Up to 80% of factors that determine quality, costs, environmental impact and market success of a product are defined during conceptual design phase. Environmental impact assessment is most widely accepted approach to evaluating environmental friendliness of a product. However, methods such as Life Cycle Assessment (LCA) are not suitable for eco-evaluation of technical systems in conceptual phase and comparison of original design concepts. Environmental criteria proposed in this thesis are energy transformity effectiveness of energy and signal transformations, number of these transformations, environmental friendliness of secondary effects towards the environment, number of these effects, and number of transformations in which material state change occur. These five environmental criteria are the basis for eco-evaluation method proposed, and the method is further supported by decision matrix and a rank-sum rule to aggregate criteria outcomes. Eco-evaluation is performed by evaluating energy, material and signal transformations indicated by chains of physical effects and secondary effects towards the environment. Environmental criteria and eco-evaluation method proposed are main theoretical and practical contributions of the work reported in the doctoral thesis. Methodological contribution is achieved by providing validation of the environmental criteria and method proposed. Effectiveness and efficiency of environmental criteria and method proposed are demonstrated by comparing eco-rankings of laundry cleaning concepts produced by mechanical engineers in a case study, results of LCA, and eco-ranking from applying the proposed method. Validity of the proposed method is further confirmed by comparison of environmental friendliness of alarm clock concepts available from literature, and eco-ranking resulting from applying the proposed method.