As the services industry has grown and diversified, there has been a rapid rise in the share of energy and material costs in provision of services. As a result, services, which have traditionally been considered immaterial by their nature, are now absorbing substantial amounts of energy and material goods. By decomposing the CO2 emissions embodied in material goods and services, this study quantitatively analyzes the implications of energy and materials consumption in services for the change in indirect CO2 emissions by household consumers in Japan. The results show that the domestic CO2 emissions associated with the energy and material goods absorbed by services through the supply chain increased consistently during the decade 1990-2000, thereby constituting a key element in the rise in CO2 emissions due to household consumption. The energy and materials within the supply chain underlying services that have been identified as the main causes of this increase include electric power consumption, petroleum products, building renovation and repair, distribution of printed materials, plastic products and water, all of which are necessary to support the services in question. This study highlights the increasing importance of energy and materials consumption by services in the context of climate change policy.