three of Amsterdam's tool libraries.
• Bundles: Offers washing-machine-as-a-service to Amsterdam residents, expanding from residential pilots into municipal housing corporation contracts.

Startups

• Peerby: Amsterdam-based sharing platform that operates the city's neighborhood tool library network and a peer-to-peer lending app with over 100,000 registered users in the Netherlands.
• Amber Mobility: Developed the centralized fleet-sharing platform managing the city's 120 shared electric vehicles.
• Lizee: Provides reverse logistics and refurbishment software used by Ahrend to track furniture components through multiple use cycles.

Investors and Funders

• European Investment Bank (EIB): Provided a 50 million euro loan facility under the Circular City Programme to support Amsterdam's infrastructure investments.
• Amsterdam Economic Board: Co-funded the tool library network and circular procurement training with 3.6 million euros between 2020 and 2025.
• Invest-NL: The Dutch national investment institution provided growth capital to Peerby and Amber Mobility as part of its circular economy portfolio.

KPI Summary

KPI	Baseline (2020)	Current (2025)	Target (2028)
Material diverted from landfill (metric tons/year)	0	22,000	40,000
Municipal procurement cost reduction	0%	18%	25%
PaaS contracts active (city-wide)	2	38	75
Tool library members	0	34,000	60,000
Lighting energy reduction (covered buildings)	0%	52%	60%
Shared fleet vehicle utilization rate	22%	61%	70%
Circular procurement staff trained	0	8	20

Action Checklist

• Conduct a category-by-category assessment of current procurement spending to identify products where PaaS models could reduce total cost of ownership by 15% or more
• Engage with manufacturers at least 18 months before contract renewal to explore PaaS alternatives and give suppliers time to develop service-based offerings
• Train procurement staff in lifecycle cost modeling, service-level agreement design, and circular procurement evaluation criteria
• Resolve budget classification rules for PaaS expenditures with finance departments before issuing tenders, addressing the operational versus capital expenditure distinction
• Pilot a neighborhood tool or equipment library in one district to test demand, logistics costs, and community engagement before scaling city-wide
• Require material passports for all PaaS contracts above a defined threshold to enable accurate end-of-life material recovery and secondary market valuation
• Establish performance monitoring dashboards that track material diversion, cost savings, and service quality for all active PaaS contracts

FAQ

Q: Does product-as-a-service actually cost less than buying products outright? A: Amsterdam's data shows that PaaS contracts reduce total cost of ownership by 18 to 31% across lighting, furniture, and fleet categories when measured over a 5 to 10 year horizon. The savings come from three sources: manufacturers optimizing for durability and energy efficiency when they retain ownership, elimination of disposal and replacement costs, and reduced maintenance expenditure through professional service management. However, upfront monthly service fees are typically higher than the annualized cost of a capital purchase, which can create budget perception issues even when lifecycle economics favor PaaS.

Q: How do you handle situations where no suppliers offer PaaS for a product category? A: Amsterdam encountered this challenge in roughly 30% of targeted categories. The city's approach has been threefold: first, engage industry associations to communicate demand signals 12 to 18 months before tenders; second, structure contracts as performance-based specifications that allow but do not require PaaS delivery models; and third, use pilot contracts with shorter terms of 2 to 3 years to reduce supplier risk perception. In several cases, traditional purchase contracts were modified to include mandatory take-back clauses and extended warranty periods, creating a transitional model between outright purchase and full PaaS.

Q: Can tool libraries work outside dense urban areas? A: Amsterdam's tool libraries benefit from high population density with an average of 5,100 residents per square kilometer, which keeps logistics costs manageable and ensures sufficient demand. Rural and suburban implementations face higher per-member costs due to longer travel distances and lower utilization rates. However, mobile tool library models using converted vans that serve multiple communities on rotating schedules have shown promise in smaller Dutch municipalities like Almere and Amersfoort, achieving 60 to 70% of Amsterdam's per-member utilization at comparable per-use costs.

Q: What role does technology play in making sharing models work at city scale? A: Three technology layers are critical. First, booking and inventory management platforms that provide real-time availability, reservation scheduling, and automated billing, which Amsterdam sources from Peerby and Amber Mobility. Second, IoT-enabled products with embedded sensors that report usage data, maintenance needs, and location, enabling manufacturers to optimize service delivery and plan component recovery. Third, material passport databases that track product composition and condition through multiple use cycles, which Amsterdam mandates for PaaS contracts above 50,000 euros. Without these systems, the administrative overhead of managing shared and service-based assets would exceed the savings they generate.

Sources

• City of Amsterdam. (2025). Circular Innovation Programme: Annual Progress Report 2024-2025. Amsterdam: Municipality of Amsterdam.
• Circle Economy. (2024). The Circularity Gap Report 2024. Amsterdam: Circle Economy Foundation.
• European Commission. (2023). Green Public Procurement and Circular Economy: Best Practice Report. Brussels: Publications Office of the European Union.
• Signify. (2025). Light-as-a-Service Impact Report: Public Sector Deployments in the Netherlands. Eindhoven: Signify N.V.
• Ahrend. (2025). Circular Furniture Programme: Five-Year Performance Review. Amsterdam: Royal Ahrend.
• ICLEI. (2025). Circular Procurement in European Cities: Adoption Survey and Capacity Assessment. Bonn: ICLEI Local Governments for Sustainability.
• Invest-NL. (2025). Circular Economy Portfolio: Impact Report 2024. The Hague: Invest-NL.
• European Investment Bank. (2024). Circular City Programme: Loan Facility Impact Assessment. Luxembourg: EIB.